Mayoral candidate pitches new tax rate
Move would keep small businesses from paying too much property tax: Sylvester
Vancouver mayoral hopeful Shauna Sylvester has a proposal she says could provide relief for the city’s small businesses struggling with ever-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 various 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 has been discussing the idea with various people recently, including, just in the last week, the former chair of B.C. Assessment, and a provincial cabinet minister.
“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 that would 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,” Sullivan said. “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 receive different tax treatment.
“I want to put the emphasis on local business, if there’s a way within the assessment category to say ‘small and local,’” she said.
“But that needs some work, it needs some thinking through.”
Amy Robinson, executive director of LOCO B.C., an organization representing the independent business community, said tax reform is needed because recent studies have shown Vancouver businesses pay a higher portion of the property tax burden than other Canadian cities, as compared with residents.
However, Robinson said, Sylvester’s idea about a new category could face a lot of pushback from the business community.
“I’d like to see the city address things that affect all businesses first,” Robinson said, providing the example of reducing red tape at city hall’s permitting processes. “Then there would be no perceived unfairness in terms of how it’s applied.”
Robinson, whose group is inviting mayoral and council candidates to a forum next Tuesday focused on small-business issues, said: “There’s a risk of pushback. Trying to get that kind of thing moved forward could be a bureaucratic nightmare.” dfumano@postmedia.com