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Municipal tax gap remains a burden

The gap between what businesses and homeowners pay in municipal taxes is narrowing across British Columbia, but there is still a long way to go, says a business organization.
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Oak Bay had the lowest tax gap in Greater Victoria at 1.79.

The gap between what businesses and homeowners pay in municipal taxes is narrowing across British Columbia, but there is still a long way to go, says a business organization.

North Saanich topped the list of the province’s 161 municipalities with the highest gap, the Canadian Federation of Independent Business said in its report released Tuesday. But North Saanich is also among the top five municipalities with the largest decrease in its gap between 2003 and 2013.

The report ranks all B.C. municipalities. A gap of one means commercial and residential properties pay the same amount. A gap of two means a commercial property pays two times as much as a homeowner.

The North Saanich tax gap is 5.20. Oak Bay had the lowest tax gap in Greater Victoria at 1.79.

In 1990, B.C.’s average gap was 1.8. It increased to 2.93 by 2008. It has since dropped to 2.65.

The gap between the rate charged by municipalities to homeowners and businesses is a long-standing concern of business groups in B.C. “These property tax gaps are highly unfair for small business,” said Richard Truscott, director of CFIB provincial affairs for Alberta and B.C. “The reason for the imbalance is simple: votes. As municipalities grow and citizens demand more services, there’s less hissing, and fewer votes to lose, if the politicians dump more and more of the tax burden on the shoulders of business owners.

“With a municipal election just around the corner, it’s the perfect time to be taking about this issue.”

The gap brings “significant added financial stress on small businesses, most of which operate in highly competitive markets and thin margins,” the CFIB said. Higher taxes can impact the success or even survival of small businesses.

This is small business week in B.C. where 382,200 businesses have 50 or fewer employees and represent the vast majority of companies in this province.

Although the gap has declined, municipalities levy three to five times more tax on commercial property than on a residential property with the same assessed value, the report said.