Victoria churches and other non-profits could lose anywhere from a small portion to all of their city tax exemptions under proposed changes to taxation policies.
City staff are recommending the city adopt a "commercial activity" definition in which portions of properties used principally for revenue generation - such as thrift stores or church parking lots rented at commercial rates - deemed to be in competition with for-profit businesses would lose that portion of their permissive tax exemption.
For the organizations themselves, the change could mean a lot or a little.
For example, the Glad Tidings Pentecostal Church could lose 92.7 per cent of its municipal permissive tax forgiveness, which translates into $46,924 a year. The Mustard Seed Street Church could lose 25 per cent of its municipal tax forgiveness, or about $999 a year, and the B.C. SPCA could lose 36 per cent - $11,642.
The recommended changes are designed to address issues of "affordability and fairness," said acting mayor Chris Coleman.
"The issue of permissive tax exemptions comes up about every four years and, as soon as you open it up, it becomes apparent that it's way more painful in addressing it than people realize," Coleman said.
"I recognize there are a lot of organizations that are dependent on a lowering of their taxes to carry on their business."
If implemented, the effect on churches and nonprofits would be higher than the estimated added revenue of $256,000 in new taxes. The change would trigger payment of applicable taxes to other agencies, such the Capital Regional District and school board, bringing the total tax effect on those organizations to about $418,000.
Not every church parking lot would be taxed, Coleman said.
"There are certain houses of faith that have parking lots where they subcontract that use during the week to Robbins or somebody. That becomes a commercial entity, which [according to most opinions] should be taxed because it's a commercial entity leading to a revenue stream," Coleman said.
"Then there are other parking lots with houses of faith that are just bare land that they use on the weekend and then sit virtually vacant during the week."
Churches, hospitals, libraries and educational institutions are exempt from property taxes under the provincial Community Charter. Municipalities can provide permissive tax exemptions to charitable, philanthropic or non-profit organizations; properties owned by other local authorities or regional districts; land surrounding churches along with church halls; land surrounding seniors' homes, hospitals or private schools; or properties owned by athletic or service clubs.
City staff also are recommending the 21 grandfathered properties owned by the organizations - including the United Way of Greater Victoria, the Canadian Cancer Society and the CNIB - have their tax-free status pared back by $284,781 over five years.
That would bring the tax exemption for the 21 in line with current city policies.
The staff report says if the grandfathering provisions are removed, the city's permissive tax exemptions would drop to 1.40 per cent from 1.63 per cent of total tax revenue. It recommends the city then cap permissive tax exemptions at 1.60 per cent of total tax revenues to make room for new applicants.
"You have to address the grandfathered issue or you close the door to any newcomers," Coleman said.
City communications director Katie Josephson said no changes would be made until 2014 at the earliest and that all property owners would be consulted. bcleverley@timescolonist.com
