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Municipal taxes in Vancouver: the good, the bad and the ugly

The October 2018 election in the city of Vancouver resulted in a decisive vote for change that ended Vision Vancouver’s decade-long majority as the party was entirely eliminated from council.

The October 2018 election in the city of Vancouver resulted in a decisive vote for change that ended Vision Vancouver’s decade-long majority as the party was entirely eliminated from council.

One of the first tasks of the new council was to address the 2019 budget and taxes. The result delivered a mix of news – the good, the bad and the ugly.

First the good news. Finally, Vancouver is standing up to the province to oppose its recent encroachment on the municipal tax base. The B.C. school tax surcharge is scheduled for collection in July 2019. Unlike the previous council majority, which neglected to protect the city’s interests, the new council has taken action.

New Coun. Rebecca Bligh, a young renter on the east side, brought forward a motion to council to oppose the surcharge. The motion noted the many concerns about the surcharge. Among them: it is not based on the ability to pay; many people with rentals or certain levels of debt financing do not qualify for a deferral; it could cause a tax revolt; and the province can use its own income tax base instead.

The $250 million in expected revenue from the surcharge could instead be raised by a 0.25% increase applied to the top income tax bracket. This would mean that a taxpayer with a net income of less than $150,000 per year would pay no additional income tax while someone earning a net income of $250,000 per year would pay only $250 in additional income tax.

Supported by the Non-Partisan Association and the Green Party of Vancouver, the minority council voted for the mayor to send a letter to the province requesting that B.C. withdraw the school tax surcharge. Even though Mayor Kennedy Stewart voted against the motion, he sent the letter as directed by council.

Other municipalities have also raised concerns. Even those who may not be significantly affected now realize that this precedent will affect them in the future, either through inflation over time or through criteria adjustments that cover more properties. Pressure is mounting on the province to withdraw this flawed, ideologically based scheme.

However, there is also the bad and the ugly in the 2019 city finances. The budget has now been approved by council, with significant increases that allow for implementation of the Vision policies and programs that are still in place.

New Coun. Sarah Kirby-Yung proposed to delay approving the budget until the first quarter of 2019, a reasonable request since it doesn’t have to be finalized until the spring. But under staff pressure, no extension for council review was granted.

So much for change. The Vision-appointed staff are still implementing the Vision agenda.

The city budget not only increases property taxes for residential, but also affects businesses. To counter this, the city is looking at potentially transferring 2% of the tax bur-den from business to residential, making housing even less affordable.

Derek Holloway, a retired BC Assessment senior appraiser, thinks the tax shift could be entirely unnecessary if large industrial-commercial-investment properties were properly assessed each year. He suggests that in the past, many trophy properties like Oakridge Centre and other mixed-use sites have been substantially underassessed, often because B.C.’s Assessment Act is toothless when it comes to facilitating access to critical valuation information on these large properties.

Just a few underassessed
billion-dollar properties can dramatically shift the tax bur-den to many smaller commercial and residential properties.

Even land banking of typical commercial development sites that are demolished and covered with planter boxes to reassess for substantial property tax reductions is subsidized by small businesses.

The new city council has shown an interest in working with the province to address these issues on the B.C. surtax and commercial property taxes.

However, as the Vision-appointed staff continue to effect policies that the public voted against, the new council needs to consider alternatives at the staff level to better support council’s efforts to reflect the outcome of the election. •

Elizabeth Murphy ([email protected]) is a private-sector project manager and was formerly a property development officer for the City of Vancouver’s housing and properties department and for BC Housing.