B.C. cities counter business tax critics

UBCM warns of tough choices to lower corporate property tax rates

UBCM president Barbara Steele

B.C. cities are fighting back against years of repeated attacks from business lobby groups over municipal spending and taxation policies.

They’ve released their own analysis that concludes small business demands for lower tax rates would shift more of the tax burden to residential payers, resulting in a 14.5 per cent property tax hike for the average B.C. home, or an extra $230 per year.

The report by the Union of B.C. Municipalities (UBCM) counters a series of papers by the Canadian Federation of Independent Business (CFIB), rejecting claims of out-of-control civic spending.

“Municipalities are investing more in the areas that matter most to our communities,” said UBCM president Barbara Steele, a Surrey councillor. “Our operations are becoming more efficient.”

Spending is up primarily because of escalating police and firefighting costs and growing demand for recreational services, the report says, not from general government overhead.

It also notes federal and provincial governments are imposing higher costs on local taxpayers – through more onerous requirements to cut greenhouse gases, improve drinking water quality and clean up sewage discharges – often without enough accompanying financial aid.

Port Coquitlam Mayor Greg Moore, vice-president of the UBCM, said general government costs have on average declined over 20 years.

He rejected claims businesses don’t have enough say, noting three-quarters of mayors come from the private sector.

“There is excellent representation from local business,” he said.

The CFIB argued civic spending has grown twice as fast as the population and inflation combined.

It wants the province to force cities to cap business tax rates at no more than twice the rate residents pay, amounting to a significant cut in most cities.

Capping business rates at that ratio would “would lead to revenue shortfalls in almost every city, town and village,” the UBCM report warns.

CFIB vice-president Laura Jones said her organization has never argued for making up the difference by raising residential tax rates, adding cities should instead cut spending.

“They’re being a little bit intellectually dishonest in the way they’re positioning the study,” she said. “I think it’s a strategy to deflect attention away from the overspending thats’s going on.”

Jones did not name specific civic services to cut.

“I would look at wages and benefits of staff,” she said.

Total municipal compensation is 30 per cent above comparable pay levels in the private sector, Jones said, adding civic wages and benefits should be frozen until they get within five per cent of the private sector.

The UBCM study warns councils not to take such advice seriously, noting contracts are negotiated and can’t be arbitrarily imposed.

It also cautions that some critics who seek to cut non-core services define them as anything that can be delivered by private firms.

The report said that could apply to parts or all of recreation, transit, economic development, arts and culture, housing, garbage collection and perhaps other local services.

Some services like parks and recreation, where cities face growing demands, generate hard-to-quantify social dividends by keeping seniors and youth active, healthy and engaged, the report said.

Gregory Thomas, B.C. director of the Canadian Taxpayers Federation, said residential tax hikes to cover business cuts would be a “nightmare scenario” but argued cities can take a firm line in upcoming bargaining with their unions to cut costs.

“Public sector employees have been wildly successful at the bargaining table,” he said. “(Councils need to) spine up and take the employers’ side, take the taxpayers’ side in negotiations.”