Could candidate’s tax idea work?
Plan for separate mill rate on ‘small, local businesses’ met with skepticism
Vancouver mayoral hopeful Shauna Sylvester has a proposal she says could provide relief for the city’s small businesses struggling with rising property taxes.
But while many in the business community have long called for tax reform, some have questions about the details of Sylvester’s idea.
At campaign events, including Sunday’s candidates’ town hall in Chinatown, Sylvester has raised her proposal to look at creating a new subcategory for small, local businesses so they could pay a lower property tax rate.
“Every business is categorized as commercial, so we’ve got the Amazons in the same place as the health-food store on Commercial Drive,” Sylvester said recently. “We need to create a new category in our assessment rolls, and we need to apply that category and give them a different mill rate.”
Most businesses in Vancouver pay what’s known as triple-net leases, meaning tenants are responsible not only for paying the landlord the rent, but also maintenance fees and property taxes. Typically, when the assessed value goes up dramatically for a big multi-tenant commercial building, the property owner isn’t the one on the hook for the bill — it’s the tenants.
Sylvester, who previously sat on the B.C. Assessment Board and the Downtown Vancouver Business Improvement Association, said she’s been discussing the idea with various people
“I’m really trying to do the work to see if this could happen,” she said. “So then we just have to look at the financial implications, and what would that mean, and how many would fit into this category.”
But property tax agent Paul Sullivan said while the idea is “not without merit,” there are some challenges.
“Our community retailers and local independent business are paying too much,” said Sullivan, a senior partner with Burgess, Cawley, Sullivan & Associates. “So from that perspective, it’s good. The difficulty with it, like so many other propositions around a different class, is how are we going to define it? How are we going to define what a local independent business is? Is it square feet? Number of stores, number of employees, volume of sales?
“It gets complicated. And one of the biggest difficulties is if we put a cap on it — say, the size or the number of employees or the revenue level — we’re stymying business. We’re giving them a reason not to grow and flourish and employ more people and become a bigger part of a sustained long-term community. We’re saying: ‘Don’t get bigger than that or we’re going to tax you more.’ And that’s what I don’t like about it.”
Sylvester said details would need to be worked out around defining what constitutes a locally owned small business, but she pointed to the precedent in the federal income tax system, where small businesses are treated different.
We’ve got the Amazons in the same place as the health-food store on Commercial Drive.”
Shauna Sylvester