Local business taxation not fair at all

To be fair, Terrace appears to have made a hard effort to control municipal spending.

By Shachi Kurl

Not since the times of FDR have we heard so much about a “new deal”. Only in this case it’s about BC municipalities looking to extract more and more money from other levels of government. This bun fight wouldn’t be so much of an issue – save for one big point.

There’s only one source for the money: you, the taxpayer. So if communities want more, you’ll ultimately pay more.

Small business owners in Terrace understand this. It would be one thing if Terrace’s municipal tax burden was shared equally among all payers. But not all landowners are equal. Instead, business property owners face bills that are three times what residential property owners pay.

In 2011 – the average Terrace property was valued at $192, 238. At the city’s current taxation rates, a homeowner would cut a cheque to city hall for $2,268. By contrast, a business owner’s hands would shake in forking over $6,785 in property taxes.

Consider their helplessness and their outrage over the matter. Though tax dollars from business make up the bulk of the local tax base, the political clout doesn’t translate. They were stripped of their municipal vote in the 1990s. No taxation without representation is a tenet of democracy. But it’s not the reality in BC.

As long as entrepreneurs don’t have a business vote, and as long as there are more residential property owners with a vested interest in seeing their taxes stay low showing up to the polls, local merchants find themselves at the mercy of municipal politicians and staff to keep their taxes at sustainable levels.

For every extra dollar they have to pay, a small business owner must generate exponentially more in revenues, or raise prices, or cut back staff hours, or, as often as anything, hold off paying themselves.

It would be one thing, they say, if they were consuming triple the municipal services they are paying for. But snow-covered sidewalks in front of their stores aren’t cleared three times faster. And in Terrace the city opted out of commercial trash removal years ago.

So now business owners pay to have garbage removed themselves and often pay to have snow removed to keep  themselves and their customers safe, sanitary and slip-free.

To be fair, Terrace appears to have made a hard effort to control municipal spending. Over the last decade Terrace’s population has increased eight per cent. Its operating spending, adjusted for inflation, decreased two per cent.

It also did a very wise thing  years ago when the city’s primary employer and industrial taxpayer, Skeena Cellulose, went under. The city cut spending in recognition of the fact it would likely never have the benefit of the mill’s property taxes ever again. So cutting spending then was a fairly prudent move.

But the story doesn’t and shouldn’t end there. When the tax base isn’t really growing and there’s only so many dollars and services and infrastructure need to be maintained and pot holes need to be filled, what’s a city to do?

It could try shifting the burden so it’s more reflective of business owners’ need for tax fairness. It could do more to recognize the high risks and slim rewards that come with staking your hard earned dollars on opening a business and creating jobs.

Would tax shifting be a politically unpopular move? Maybe.

Many cities are quick to say their tax rates reflect the demands of residents to do more, build more and spend more on making cities more “liveable”.

But it is commerce, not livability, that is the true life blood of a thriving community. The first civilizations did not spring up along the shores of the Nile or Fraser rivers because they seemed like nice places to settle. Their beginnings are steeped in trade, business and the flow of cash.

Terrace could also freeze business taxes until they are double the rate of residential property tax. But without the political will, the chances of it happening are about as good as the chances of those flower beds you’ve dug growing weed-free this summer. While you struggle in the garden, many small business owners will be struggling to pay their property tax bill. Hardly seems fair.

Shachi Kurl is the Director of Provincial Affairs for BC and Yukon for the Canadian Federation of Independent Business.

 

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