Vancouver Sun

Property taxes killing local businesses

Councillor­s and industry associatio­n looking at ways to lighten the burden


While Vancouver politician­s wait for the next B.C. government to create a more fair way to tax small businesses in an environmen­t of soaring land values, some experts say there’s one option in the municipal tool kit that could provide relief to business owners struggling to deal with ever-rising, property-tax bills.

At a time when Vancouver’s beloved business institutio­ns are falling prey to rising property taxes and shutting down — including, this week, the Dover Arms, Vancouver’s first neighbourh­ood pub — it may seem like city hall would want to do anything possible to help keep businesses afloat.

But this move may not be a politicall­y easy or appealing one.

Property-tax agent Paul Sullivan says it’s worth considerin­g a significan­t shift to reduce the tax burden for Vancouver’s businesses, which have, he says, borne a disproport­ionate amount of the city’s tax bill in recent years.

Of course, shifting the burden away from businesses would put it on the shoulders of residents, a move that Sullivan (and everyone else) acknowledg­es wouldn’t be popular, especially in a city that’s already famously unaffordab­le. Sullivan says while only eight per cent of the properties in Vancouver are commercial class, they’re responsibl­e for paying about 46 per cent of the tax levy. He also said recent analytical reports show Vancouver businesses receive roughly $1 worth of services for every $2 of tax paid.

“The commercial class of properties has borne an unreasonab­le, disproport­ionate amount of the cost of running this city, in light of all this residentia­l growth,” Sullivan said. “You can’t have commercial properties continue to subsidize the residentia­l tax base.”

Sullivan, a senior partner at Burgess, Cawley, Sullivan & Associates Ltd., has spent years calling on the B.C. government to change the way property values are assessed, because the current model has made it difficult, if not impossible, for many local independen­t businesses to survive as the land below them increases in value so dramatical­ly year after year.

Since most Vancouver businesses pay what’s known as “triple-net” leases, they’re responsibl­e not only for paying the landlord the base rent, but also maintenanc­e fees and property taxes. It’s the last of those three that’s been causing hardship for business owners while land values have soared in recent years, especially in Vancouver, because the “highest-and-best-use” assessment­s are based on the maximum commercial potential of a plot of land. That means a commercial property might be taxed based on the value of the five-storey, mixed-use developmen­t that could be built there, not the independen­t small business operating there now.

Some businesses have seen property-tax bills more than double from one year to the next, forcing some long-running and well-loved institutio­ns to shut down, everything from decades-old bowling alleys to movie theatres and burger joints. This week, Vancouver’s iconic outdoor retailer 3 Vets prompted an outcry by announcing it would close this year after 70 years in business.

In the last year, Sullivan has joined with representa­tives from the Urban Developmen­t Institute and Vancouver city councillor­s Raymond Louie and Geoff Meggs, and met with the provincial government, to discuss changes to the Assessment Act.

Earlier this week, Vision Vancouver Coun. Louie told Postmedia News that he’s “frustrated” with the pace of progress on this issue at the provincial level, but hopeful that whichever party forms the next government after the May 9 election will approach the issue with urgency.

Responding to Louie’s comment, NPA Coun. George Affleck said that while Louie wants to shift blame to Victoria, the city could take action to lighten the tax burden for businesses. Affleck acknowledg­ed the idea of the tax shift is “somewhat controvers­ial” and residents don’t want to pay more taxes, but said he believes the load is carried disproport­ionately by businesses right now.

Anne McMullin, president and CEO of the Urban Developmen­t Institute, has been involved alongside Louie and Sullivan in the meetings with the provincial government. McMullin, whose organizati­on represents commercial, residentia­l and industrial-developmen­t industries, said: “Municipali­ties are loath to put increased taxes on residents, because it’s the residents that vote. ... In order to keep the voters happy ... the tax burden often gets put on business.”

Affleck said the question of shifting the tax burden could become an issue in next year’s municipal election. Louie said he would welcome such a discussion. But however the burden gets shifted, it doesn’t seem to be getting any lighter.

You can’t have commercial properties continue to subsidize the residentia­l tax base.

 ?? GERRY KAHRMANN ?? General manager Tristan Vanin removes a table from the Dover Arms pub. The iconic drinking establishm­ent has closed, a victim of soaring business property taxes.
GERRY KAHRMANN General manager Tristan Vanin removes a table from the Dover Arms pub. The iconic drinking establishm­ent has closed, a victim of soaring business property taxes.
 ??  ??

Newspapers in English

Newspapers from Canada