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Municipal finance a delicate topic

Taxation fairness is not going to be as easy as it sounds

The Terrace and District Chamber of  Commerce’s request that council ease the tax burden on businesses and pass the bill to homeowners did not come as a surprise.

Business establishments have been singing this tune for years. Resistance to taxes goes hand in hand with government at all levels. “No Tax Payments!” screamed a headline in Germany’s Neue Rheinische Zeitung on November 16, 1848. The article’s closing sentence was as provocative as its headline: “Refusal to pay taxes is the primary duty of the citizen!” The author was … Karl Marx! Marxism is alive and well; it moved from the lunchroom to the boardroom.

Karl Marx’s political philosophy has been tried and proven to be a costly error. Should we adopt Marxism as our guiding philosophy on taxation? I don’t think so.

Taxes appear as a curse only when we refuse to recognize the connection between taxes and services. We have many options to reduce taxes. We could replace all traffic lights with stop signs or do without intersection controls of any kind and rely instead on section 173 of the Motor Vehicle Act to regulate the flow of traffic.

We could also do without street sweeping and without park maintenance. Car repair shops and tire dealers would do a brisk business if our streets had more and deeper potholes. But council is not accustomed to such demands. Council is accustomed to demands for more services delivered with greater efficiency. Such demands, however, are rarely supported by offers to pay more taxes.

Taxation does raise questions about fairness. Who should pay for what, and how do we define fairness. Property values are assessed by the B.C. Assessment Authority as directed by the Assessment Act.

Council must set one rate for each property class, it cannot consider individual property owners’ ability to pay. If homes in my neighbourhood sell at a good price this year (meaning at a healthy profit) and sales in other neighbourhoods remained flat, the assessed value of my home will increase next year relative to the value of other homes.

My former neighbours made a profit and as a consequence I end up paying higher taxes. Is that fair?

Council’s discretionary revenue options are limited to property taxes and user fees. Property taxes require little administration on the part of the municipality.

If road maintenance and snow removal services were to be financed from user fees, based on X cents per ton/kilometer of road usage by individual vehicle owners, invoiced monthly, payment for road services would be fair, but the cost of administration would likely exceed the cost of doing the job in the first place.

Municipal revenues in Terrace are collected about as efficiently as can be done. Many municipalities issue separate invoices for taxes, water user fees, sewer user fees, garbage collection fees, and more. Homeowners here get one tax bill per year for the lot. What this method lacks in fairness is more than made up in cost-saving efficiency.

Council’s focus should be on service delivery, concentrating on both efficiency and effectiveness.

Asking council to play the role of Solomon and “put the wisdom of God” in the allocation of the tax burden is to place council in a no-win position, and distract it from its principal duty.

If the chamber of commerce considers the business establishment’s share of the local tax burden to be too high, it should raise the issue with the residential property owners.

Maybe residential property owners in Terrace should form their own association. The chamber could negotiate a tax sharing arrangement with that association, a deal both parties could accept as being fair and reasonable.

I am sure that, should a Terrace Residential Home Owners’ Association and the Terrace and District Chamber of Commerce make a joint submission to council on the subject of fair property tax burden allocation, council would be pleased to comply with the request.

Andre Carrel is a retired public sector administrator living in Terrace, BC.