B.C.’s municipal elections are less than a month away, which accounts for the timing of the latest report from the Canadian Federation of Independent Business. Not surprisingly, the B.C. Municipal Property Tax Gaps 2003-13: a 10-Year Perspective has recommended several measures to reduce the burden on its members, including extending the homeowners’ grant to business owners who occupy live-work spaces.

The CFIB’s B.C. director, Richard Truscott, told the Georgia Straight by phone that the report focuses on the gap between residential and business property taxes in municipalities across the province over a 10-year period. “It seems that as cities grow, it becomes all too easy for municipal politicians to stick more of the tax bill onto small-business owners,” he said. “The reason for that is there’s less hissing. If you try to hike taxes on residents, they get understandably upset.”

The largest gap in the province is in North Saanich, where the property tax imposed on commercial entities is 5.2 times that paid by residential-property owners. Second is Terrace at 4.64 times, followed by Coquitlam at 4.5 times, Vancouver at 4.33, and Burnaby at 4.22.

Among B.C.’s 10 most populous cities, the smallest gap is 2.08 times in Kelowna, followed by Abbotsford at 2.55 times, and Surrey at 2.94. It’s worth noting that Surrey, which is B.C.’s second-largest city, had a far lower percentage of police officers per capita and a far higher murder rate than existed in Vancouver in 2013. Meanwhile, Surrey has only nine library branches and six community centres, compared to Vancouver’s 22 library branches and 24 community centres.

Truscott admitted that it’s not realistic for the CFIB to aim for a one-to-one ratio for commercial and residential property taxes, but he would like municipal governments to try to figure out how to lighten the load on small businesses. “A two-to-one gap seems more fair and more reasonable,” he said.

In 2003, businesses across B.C. paid 2.48 times more property tax on average than residential property owners, according to the CFIB. That rose to a peak of 2.93 by 2008 but has since fallen back to 2.65 times.

Truscott acknowledged that the public is not going to feel nearly as much sympathy in reducing property taxes for multinational corporations or big banks, but he said a good case can be made for creating a subclass for small businesses. He suggested that one way to give small businesses a break would be to exempt the first $100,000 of assessed value. If the business is a tenant, perhaps that could result in a lower rental rate, he added.

“That would go a long way to helping a lot of the small businesses, which, of course, typically operate in highly competitive markets on very thin profit margins,” Truscott stated. “Anything that local governments can do to make the property-tax system a bit more sensitive to income and size would be
most welcome.”

The CFIB report also recommends that local governments provide property-tax notices earlier to commercial entities and allow companies to make monthly or quarterly remittances.

In previous Vancouver elections, the Coalition of Progressive Electors has called for a two-tiered property-tax system to provide lower rates to small local businesses while retaining higher rates for banks, fast-food chains, and big-box retailers. And this year, the Vancouver Greens have promised to investigate why many “long-term independent businesses” have shut down. According to the Vancouver Greens’ website, this could lead to “changing the taxation mill rate for independent small businesses with strong community ties that have been doing business for years”.

The Greens have also pledged to consider tying tax rates to company revenues “as a means to alleviate the tax burden on smaller independent businesses”.

Meanwhile, Truscott pointed to Toronto and Saskatoon as two large cities that managed to narrow the gap between commercial and residential property taxes. He said that this was accomplished by introducing 10-year plans, ensuring that the transition was gradual. ”This is a long-term effort,” the CFIB B.C. director stated. “We understand that policymakers have to be in it for the long haul.”