B.C.’s official Opposition is supporting a proposed solution to property tax hikes that are killing small businesses in the province’s cities, adding another voice to a growing chorus that includes business groups, arts organizations, and local governments.
The provincial government has said it’s examining the proposed policy, which would allow local governments to create a property tax “subclass” to reduce tax bills that commercial tenants must pay on the unbuilt development potential in the air space above their heads.
The situation that threatens the viability of even popular, successful business and leads to vacant storefronts along the main streets of cities.
The B.C. Liberal critic for municipal affairs, Todd Stone, introduced a bill on Wednesday outlining proposed legislative changes, which he said could be implemented in time for the 2020 tax year.
“We could pass this bill and have it in place by next Thursday,” said Stone, the MLA for Kamloops—South Thompson, “in time for it to be a tool local governments could use to address this challenge.”
But even if the provincial government decides to pursue this particular change, the schedule Stone describes seems unlikely based on statements from the Ministry of Municipal Affairs.
The problem is that properties are taxed not on their existing use, but based on “highest and best use,” meaning some small businesses operating in older one-storey buildings are taxed as though they were multi-storey mixed commercial-and-condo highrises.
What’s more, all that unbuilt development potential is taxed at the commercial rate, which, in Vancouver, is four times the residential rate.
One possible solution has been endorsed by a broad group, as publicly outlined by City of Vancouver staff in July: The province could create a new property tax “subclass,” which would allow municipal governments to use a different lower rate for the development potential above existing buildings. It would be up to local governments how low to set the rate for that subclass, and whether or not they want to use it at all.
The issue came up at last month’s annual Union of B.C. Municipalities convention, where delegates endorsed a resolution calling on the province to enable “implementation of the ‘split assessment through a new commercial subclass’ approach in time for 2020.”
But shortly before municipal politicians voted on that resolution, a Ministry of Municipal Affairs spokeswoman told The Vancouver Sun that “this would not be possible to achieve for 2020 implementation.”
Stone criticized the B.C. NDP this week for moving too slowly to address this issue while small businesses struggle.
“The government’s response is: ‘We’re studying the matter,’ which they’ve been saying for 2½ years,” Stone said. “The problem is getting worse. It doesn’t matter if you’re on South Granville or if you’re on 104th Avenue in Surrey, there are some very significant challenges facing certain neighbourhoods that are being hollowed out of their small businesses.”
Of course, the problem didn’t arise overnight. At a news conference Wednesday, the B.C. Liberals distributed materials citing, among other things, a 2016 blog post about the sky-high property assessments hammering commercial tenants. The post was written by then-Vancouver Coun. Geoff Meggs, who is now Premier John Horgan’s chief of staff.
When asked this week why the B.C. Liberals didn’t address this issue while in government for the 16 years before the 2017 election, Stone replied that the problem has become far more severe recently in different parts of the province.
“And even more importantly,” Stone continued, “there has never been this broad of a stakeholder group or coalition, including local governments, very importantly, leading the charge, saying: ‘We need these tools.’”
In previous years, there were various working groups and advocates and experts recommending different solutions to the problem, which was largely localized within Vancouver. There is now, though, a broad coalition behind a preferred solution.
Support for the subclass proposal is not unanimous, though; although the UBCM resolution was endorsed by a slim majority, 46 per cent of municipalities voted against it. The UBCM resolution was actually “quite contentious,” Municipal Affairs Minister Selina Robinson said this week in the legislature, and some local governments argued it would be bad for their communities.
On Wednesday, Robinson told reporters her government was looking at “interim solutions, ones that we can implement more quickly.”
Asked if those interim solutions could be in effect for the 2020 tax year, Robinson replied: “We’re working toward that goal.”
But Robinson provided no details on what, exactly, those “interim solutions” for next year might include.
With a file from Rob Shaw