Vancouver council approves 2% tax shift from businesses to homeowners

WATCH: Vancouverites react to shift in tax burden

A A Vancouver businesses being squeezed by the city’s high real estate prices are getting some relief from City Hall.

On Monday, council voted to shift 2 per cent of the tax burden from businesses to homeowners.

This comes after City staff recommended against the shift, warning it will add a burden to homeowners, and would benefit large corporations that don’t need the help, along with small businesses.

Homeowners have also not had the chance to weigh in on the shift.

However, councillors like Sarah Kirby-Yung say local small businesses need to be kept alive.

“I think that they needed immediate relief,” she said. “We have businesses that are closing down, that are moving out of our neighbourhoods and what we want to see is complete communities across the city.”

The change will be phased in over three years, starting with a 1 per cent shift in May.

Council asked staff to explore the idea and its consequences back in December, as skyrocketing property values left some small business owners facing tax bills that doubled in just a couple of years.

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Businesses occupy just seven per cent of properties in the city, but are responsible for 45 per cent of Vancouver’s tax bill. Businesses that don’t own their properties are still hit, because most commercial leases pass the tax bill on to the tenant.

Small business owners say something needs to be done, and soon.

Shelly Klassen, owner of Blushing Boutique on Richards Street, told Global News her taxes have doubled in five years.

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“It’s really affected our business in a negative way. Our sales have not doubled, unfortunately. So it’s taken away from many things such as my advertising budget or my ability to get new inventory,” she said.

“If small businesses, local businesses are important to you, you can’t keep increasing taxes like this. It’s putting us right out of the market.”

Blaine McNamee, owner of Rufus Guitars, said his taxes have doubled in two years due to “pure speculation” and a property assessment that’s based on what could be done with his property, not what the building is actually worth.

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But McNamee said shifting taxes from businesses to homeowners could unfairly penalize already struggling residents, and argued the city needs to get creative with its tax solution.

“If we could take some of the tax off existing businesses, especially businesses that have old buildings that realistically aren’t worth $10 million, if we could take some of that tax and transfer it to new developments to cover that, I think it would encourage young entrepreneurs to stay in the city,” he said.

“It would make it more affordable to open businesses and it wouldn’t put such a burden on local business owners.”

The Canadian Taxpayers’ Federation says the solution isn’t to put the burden on homeowners, but rather for the provincial government to change the way commercial properties are assessed.

“Instead of taxing people based on what a building might be, just tax it on what it is. Don’t tax it on its potential, tax it on what it actually, physically is,” said spokesperson Kris Sims.

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Business Improvement Associations made their case to council Monday, with the West Broadway BIA telling councillors that it had seen 75 businesses close since 2015 — many citing rising tax bills.

Paul Sullivan, a property tax consultant  with Burgess, Cawley, Sullivan and Associates, told CKNW’s Lynda Steele Show part of the problem now rests on the provincial government’s shoulders.

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“Now, council is worried about shifting the tax burden to residents from business because the NDP’s Carole James has loaded up our residents already with $100 million more already of additional school tax,” he said.

“NDP is attacking the municipal finance system to the point where they’ve removed the tools and ability to look after our own affairs.”

The potential tax shift could cost residents between $25 to $80 per year, but Sullivan said that could result in a difference of $500 to $600 in lower taxes for a business.

-With files from Tanya Beja