Unrest grows among B.C. businesses over rising commercial property taxes

Click to play video: 'Growing revolt over business taxes in B.C.'
Growing revolt over business taxes in B.C.
WATCH: There is a growing revolt over increasing business taxes in B.C., hitting the sector just as it's trying to recover from the pandemic. As Ted Chernecki reports, business says it's time for transparency and accountability from B.C. cities – Jun 23, 2021

There is growing unrest among B.C.’s business community amid rising commercial property taxes.

Business groups say they’re being hit by the perfect storm, including the end of a COVID-19 property tax subsidy, increasing property tax rates and soaring land values as they try to recover from the pandemic.

“There is going to be a major property tax revolt, particularly from the commercial taxpayer and I suspect the residential tax payer is going to get involved too,” Paul Sullivan, regional leader and tax expert for tax recovery firm Ryan Canada said.

Read more: ‘Trade offs’ required to keep Vancouver property tax hike under 12%: city report

A key complaint of businesses is the end of a school tax break for commercial properties the provincial government implemented for the 2020 tax year.

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But Sullivan said the continued upward pressure on land prices combined with growing annual municipal spending — and subsequent tax hikes — has left some businesses with a 25 to 55 per cent tax hike this year.

“People are just realizing it now because their tax bills are due,” he said.

Click to play video: 'Trade offs needed to keep Vancouver property tax hike under 12%'
Trade offs needed to keep Vancouver property tax hike under 12%

Surrey Board of Trade president and CEO Anita Huberman said her organization has been “inundated” with concerns from businesses about their tax bill this year.

“We want a tax climate where businesses can survive. We’re still in a pandemic and so many businesses are facing challenges,” she said.

“It’s like business is being pushed out, jobs are being compromised.”

Read more: End of pandemic property tax break ‘insensitive’ to small businesses, Vancouver restaurateur says

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The Surrey Board of Trade presented a sample case of two commercial properties of similar sizes not far from one another on opposite sides of the Surrey-Langley border to make its case about municipal taxation.

The Surrey property, which was actually slightly smaller, had a tax bill of more than $800,000, while the Langley property’s bill was $287,000.

“If nothing is done, businesses right now are facing the really difficult decision to delay hiring, to delay business maintenance, to delay capital investments,” she said.

“They’re saying if their property tax increases next year, they’re looking at moving out of Surrey.”

Click to play video: 'B.C. small businesses hit with major tax increases'
B.C. small businesses hit with major tax increases

Sullivan focused his concerns on the City of Vancouver, where businesses representing just seven per cent of properties in the city carry 43 per cent of the tax bill.

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It’s fine for the city to want to explore climate and social programs, he argued, but said it shouldn’t be trying to fund them from its property tax base.

“The fundamental problem we have is the budget is too big, we’re funding too much. You’re averaging 6.5 per cent (budget) increase per year when other jurisdictions are less than half that,” he said.

Read more: Vancouver property taxes are highest in Canada, report says

Vancouver has made moves in recent years to try and lower the tax burden for businesses, shifting two per cent of the property tax burden from city businesses to homeowners over three years between 2019 and 2021.

In its 2020 Canadian Property Tax Rate Benchmark Report, commercial real estate analysis firm Altus Group found Vancouver actually had the lowest tax rate for commercial properties in the country, at $6.73 per $1,000 of assessment — a decrease of 55.3 per cent since 2015.

The city’s commercial to residential property tax ratio also sat below the national average, it found.

But with property assessments sky-high in B.C., and projected to only climb further, Sullivan wants more action — some of it potentially radical, like giving commercial property owners a vote in municipal elections.

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Business owners were previously able to vote in B.C. municipal elections until 1993, when their franchise was scrapped by Mike Harcourt’s NDP government.

“We are going to start a reform advocacy movement here — we need to see commercial taxpayers have a vote, we need to address the highest and best use issue, we need small businesses to be taxed fairly, we need the distribution of taxes between commercial and residential to be more aligned with the consumption of services,” Sullivan said.

“Vancouver (has increased property taxes) five per cent on top of seven per cent last year. How do you justify that?”

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