City of Terrace plans to reduce business taxes by 1%

The decision is in response to both pressure from the business community as well as the desire to honour a 2013 council resolution

The city has decided to reduce business taxes by one per cent in response to both pressure from the business community as well as the desire to honour a 2013 council resolution that promised to review industrial tax revenue each year in the hopes of reducing both residential and business taxes.

The decision, made April 8 at a committee of the whole meeting, comes late in the budgeting process and the money is being taken out of the city’s general surplus which currently sits at just over $900,000.

Led by a recommendation by councillor James Cordeiro, the councillors decided to commit $50,000 for each of the next five years for the reduction unless the windfall from expected industrial development doesn’t pan out.

The Terrace & District Chamber of Commerce has petitioned council to lower the tax rate for businesses several times in the past and thus to narrow the ratio between business and residential rates which it argues is unfairly one of the highest in the province.

“This is a promise that has been made in 2011, 2012, 2013, 2014, 2015,” said Cordeiro of the pending tax reduction in an interview. “In all fairness, it’s been the business community that’s come to every budget meeting asking for the reduction. I don’t remember seeing any residential group come and specifically ask for it.” Furthermore, says the councillor, it was because of business development that the budget predictions are buoyant.

“Ideally you would like to see everybody have a tax reduction but residents aren’t kicking in an extra $800,000 [in taxes] in new residential construction,” he said. “The new money is coming from the commercial sector.”

“If you don’t need all that new money, it’s appropriate to return it to where you took it from, instead of everybody’s pockets,” Cordeiro continued.

The decrease in the business tax rate will not have an impact on residential and other tax rates which will be the same as last year, council was told by finance director Phyllis Proteau.

Figures in the city’s five-year financial plan project its surplus to decrease to $509,414 in 2018 and $431,387 in 2019, below the $800,000 mark Terrace finance officials consider should be tucked away for emergencies.

This did not concern Cordeiro or other councillors who backed the proposal.

“If we look out five years from now, if everything stayed the same according to those numbers and everything was as conservative as forecast, then we would have to do something to put that cushion back up. But I would be fairly confident that the cushion will replenish itself,” said Cordeiro.

The financial plan for 2018 and 2019 also forecasts more capital projects, another reason for the drop in the anticipated surplus for those years.

Councillor Brian Downie originally cautioned Cordeiro at the meeting that it was a bit late in the budgeting process to make changes but did say finally that “it signals interest on our part.”

Cordeiro said that he felt the impact on the budget was minimal and that lowering business tax is a “gesture of good faith” that the city holds true on its resolutions and promises. The original council resolution crafted in late 2013  was “that the city review any new light or major industrial tax revenues annually with a target to reduce business and residential property taxes.”

Tax revenues coming from the Kitselas Development Corporation and Global Dewatering, two companies that bought land at the city’s Skeena Industrial Development Park are contributing to the increase in industrial taxes.

The 2015 budget and the city’s five-year projections are predicated on the idea that money will come in the future from hotel and residential construction as well as growth at the industrial park, indicated city briefing documents provided to council.

Councillor Lynne Christiansen, who was acting on behalf of mayor Carol Leclerc at the April 8 committee of the whole meeting, said the decision will be voted on officially at the council’s April 27 regular meeting.

While the residential rate will be frozen this year, residential property owners will be paying an extra $189 a year starting this year when the city buys and distributes new containers as it refines its garbage collection and recycling program.