Vancouver businesses call to shift more of tax burden to residences

Vancouver businesses call to shift more of tax burden to residences

The municipal portion of property tax on an average residential property in Vancouver grew by $1,140 over the past 10 years — for an average business, it increased by $10,827 during that time

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Business advocates are urging Vancouver city council to give a break to local small businesses struggling with rising property taxes.

This debate about what city staff calls the “tax shift” has come up periodically over the years in Vancouver, and poses a tricky problem. Just about everyone says they value their neighbourhood shops, restaurants and businesses, and no one wants to see more of them closing down. But any reduction in property taxes for commercial properties would need to be made up by other taxpayers — which would mean hiking taxes even more for homeowners.

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“I realize it’s a balancing act,” says Patricia Barnes, executive-director of the East Village Business Improvement Association. “But our job is to make sure city council understands our business communities are suffering right now.”

Every year, after City Hall sets its operating budget, council must determine what is known as the tax share, meaning how much is paid by different kinds of properties. For 2024, city staff recommend 57.1 per cent of Vancouver’s property tax bill should come from its residential properties and 42.9 per cent from non-residential.

That is the same tax share as last year, and the recommendation comes as a disappointment to commercial property owners and their business tenants, who are typically on the hook for property tax bills.

The final decision will be up to council later this week. Barnes appreciates that residential property owners probably do not want a tax hike either, she said, “but we are in a really crucial situation with our small businesses.”

Barnes and other local business representatives have signed up to speak at City Hall on Wednesday, when council considers the property tax distribution for 2024.

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But city staff are recommending against a tax shift, as are the outside experts from Ernst and Young who were recently enlisted to review the city’s tax policy, and found “no compelling evidence to warrant a tax shift” this year.

Paul Sullivan, a Vancouver-based principal of international tax services firm Ryan, said: “This is one thing council can do right now to show their support for business, because that’s what ABC was elected on,”

Vancouver voters supported ABC expecting a “business-friendly council,” he said, “and I think business feels sandbagged with the tax increases we’ve seen since we voted in ABC.”

Sullivan emailed Vancouver’s council and municipal staff over the weekend, citing a 2023 city report that found most of Vancouver’s business districts had an “unhealthy” storefront vacancy rate of more than 10 per cent.

The city’s numbers show that the municipal portion of property tax on an average residential property in Vancouver grew by $1,140, or 62 per cent, over the past 10 years. For an average business, it increased by $10,827, or 55 per cent (from $19,597 to $30,424), during that same period.

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Back in 2019, Vancouver’s previous council voted to shift $15.8 million in taxes over three years toward residential properties. That move was supported by councillors from the Green Party, as well as three Non-Partisan Association councillors who now represent the majority ABC party on the current council: Rebecca Bligh, Lisa Dominato and Sarah Kirby-Yung. Council’s 2019 decision went against city staff’s recommendation. At that time, Bligh said the decision was meant “for every single business to get a very clear message from this government that we value them, and while they’re trying to figure out how to make it work day-to-day, we’re in their corner.”

Jairo Yunis, Canadian Federation of Independent Business’s director for B.C. and western economic policy, is also advocating for a tax shift. His organization regularly hears from businesses forced to make “tough choices” on how to deal with rising taxes, he said, including increasing prices for goods and services, or relocating to another municipality.

dfumano@postmedia.com

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