A review of British Columbia’s industrial property taxes has ground to a halt, nine months after a promised deadline to resolve long-standing business concerns about those rates.
But a government spokesman has insisted the province is still committed to do just that, as it helps fund yet another study into the issue.
For many years, the private sector has felt some municipalities have been gouging them, forcing businesses to pay higher property taxes so residents can pay less.
Those feelings turned into headlines in 2009 when Catalyst Paper Corp. triggered an industrial tax revolt by paying just $6 million of the $23 million it owed to four municipalities, challenging the fairness of that bill in court (see “Forest companies lobbying for lighter tax load” – issue 1022; May 26-June 1, 2009).
Catalyst lost that case and eventually agreed to give three of the four municipalities their money – although it’s appealing the ruling.
In the meantime, back in March 2010, the province, the Union of British Columbia Municipalities (UBCM) and the Business Council of British Columbia (BCBC) committed to come up with recommendations for a better industrial property tax system.
The deadline for those recommendation was September 2010. But that date has come and gone without a resolution to the dispute.And according to Jock Finlayson, BCBC’s executive vice-president of policy, the review’s steering committee hasn’t even had a meeting for the past four months.
“The process sort of ran out of gas in terms of where the government was going with it,” he said, noting four different ministers have been responsible for the file since it was first opened.
To a certain extent, that’s understandable given the recent political turmoil in British Columbia and the government’s “preoccupation with HST.”
Nevertheless, Finalyson said, the process has been “much slower than I envisaged at the front-end.”
In the midst of that morass, the UBCM has announced it’s looking for a consultant to “determine the conditions under which municipal property taxes have a material effect on business decisions for major industry.”
According to a bid document quietly posted on the government’s procurement website, the UBCM is spending $50,000 for the study – with $25,000 of that amount coming from the province.
The UBCM and the government have said that work is separate but will inform the stalled review process. But Finlayson questioned whether that study will give local government the answers it’s looking for.
“If they want to go and do a study and get some more up-to-date information and shed some new light on this topic that’s fine,” he said.
“Although, as an economist I can tell you I think they’re going to have some challenges in actually executing the study.”
For example, it’ll be difficult to measure how much impact the uncertainty of industrial property taxes – which can shift with the makeup of a local council – has on investment.
And, in any case, the study’s results won’t change the fact that the province is ultimately responsible for both creating and cleaning up the present property tax mess.
After all, it’s the province that gave municipalities the power to set those rates in the first place – 27 years ago.
Peter Ladner is on vacation.