Homeowners paying too much in school taxes, experts say
Vancouver subsidizing other districts in B.C. and situation expected to worsen
Real estate and taxation experts say Vancouverites are being “hosed” because homeowners in the city pay a disproportionately high amount of provincial school tax.
In fact, the amount of school tax collected from Vancouver exceeds the school district’s annual expenditures, and it’s a situation that’s likely to get worse when planned changes to school tax rates on high-valued properties kick in next year.
“Vancouver is heavily subsidizing all the other school districts in the province,” said Paul Sullivan, head of the property tax division at the consulting firm Burgess, Cawley, Sullivan and Associates. “Everybody’s getting hosed.”
School tax is charged on a property owner’s annual tax notice, and the rate is based on the number of homes and the total residential assessed value in the district. In 2017, the rates ranged from 0.8 per cent (West Vancouver) to 5.2 per cent ( Vancouver Island West).
According to the B.C. government’s website, “You pay school tax to share in the cost of providing education in B.C.”
If that’s the case, Sullivan said, Vancouver is paying too much.
A report prepared by Cascadia Partners for Metro Vancouver last year showed that in 2016, $557.2 million in gross school property taxes were collected from Vancouver, while the district’s expenditures were slightly over $500 million. That means Vancouver’s school property tax contribution was 111.4 per cent.
Vancouver is the only school district where the school taxes collected in the member municipality or municipalities cover the district’s expenditures.
For example, school taxes collected in Surrey cover just 37.5 per cent of the budget in the province’s largest and fastest growing school district.
“We are the only ones that are paying our school budget and we’re actually overpaying it by 11 per cent,” Sullivan said. “They don’t need to recover this from Vancouver, they need to recover it from other municipalities that are not even covering their costs of running their schools.”
He said the situation is about to get worse, because a school tax increase introduced in the B.C. budget would see owners of highvalued homes taxed an additional 0.2 per cent on the portion of property valued above $3 million and 0.4 per cent on the portion above $4 million starting next year.
Though the increased school tax will apply to about two per cent of all homes in B.C., many are located in Vancouver.
Twenty-four per cent of homes in Vancouver are assessed at more than $3 million.
Andrey Pavlov, a finance professor at Simon Fraser University’s Beedie School of Business, said the idea of Vancouver’s school tax money subsidizing the rest of the province is “very unfair.”
“There should be some correlation between taxes paid and money spent because this is yet another huge transfer from one region to another,” Pavlov said.
However, he said the school tax is misleading because despite the name and the description on the government website, the money goes into general revenue so it’s difficult to track how it is spent.
There have been mixed messages from the province about where the money from the school tax increase will go — the Insurance Corp. of B.C., housing and seismic upgrades to schools have all been suggested.
“If the school tax has nothing to do with schools then things are even worse, then the tax is labelled in a misleading way,” Pavlov said.
Both men suggested that the way school district budgets are funded should be reviewed, to make sure there is equity and accountability.