Every spring, homeowners across British Columbia receive a statement from their local government demanding payment for local and regional services, including elementary and secondary education.
The individual statements are complex enough. But with 30 cities and towns in the Fraseropolis area alone, all facing different economic circumstances and delivering services in different ways, and a wide range of property values within each jurisdiction, it’s close to impossible for the lone taxpayer to evaluate their own position in terms of fairness and value.
The Government of B.C. recently posted city-by-city 2015 property tax statistics on its website. I’ll venture a few obvious points, and even then there is guessing involved.
- Mayors and municipal councils take most of the political heat for property tax levels, but municipalities account for just 40 to 50 per cent of property taxation in the Lower Mainland. School districts and regional services such as sewer, water and transit eat up the rest.
- There is no evidence that larger cities are more efficient than smaller cities.
- The amount of property tax collected for each “representative house” varies from city to city. The City of Vancouver’s per-house tax is 50 to 60 per cent higher than the tax in Surrey, the outer Metro suburbs and the Fraser Valley. Is this fair? Hard to say. The ranking of cities resembles the ranking of average home values as reported by real estate boards in Greater Vancouver and the Fraser Valley; but the actual numbers are out of whack. Langley’s representative house has one-third the value of a representative house in Vancouver, but the owner pays two-thirds as much tax as the homeowner in Vancouver.
- Business development is a high priority for every city, but there is no evidence that success brings lower taxes for homeowners. In Burnaby, businesses pay a high share of total taxes, and homeowners carry the lowest share of the tax burden in the Lower Mainland, but they still pay relatively high taxes per representative house.
- The “total taxes per person” calculation reflects several variables: political decision-making on spending, the amount of money available from business and industrial sources (high in Vancouver and Burnaby), the relative number of renters, who pay taxes only indirectly and unconsciously through their landlords (high in Vancouver and Burnaby) and household size. The spread among cities here is not so wide, although Surrey, B.C.’s second-largest city, is a notable outlier on the low-tax side.
- School district trustees spend a lot of money without much public scrutiny, and the tax take varies widely from city to city. The 2015 school tax payment per representative house is about $2,000 in the City of Vancouver, $1,540 in Burnaby, $1,270 in Coquitlam and $1,045 in Langley Township. One possible measure of how the trustees are performing is to compare school costs with the cost of municipal services. In Vancouver, the school trustees collect 75 per cent as much money as City Hall; in Coquitlam, where school taxes are lower per house, the figure is 60 per cent; and in Langley Township, with even lower school taxes, the figure is 50 per cent.
The Canadian Federation of Independent Business posts periodic reports on spending by municipalities in B.C. Their 2014 review, as in other recent years, points out that municipal spending is growing faster than population growth. About half of this spending is covered by property taxes, with half coming from other sources, including an increasing share paid by property developers. The CFIB says spending be restrained. It offers little context on why this increase is taking place, except to say that wages and salaries may account for 60 per cent of the expenditure total. It makes no reference to tax pressure from other local agencies.
If municipal over-spending is really a problem, the obvious course of action is to ask citizens where they would like to cut back. It may be that local officials are greedy and incompetent, or it may be that residents are demanding more services. Maybe we have bigger and better recreation centres. Maybe we have more building inspectors, after the crazy decades of the 1980s and ’90s when developers built leaky condos and imposed billions of dollars in retrofitting costs on the people who bought them. Sewers, water lines and streets are ageing, especially in the inner suburbs, and upkeep and replacement costs are rising. Can we afford to cancel or defer spending on these items?
The CFIB does not propose that a round of consultations with the public. It calls, instead, for the effective abolition of community self-government. The B.C. government would put an across-the-board cap on municipal spending, regardless of past performance or local circumstances. Government would also freeze municipal wages and salaries for an indefinite period. The main justification for asking the Province to take this political leap is that it would reduce one part of the property tax bill for small business, resulting in fewer business failures — although the report offers no estimate of how many business failures are caused by property taxation, or how many could be avoided.
It’s clear that businesses would like to pay lower taxes. However, jurisdictions with relatively low taxes to not necessarily attract business. In my own community of Maple Ridge, for example, the inflow of business investment is slow and homeowners are left to carry 79 per cent of the local tax burden, compared with 51 per cent in the higher-tax jurisdiction of Vancouver. Access to markets and access to labour seem to be much more important considerations in choosing business location.
The CFIB report also states that a B.C. family of four, could have saved, on average, $8,356 over the period from 2000 through 2012 — something like the cost of running a compact car for a single year — if municipalities had kept spending in line with population growth and inflation. Somebody would have saved something, no argument there, but the “average family” is a hypothetical construct in a world where every jurisdiction (151 B.C. municipalities) behaves differently. And the figure seems fishy even as a generality, judging from the fragmentary information provided; it seems perversely to ignore the financial contribution that business makes to running our cities and towns. It also ignores the position of renters, whose level of benefit from reduced municipal spending is unknowable.