Passing on tax burden
Dear Editor: While attending the City of Penticton’s infrastructure open house on Nov. 26, it was wonderful that atrocious policies such as eliminating economic incentives and abating taxes made it to the list of ideas being considered to fund the infrastructure deficit.
One staff member’s sales pitch was providing abatements of taxes for new development in targeted “economic incentive zones,” based on his discussions with developers is a good idea. If giving developers of new property a tax holiday is such a good idea, why don’t school boards and other levels of government such as the Regional District of Okanagan Similkameen jump on the tax abatement/exemption wagon?
Temporarily abating taxes unfairly forces every other resident and business to pay for police, fire, street cleaning, council honorariums, etc.
A key principle in property assessment and taxation systems throughout the world is that all property is subject to assessment and taxation. However, every nation usually provides some exemptions for property owned or used by organizations providing services related to government, education, charity, religion, culture and historic preservation.
Some economic development advocates preach about the advantages of tax abatements for targeted economic development and growth. Yet, few, if any, econometric studies demonstrate a clear correlation between tax abatements and business location decisions. There are even fewer studies that use independent, objective and unbiased data to support tax abatements.
Leading organizations such as the International Association of Assessing Officers discourage abatements due to unintended consequences and the Lincoln Institute of Land Policy as recently as 2014 confirmed that tax abatements for economic development probably don’t deliver the value intended.
In Penticton, other than the benefactors of tax abatements, who really buys the concept that a hotel expansion, constructing a new warehouse or several new luxury lakefront condominiums need temporary tax subsidies? It’s simply unfair to pass the tax burden for essential public services onto every other property owner, resident and business owner that still pay their full taxes.
Far better principles limit exemptions and abatements based on social values and unquestionable public benefits. Tax abatements and exemptions should be strictly limited to:
• advancing charitable and benevolent purposes,
• recognizing volunteer and fundraising components of ‘’not for profit’ organizations,
• advancing youth programs and community care for the disadvantaged, and
• providing appropriate access to non-profit facilities and programs.
Principles like these get lost in using tax abatements for economic development and incentives that only benefit individual property owners and developers. Wayne Llewellyn
Penticton