Proposed empty stores tax assailed by business groups
An advocacy group representing commercial landlords slammed Vancouver's proposed empty stores tax aimed at reducing shuttered businesses and revitalizing commercial streets, but which critics say could backfire.
Paul Sullivan, a property tax agent, said commercial landlords are already struggling with a challenging retail environment, increasing crime in some neighbourhoods, skyrocketing property taxes and red tape, yet are being scapegoated for rising vacancy rates.
“You can't blame property owners for an unattractive environment for retail,” said Sullivan, who is also co-chair of the Business Tax Alliance, a partnership of property tax agent company Ryan ULC and business improvement groups across the province. “It's divisive politics.”
On Tuesday, Vancouver city council approved an amendment tacked on by Mayor Kennedy Stewart to explore an empty storefront tax.
Kennedy is concerned by “atrocious” vacancy rates, which has surpassed 20 per cent in some neighbourhoods.
He said the tax will not penalize the majority of property owners, but will target speculators who sit on vacant properties while land values rise. He argued the tax could also force more supply on the market and possibly end up lowering rental rates.
But Sullivan said he's talked to major leasing agents in Vancouver and “they don't have anybody they know that's purposefully keeping their properties vacant. People don't do that. People have mortgages ... and need rent.”
The city's plan to explore an empty storefront tax drew an outcry from business groups and a lukewarm reaction from the provincial government, which needs to approve a change to legislation before Vancouver can impose the tax.
On Thursday, Finance Minister Selina Robinson said while the ministry wants to work with local governments to address issues facing their community, “in this case I think Vancouver still needs to do some more homework to determine what is at the root of this particular challenge, including working with local businesses.”
Neil Wyles, executive director of the Mount Pleasant Business Improvement Association, has seen vacancy rates creep up in his commercial district to about 14 per cent.
But he believes an empty stores tax is not the solution.
There's many reasons why a commercial property might be empty, he said. Some could be held up by city permits, while others in troubled neighbourhoods might have difficulty attracting tenants.
“It's not just a one-size if it's vacant, let's slap it with a tax,” Wyles said. “That's not a solution. There's always a story behind it.”
Wyles said the city should work on shortening waiting times for business permits or licences.
A 2020 report from LOCO B.C. found that the average wait time for a permit or license is 8.2 months, and pegged the cost of that delay at $721,000, factoring in broader economic losses like revenue loss and losses in employment and supplier sales.