Churches, educational institutions and philanthropic organizations are granted property-tax exemptions on the assumption that they are non-profit entities. The City of Victoria is considering taking away some exemptions in cases where the property is being used for commercial purposes.
Certainly, no one should be allowed to hide behind charitable status to avoid paying taxes while making a profit, but the city should approach this issue with flexibility and compassion, putting the spirit of the law ahead of the letter of the law.
If renting out its parking lot during the week allows a church to pay its utility bills and keep functioning, it might be better to let it be. Through outreach programs, youth groups and other activities, churches often contribute to the broader good. Their work relieves some of the pressure on social services and helps to keep crime down. Should they not be able to carry out this work, the burden could shift to the public sector.
Another example is the B.C. SPCA, which could lose 36 per cent of its tax exemption, adding more than $11,000 a year to its costs. It makes no sense to impose a hardship on a non-profit organization that performs functions for the public good.
If tax exemptions are reduced, some organizations could be subjected to further hardships, as the city is proposing to create a standalone utility to handle stormwater, which would mean a new utility fee. Handling of stormwa-ter is now covered by property taxes - which means nonprofits would not be exempted from the new fee.
Furthermore, reducing an exemption in Victoria would trigger tax liability to other agencies such as the Capital Regional District and the school board.
If the exemption enables an organization to achieve its fundamental purpose, the inclination should be to leave it alone. On the other hand, if the tax exemption enables a commercial activity to grow to the extent that the charitable purpose is secondary, the exemption should be adjusted accordingly.
It would be a headache trying to figure out how much a non-profit group should be allowed to make before it was determined to be more business than charity. But imposing a firm, by-the-numbers rule would create hardships for organizations already struggling to survive.
Acting mayor Chris Coleman admits it's a complex issue.
As soon as the issue of permissive tax exemption is opened up, he says, "it becomes apparent that it's way more painful in addressing it than people realize. I recognize that there are a lot of organizations that are dependent on a lowering of their taxes to carry on their business."
If the changes were implemented as outlined by city staff, it would alter municipal revenues by an estimated $256,000, not a substantial amount, and one that could easily be wiped out if the city has to assume some of the burdens now carried by nonprofit organizations.
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