Dan Fumano: 'Wait-and-see': On tax relief, the devil's in the (lack of) details
Credit to Author: Dan Fumano| Date: Wed, 22 Jan 2020 01:45:28 +0000
Relief is coming for small businesses struggling with big property tax hikes, the B.C. government has announced. But businesspeople are wondering where, when and how that relief will land. And so far, there are no answers.
B.C.’s Municipal Affairs Ministry said Friday that “business property tax relief legislation” was under development that would soon help “small businesses, non-profits and arts and culture organizations.”
In the statement, minister Selina Robinson said “interim legislation” would be introduced this spring to give municipalities “the tools they need to provide immediate property tax relief to targeted properties, for 2020, while we continue to work with stakeholders on a permanent provincewide fix.”
That probably sounded good to struggling small-business owners.
But how will the “targeted” relief will work and whom will it target?
Vancouver councillors tried to get answers Tuesday from B.C. Assessment officials, who had to acknowledge they were still in the dark.
For years, Vancouver businesses have been hammered by massive property tax increases because properties are assessed — and taxed — based on “highest and best use.” That means many old one-storey buildings on arterial streets are treated as though they were multi-storey mixed-use buildings, and those growing tax burdens are usually borne not by the property owner, but by the tenants, including many independent family businesses.
Many Vancouver businesses have been crushed in recent years by growing tax bills for the development potential over their heads.
The province’s proposed legislation would allow municipalities to exempt part of the value of certain commercial properties from taxation, said Friday’s statement, which came three days after Robinson had made a similar comment to Postmedia that relief was “on the horizon.”
Storefronts along Cambie Street on Jan. 21, 2020.
“We saw the press release that came out on Friday, and I really haven’t had any background information as to what that’s going to be looking like,” Grant McDonald, B.C. Assessment’s acting director of assessment operations, said under questioning from NPA Coun. Sarah Kirby-Yung. Until the B.C. legislature resumes in mid-February, he said, “it’s a little bit of, unfortunately, wait-and-see.”
Speaking later outside Vancouver council chambers, McDonald said: “The province is always, ultimately, tight-lipped about this kind of thing, and until the legislation is tabled, we don’t know what it is.”
Mayor Kennedy Stewart made the point, while chairing Tuesday’s meeting, that the province is limited in what it can disclose before legislation is introduced. Friday’s provincial statement said more information will be provided “in the coming weeks.”
While that might be true, the lack of details is frustrating for some local business owners, particularly those for whom help is coming too late.
Future relief won’t help Ouisi Bistro, a popular South Granville eatery for 25 years until it was shuttered in October, causing the loss of 16 jobs. Ever-rising property taxes were “the major factor” in Ouisi’s closure, said owner Rob Clarke.
“Without any details, this is just lip-service,” Clarke said of the promised relief. “We have no idea what it is that they’re proposing: how they’re going to target, how they’re going to define small business, what mill rates they’re going to use.”
“Obviously, any move on the file is good for small business, but what we really need to see is a mill rate and a tax category that’s based on actual use, not on best use,” said Clarke, who owns three other restaurants in Vancouver.
The question of how “small business” will be defined and targeted was not addressed in Friday’s statement. A ministry representative said that would be left up to municipalities. The legislation, the ministry representative said, is “being designed to enable municipalities to identify commercial properties and set the thresholds required for properties to qualify for exemptions.”
It will be challenging, former Vancouver councillor Gordon Price wrote Monday on his blog Price Tags, for a city government to determine which businesses count as “small” and get exemptions, “not to mention who it will tax (or what services to cut) to make up the difference.”
“It will get ugly, and there will be unintended consequences,” Price wrote. “If a business has 10 employees, does it become big when it has 11? If it has two outlets, does it becomes a chain at three, and hence just another Starbucks?”
“The City’s job is to set the overall tax rates, which vary by class of property (commercial, residential, industrial, etc.) but not to vary the tax rate within a class. Now it looks like it is going to wade into this very messy territory, which will soon begin to feel more like quicksand than an attempt to drain the swamp.”