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Courtenay council shifting taxes away from businesses
Courtenay council is taking some of the tax burden off business property owners in the city.
Councillors voted Wednesday to move the commercial multiplier — the factor by which the commercial class tax rate is greater than the residential class rate — down from 3.1 to 2.9, which shifts the tax burden toward residential.
Council approved an increase of three per cent in the revenue raised from property taxation. How that impacts taxpayers varies from class to class, based on the tax rate multiplier.
"You're shifting the tax load," explained Tillie Manthey, the city's director of financial services. "You're raising the same amount of money overall but determining where that load will be."
Council looked at various tax rate multiplier options and voted to reduce the commercial rate multiplier from 3.10 to 2.9 — back to the city's historic low of 2000-04.
This means the average commercial property assessed at $604,157 will see a 1.28-per-cent increase over 2010, or $77.22. The average residential property with an assessed value of $280,520 will see taxes increase 5.79 per cent or $53.46.
Coun. Larry Jangula questioned why one tax class has to affect the other and why the city couldn't leave the residential tax rate where it is and change the commercial rate, noting that debating the multiplier always puts council into a "huge dilemma."
"I really question where a small business uses three or four times the amount of services as a resident," he said. "I still feel we should be able to adjust the multiplier for businesses without affecting residential."
Jangula told council he has heard from some downtown business owners whose taxes have increased $4,000 in two years.
"I'm hearing that most people have pretty much had it with taxation, and they're at the top," he said.
Coun. Doug Hillian wondered why the city couldn't have different levels of commercial tax based on a business's size, but Manthey explained that the province legislates the taxation system, and local governments have no ability to vary from that system or within a class.
Coun. Murray Presley felt there was no justification for the multiplier except to make it easier to justify tax increases.
He also noted that higher taxes for business property owners comes back to hurt the city because businesses can't expand, and they could end up being forced to close.
Presley is the one who recommended moving to a multiplier of 2.9.
"I'd like to (decrease the multiplier) a lot more, but you need that transition in fairness to everybody," he said. "I'd like to see us decrease it more in the future."
Coun. Jon Ambler advocated for decreasing the multiplier as well, pointing out council has taken it as a strategic goal to work toward moving the multiplier downward.
He noted that the multiplier has decreased by 0.2 each year since 2009, and the change to 2.9 is in keeping with that steady, continuous movement.
Ambler felt council needed to take a bold step to support local businesses.
"If we lose a Fifth Street business, it's like a black tooth in a pretty smile," he said. "We need to make sure we avoid it."
Jangula was pleased to see council move in this direction.
"I'm concerned the burden is too high on small businesses, especially downtown," he said. "If we destroy our downtown, we'll never get it back. We are so fortunate to have a viable downtown. They're in a real squeeze, and I think we're giving them a sign we're listening. This is being prudent, and I think it's giving the message we are listening and trying to be fair."
Hillian raised concerns about the impact of tax increases regardless of the multiplier but was supportive.
"I certainly have concerns for the fact that whatever tax rate we set, it doesn't impact everyone equally," he said. "There are people for whom even the smallest increase is significant, in particular people on fixed incomes. Although this concerns me, I am struck by the plight of people in the business community."'
The city's proposed 2011-15 financial plan is posted on Courtenay's website at www.city.courtenay.bc.ca under financial services, and the public is being encouraged to review the budget documents and forward any feedback by April 15.
The proposed financial plan includes design work in 2011 for a proposed major renovation and expansion project at the Lewis Centre and a large number of capital projects related to roadways, sewer and water.
Council must adopt the financial plan bylaw no later than May 15.