Hands in your pockets, oh their hands in your pockets (again and again and again)

The business community of Prince Rupert has taken to the literary barricades, a little perturbed at the continually high rate of taxation of local small businesses compared to other locations in the province.

In a front page story in the Friday edition of the Daily News, a new study from the Canadian Federation of Independent Business (CFIB) is used extensively to highlight the tax inequalities within the city and with municipalities out of town.

With Businesses paying approximately 3.51 times more than property tax rate payers, which is well above the provincial average, aware of the city’s spending ways, they suggest that the city needs to get a better handle on its budgetary problems by controlling that spending and not increasing taxes.

They addressed the concerns of small business in the city with a letter to Prince Rupert Mayor Herb Pond, outlining the many concerns of the business community regarding their tax burden in the city.

Included in their findings is a thought of going to the province with a complaint should the various municipalities in BC, including Prince Rupert don’t soon consider a lessening of the burden on the business community.

RUPERT'S HIGH TAXES HURTING SMALL BUSINESS, SAYS GROUP
By Leanne Ritchie
The Daily News
Friday, February 09, 2007

The city of Prince Rupert is among the province’s major culprits when it comes to taxing small business at a higher rate than its residents.

According to a new study by the Canadian Federation of Independent Business (CFIB), B.C. businesses pay 2.86 times more property taxes than similarly assessed residential properties. This is up from an average gap of 2.42 three years ago.

In Prince Rupert, this gap is even larger. The average small business paid 2.41 times more property taxes than similarly assessed residential properties three years ago. In 2006, they paid 2.91 times the total property tax.

“We are not advocating they increase residential taxes,” said Laura Jones, vice-president, B.C. and Yukon, CFIB. “They can fix the problem by controlling their own spending.”

In Prince Rupert, a residential home owner whose home was valued at $175,000 in 2006 paid $2,359 in taxes, while a similarly valued business paid $6,864.69.

Property taxes include both municipal and provincial taxes. The municipal portion of Prince Rupert’s commercial tax is 3.51 times more than property taxes for similarly assessed residential properties, said Jones.

“This is well above the provincial average. Prince Rupert is definitely moving in the wrong direction.”

In a letter to Prince Rupert Mayor Herb Pond, the CFIB explains there is no justification for businesses to pay a higher mill rate than residents.

“Evidence suggests that businesses do not consume more services,” she said. “Further, small business have limited ability to pass high taxes on to consumers. Finally, the argument that businesses should pay more because they can deduct property taxes as an expense fails to recognize that property taxes are profit-insensitive.”

The CFIB first drew attention to the property tax gap back in 2003, encouraging municipal and provincial governments to address the disparity.

“Unduly burdening business is not fair and it’s not good economic policy. It affects all of us as businesses create jobs, contribute to charities and enrich the fabric of local communities,” said Jones.

“But it looks like most mayors, including the mayor of Prince Rupert, did not listen to us,” said Jones.

“If it gets much worse, we are going to call on the province to step in.”

Cities with the worst inequities are Coquitlam and Vancouver. For example, in Coquitlam, the owner of a residential property valued at $200,000 pays $1,260 in taxes while an equivalently valued business property pays 4.69 times that amount, or $5,904.

Prince Rupert’s business-to-residential ratio ranks alongside some of the province’s largest cities, such as Kamloops and Kelowna.

The city also has some of the highest residential tax rates in the province.

Concern has been expressed in the past that the city is correcting its commercial rate by transferring the costs on to residents.

Last year, for example, the city increased its spending by $516,000, an increase of 4.8 per cent in revenue.