Two new studies are calling into question Burnaby’s taxing practices on local businesses, saying businesses pay far more than residents and account for an increasing amount of tax revenue.
The Fraser Institute – a public policy think tank – recently compared finances between 17 Metro Vancouver municipalities while the Canadian Federation of Independent Businesses tackled the disparity between how much residents and businesses pay in property tax.
Looking at data from 2002 to 2012, the Fraser Institute found that 52 per cent of Burnaby’s property tax revenue comes from businesses – the highest of all municipalities in the study.
“By relying too heavily on businesses for property tax revenue or maintaining uncompetitive tax rates, municipalities risk scaring off entrepreneurs and business people who consider property taxes when making decisions about whether to continue operations, whether to expand, or whether to start a business in the first place,” said Charles Lammam, the institute’s associate director of tax and fiscal policy and co-author of study.
Similarly, the CFIB’s new B.C. Property Tax Gap Report, which also looked at a decade of civic financial information, found that Burnaby businesses pay 4.22 times what residents pay in municipal taxes. Burnaby ranked third among the worst tax gap offenders in the Lower Mainland, behind Coquitlam (4.50) and Vancouver (4.33)
“Overall, British Columbia’s property tax system continues to be hugely unfair for small business,” said CFIB’s B.C. director Richard Truscott in a statement. “It appears even more unbalanced when you compare the taxes paid to the level of services actually received by residents versus businesses.”
On average, Burnaby residents pay $2,129, compared to $8,986 for businesses. Truscott argues that businesses are getting shafted with quadrupled taxes as municipal politicians solicit votes in the lead-up to their respective elections on Nov. 15.
“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.”
Noting that high property taxes can negatively impact small businesses, Truscott pointed to the cities of Toronto and Saskatoon, which have closed their tax gaps considerably in recent years, and suggested B.C. municipalities do the same to ensure small businesses can thrive in the future.
“Small businesses in B.C. are tired of being treated like a cash cow. We hope the mayors and councils elected across the province on Nov. 15 will do the sensible thing and commit to making the property tax system more fair and equitable for small business.”
On a more positive note, the Fraser Institute ranked Burnaby 13th in government spending by population, at $1,249 per person – just below the Metro Vancouver average of $1,384. However, it also noted that all municipalities in the study increased spending “well beyond the rate needed to accommodate for inflation and population growth.”
