Business tax fix could bring relief to BC small businesses

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Small business groups say they are encouraged by new provincial legislation intended to provide relief from huge property tax bills, but there are concerns the changes may not come in time for fiscal 2023.

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The bill would allow city councils to voluntarily offer tax relief on commercial properties if taxes suddenly increase based on the development potential of space on the property.

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Jude Kusnierz, CEO of Beaumont Studios, a Vancouver-based nonprofit that has faced a 300 percent increase in property taxes in the span of five years, said she’s not confident the tax relief it will come fast enough to protect the group from a big jump in property taxes in 2023.

“At the end of the day, I’m hopeful, but I’m worried it’s too little too late,” said Kusnierz, who said the nonprofit is indebted to the owner who temporarily postponed the tax increases.

Kusnierz, on behalf of Beaumont Studios and five other arts groups, recently sent a “letter of desperation” to the city of Vancouver requesting immediate action on an issue that has forced some nonprofits and small businesses to close their doors. .

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The problem arose because properties are assessed and taxed not for their current use, but for their “highest and best use,” which in many cases could be a new multi-story condominium building with commercial space on the ground floor.

That means some family-owned businesses operating out of old low-rise buildings on increasingly expensive land have seen their property taxes double or triple in just a few years.

When property taxes increase on a large commercial building, the tenants, rather than the property owner, are the ones paying the taxes. But most small businesses have a “triple net” lease, which includes rent, maintenance fees, and property taxes.

BC Finance Minister Selina Robinson said the legislation is a direct response to concerns raised by small business owners and non-profit groups since 2010. The province is working with municipalities to ensure the relief tax takes effect next year, he said.

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the Municipal Affairs (Property Taxes) Bylaws Amendment Act it was introduced in the legislature on Monday and underwent a second reading on Tuesday.

“We recognize that (the legislation) is new, so we are increasing support for municipalities so they can act quickly and provide help as needed,” Robinson told Postmedia on Tuesday. “We work closely with the municipalities that said, ‘We can do this.’ ”

Vancouver Mayor Kennedy Stewart said in a statement that he is pleased with the proposed legislation, which gives municipalities flexibility to provide tax relief on a case-by-case basis.

Stewart, who pushed the province to make the reforms, said that depending on when the legislation receives royal approval, “it could be implemented as early as 2023 to provide immediate relief to eligible properties.”

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Paul Sullivan, a senior partner at Vancouver real estate consultancy Burgess Cawley Sullivan and Associates, was skeptical of that promise.

He said municipal governments have an Oct. 31 deadline to make decisions that would affect fiscal year 2023. Municipal elections on Oct. 15 are another hurdle, he said.

“I am extremely skeptical about the possibility of a bill passing so quickly, holding an election and passing a statute in the City of Vancouver on one of the most contentious issues we have been dealing with for over a decade,” Sullivan said. . “We are already looking forward to fiscal year 2023.”

Sullivan, who has spent years advising the government on the issue, said the business community was looking to the province for leadership.

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Instead, the province has “returned the potato to the municipalities,” Sullivan said, “because they don’t want to deal with the problem.”

Robinson rejected that argument, saying that “municipalities know what their communities need,” so it would not have been effective to “maintain” the same tax relief measures throughout the province.

Annie Dormuth, director of BC provincial affairs for the Canadian Federation of Independent Businesses, said the legislation’s intent is good, but small businesses still face significant uncertainty.

Because the tax relief measures are not mandatory, Dormuth said that leaves the discretion to municipalities, who bear the financial impact of any tax breaks.

“So there is a lot of uncertainty as to whether or not this will be an effective tool and whether or not small businesses will feel real property tax relief at the base level,” he said.

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Fiona Famulak, executive director of the BC Chamber of Commerce, welcomed the proposed tax reforms, saying that in addition to drastic increases in assessed value, businesses are also facing higher inflation, higher interest rates and costs. higher jobs.

“We are pleased that the provincial government is taking steps to address this issue by giving municipalities the ability to provide relief to small businesses and nonprofits through new tax rate flexibility,” Famulak said in an email. a statement.

BC Liberal Leader Kevin Falcon said he supports the proposed legislation, but noted opposition House Leader Todd Stone has spent years pushing for such a tax fix through a bill. of private members presented five times in the last five years. The bill was not supported by the NDP government.

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— with Dan Fumano archive

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