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Comparing ratios apples to oranges
By Naoibh O'Connor-Staff writer
Business owners in Vancouver pay municipal property taxes at nearly six times
the rate paid by residents. It's a rate roughly double most neighbouring
municipalities, double the national average and the highest ratio in the
country, according to the Vancouver Fair Tax Coalition.
At 5.89 to one, Vancouver's ratio of taxes paid by business compared to
residents is the highest of 16 municipalities in the Lower Mainland. The
national average is 3.7, says the Coalition.
But is the comparison fair? Civic money counters say no. The City of Vancouver
uses a share model to determine how much of the total tax each property class
pays. The share of taxes paid by residents is 45 per cent, while businesses pay
a 55 per cent share.
Ken Bayne, director of financial planning and treasury, says comparisons with
other municipalities are complicated. "The District of West Vancouver, for
example, has virtually no commercial class," he said. "So their residential
class values are probably 94 or 95 per cent of their value and [residents] pay a
much more significant proportion of the taxes as a result because there's no
place else to put them."
Burnaby, he said, has more major industry, including a couple of oil refineries.
"You can't really compare because every municipality is slightly different in
the makeup of their assessment roll and also different in the objectives council
has with respect to taxation," Bayne said. "The appropriate questions to ask is
how do municipalities with similar assessment rolls to Vancouver distribute
their tax levy."
Bayne examined all Lower Mainland municipalities with similar assessment rolls
to Vancouver and concluded they're all over the map. He questions the six to one
ratio put forward by the Fair Tax Coalition. "The question that should be asked
is on what basis should the various property classes pay for supported services.
That's the issue and there's a number of ways to look at it-it's ability to pay,
it's benefits received-who benefits from the tax levy and who doesn't."
Burnaby, where businesses pay property tax at a rate four times that of
residents, doesn't use a share model like Vancouver. It determines how much tax
it wants to collect and then increases the tax rate by the percentage required
to collect that tax. The percentage increase is spread evenly among all property
classes.
Rick Earle, director of finance in Burnaby, agrees with Bayne that the ratio is
not a fair determination of a reasonable tax load. "I've seen various things
groups have been doing, but obviously they're looking at the ratio and the ratio
isn't really a fair way of doing it, but it's an indication that kind of
supports their position so that's why they focused on it," he said. "But it
certainly has no relation to equity whatsoever."
Ed Des Roches, co-chair of the Vancouver Fair Tax Coalition, insists the
comparisons are fair. He said there are two types of unfairness to examine-the
amount of tax that is being allocated to commercial versus what is being
allocated to residential, and the fairness of how much is taxed for commercial
properties in Vancouver as compared to other municipalities around Vancouver and
across Canada.
"We want to engage the city because at the end of the day we see our taxes are
extremely high and we're interested as anybody in finding out a way to be able
to measure fairness from one municipality to another," he said. "To trash the
only way that we have found is not an answer to us. Just by bafflegab and saying
it's all too complicated, you can't compare doesn't give anybody any benchmarks
and it's not helping with solutions." published on 03/31/2006
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