Vancouver council votes to shift 2% of businesses' property tax to homeowners

Homeowners in Vancouver can expect to see a slight increase on their property tax notices over the next few years.

Monday night, city council voted to shift two per cent of property taxes from businesses to residences over the next three years, with the aim of providing some relief for the city's small businesses.

In May, one per cent will be shifted to homeowners, followed by half a per cent transfer of the tax for the next two years.

The motion was only narrowly approved, with the vote 6-5 in favour. Councillors Colleen Hardwick, Jean Swanson, Christine Boyle and Melissa De Genova, as well as Mayor Kennedy Stewart, voted against.

City staff recommended against the shift in a report presented Monday night, after it had been instructed in December to explore how it could help small businesses.

"A blanket two per cent tax shift does not effectively target the [approximately] 21 per cent of commercial properties impacted by assessment volatility arising from development potential," the report said in part.

"Instead, it reduces property tax for all commercial properties without considering whether or not they need any tax relief," said the report.

'There's an unfairness here'

Charles Gauthier, executive director of the Downtown Business Improvement Association, says Vancouver's small business community has been struggling under high property taxes for a long time.

The tax shift, he says, is a welcome step in the right direction considering businesses are responsible for 45 per cent of Vancouver's property tax bill, yet make up only seven per cent of all properties.

"There's an unfairness here and inequity that's been going on for decades in this city," said Gauthier.

He adds that on a $1 million property, the tax increase is expected to cost the homeowner an extra $24 for the first year. 

Who really benefits?

Coun. Christine Boyle cast one of the five votes again the tax shift, citing concerns from experts that it doesn't actually achieve its intended goal of helping small businesses.

"We heard pretty clearly … that what we need is a more targeted approach and this whole tax shift gives a lot of benefit to businesses that don't need it," she said.

During presentations from experts, she says she learned that a business like Walmart would save almost $15,000 a year, while a small business such as Heartbreaker Salon, where Boyle says she gets her hair cut, would save around $200.

She says the city should use its tools in a focused way to benefit small businesses, like implementing a split assessment.

Right now, businesses are taxed based on the property's market value, which means the 3,000 commercial properties deemed under-developed in Vancouver pay taxes assessed from the overall development potential.

"Council could define eligible properties for "split assessment", set a lower tax rate (compared to commercial) for the development potential, and limit the duration of such tax relief," according to the staff report.

City staff expects to report on the effectiveness of split assessments in time for the 2020 tax year.