Tax reform fails to ease burden on homeowners, says watchdog

Penticton city council told new system favours businesses excessively

The streamlined system for calculating property taxes approved by Penticton city council Tuesday does little to address underlying concerns about what some see as an unfair burden placed on residential owners, according to a local watchdog.

Council adopted a new “revenue neutral” approach to calculating property taxes that is meant to smooth out big increases as a result of rising residential assessments.

However, it still leaves the so-called tax multiplier — the spread between what residential and business owners pay — at a level favouring business to an extent nearly without parallel in Canada.

At present, the multiplier is 1.58, meaning that for every $1 a residential owner pays in property tax, a business owner pays $1.58.

Other communities charge businesses more, based on the assumption commercial properties produce income and are therefore able to pay more, but Penticton has for years been steadily lowering the ratio in a bid to attract and retain businesses.

A consultant’s report presented to council showed the average multiplier in B.C. is 2.74, while it’s 2.85 across major Canadian cities.

Penticton’s ratio is also the lowest in the Okanagan, with Vernon’s set at 2.73, West Kelowna at 2.33 and Kelowna at 2.3.

Frank Regehr, a retired public-sector accountant, told council Tuesday the new scheme does little to address that gap.

“We are starting at a point, really, where the residential taxpayer is paying a higher portion of taxation than virtually any place in British Columbia,” said Regehr.

Mayor Andrew Jakubeit responded that under the new tax system, the business multiplier is set to climb to 1.68 and will be reviewed annually.

“We need to make these changes gradu- ally,” explained Jakubeit.

“We went in little steps down just to minimize the impact on it, and converse- ly if there is a move to increase it, it would need to be done on a more gradual basis, and 10 basis points is still a large jump.”

Other than it not addressing the multiplier, the new tax regime represents a “really good improvement” on the existing system, said Regehr.