Rising home taxes squeezing money from ‘golden goose’ companies

VANCOUVER—Affordability doesn’t just mean a lot to Metro Vancouver residents: Every year, small businesses are bearing an increasing load with climbing property taxes.

With municipal elections approaching in October, small businesses are calling on candidates to curb “excess spending” totalling $8.4 billion by local governments resulting in a 42 per cent hike in property taxes in B.C. between 2006 and 2016, according to a report released by the Canadian Federation of Independent Business (CFIB).

Thirty-five per cent of respondents in a new CFIB report say they have delayed expanding in the past three years because of rising property taxes.  (Jennifer Gauthier / For StarMetro)

From 2004 to 2014, inflation-adjusted operation spending in B.C. increased by 48 per cent outpacing population growth at 12 per cent by four times.

The findings prompted Richard Truscott, vice-president of CFIB in B.C. and Alberta, to declare small businesses are “sick” of being treated like a “cash cow” by local governments.

“Between rising lease rates, taxes, local fees, it’s becoming less and less affordable to run a successful small business especially in the big cities and if people are feeling squeezed, you can imagine how many entrepreneurs and business owners are feeling (the same thing),” he said.

The report found that the Township of Langley was the “worst” among 20 major municipal governments between 2004 to 2014 where operating spending per person grew 68 per cent.

CFIB identified municipal wages and benefits as one of the major sources of “unsustainable” spending.

Karen Sinclair, director of finance at the Township of Langley, told StarMetro that an increase in spending from 2004 to 2014 that affects property taxes is the result of the conversion from volunteer fire services to full-time ones and the addition of 80 firefighters.

“In addition to additional salaries and benefits for career firefighters, there are additional operating costs such as vehicles, training, hall operations and maintenance, and personal protective equipment,” Sinclair said.

Another expenditure by the Township of Langley funded by property taxes is the addition of 18 RCMP members between 2005 and 2014.

She added that large contributions to other governments on infrastructure projects may have skewed the amount in spending by local government but are generally not funded by property taxes.

CFIB is calling for “fair property taxes.”

Businesses often see “what they believe as an arbitrary reassessment of their property,” Truscott explained.

This means “a lot more taxes being paid, and the underlying profitability of that business has not improved and yet they’re expected to pay thousands more in property taxes.”

Among B.C.’s major cities, Vancouver and Victoria increased their operating spending by 23 per cent from 2004 to 2014, after adjusting for inflation and population growth.

“Together, it represents about $1.6 billion in excess spending over the past 10 years.”

The City of Vancouver listed for StarMetro a number of measures they are using to implement “viable” tax policies.

Among them is “targeted averaging” where land assessments are averaged over multiple years to “smooth out shorter-term assessment volatility.”

“This will change from three years to five in 2019 which should provide some additional relief for commercial property owners and their tenants,” said chief financial officer Patrice Impey.

Jenny Peng is a Vancouver-based reporter covering business. Follow her on Twitter: @JennyPengNow

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Source

https://www.thestar.com/vancouver/2018/07/20/rising-property-taxes-squeezing-money-from-cash-cow-businesses.html