A group of Vancouver businesses is speaking out about what it says is an unfair system as the city’s property tax deadline arrived Wednesday.
Sally Traynor owns Commercial Drive’s Manifesto hair salon. She bought the struggling business in 2010, and while it’s now thriving, she told Global News she’s still being pushed to the brink.
“I’ve had to take a hard look at my business model, so I reduced the number of hair chairs and decided to diversify my retail,” she said.
“It’s a huge amount of stress because your margins are your margins, and if you’re really savvy you do your best to control those margins.”
Traynor said for her 750-square-foot business, she’s on the hook for $3,600 in rent and an additional $800 in property taxes — taxes she says have doubled since she opened the business in 2010.
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Traynor’s story is one of several being highlighted by the Canadian Federation of Independent Business (CFIB), which argues companies across a variety of sectors are facing “skyrocketing overhead” from the combination of taxes and growing lease costs.
The organization says companies are being forced to choose between leaving longstanding locations in Vancouver neighbourhoods, holding off on hiring, boosting working hours or even shuttering their businesses.
“At one point we didn’t have skyscrapers, right? We didn’t have huge residential developments on top of commercial, so at one point it wasn’t as much of an issue,” said Aaron Aerts, the CFIB’s western economist.
Rezonings in several areas of the city to allow for residential towers have resulted in the land value associated with the properties climbing rapidly, amounting to hefty new tax bills and increased lease prices at property turnover.
The CFIB said that the city shouldn’t be taxing properties on their so-called “highest and best use,” but rather on the building that currently sits on the site.
It wants to see taxes assessed along a split classification.
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“Why is a business owner paying a commercial rate, which is four times higher, on a residential potential?” asked Aerts.
The Ministry of Municipal Affairs and Housing said it is meeting with local business owners, and has left the door open to a split classification system. It said local governments also have a variety of tools to defray the impact of property assessments.
Back in April, Vancouver city council approved a 2 per cent tax shift from businesses to homeowners in an effort to defray some of those costs.
Skyrocketing property values aren’t the only pressure the city’s businesses are currently facing down.
Many are also grappling with the province’s new Employer Health Tax, which requires businesses with a payroll of over $500,000 to pay into a fund designed to offset the elimination of MSP premiums.
The region’s minimum wage also climbed to $13.85 last month.