Sep 26, 2012

Expert Panel on Business Taxation sides with local governments


Hundreds of mayors, municipal councilors and regional district directors are meeting this week in Victoria at the annual gathering of the Union of BC Municipalities. And not surprisingly, one of the major topics of discussion in the first three days has been the taxes local governments collect to provide their services.

The local government leaders heard some good news about their taxes that have been under attack.

In the past few years organizations like the Canadian Federation of Independent Business (CFIB) and the Canadian Taxpayers Federation have undertaken a frontal assault on local governments in BC. In the 2011 local elections the Taxpayers Federation got 90 candidates to sign a promise not to raise taxes.

The common line has been that local property taxes are out of control. They are rising irresponsibly and they are damaging business. They follow on from Catalyst Papers action in 2009 when they refused to pay their industrial property taxes to several communities.

The province listened closely to these complaints about local taxation.  Despite arguments that local governments were more regulated than any other government, BC created a new office of Municipal Auditor General.  So far this seems to be languishing at the appointment stage. The government also created an Expert Panel on Taxation and a separate Major Industrial Taxation Property Review. 

The Expert Panel has reported and this was the topic of discussion on the first day of the UBCM.

Port Coquitlam mayor Greg Moore told the assembled local government leaders that the report of the Expert Panel had accepted virtually all of the positions put forward by the UBCM.  Among the key points relating to local governments in the report were:

  • Municipal taxes have little effect on business competitiveness
  • BC municipal taxes are low compared to other provinces
  • Business property taxes are higher than residential property taxes in most jurisdictions
  • Municipal costs are rising faster than inflation but this is often due to issues beyond the control of the local government such as downloading of costs from provincial and federal governments..

 Moore gave examples of downloading that had increased taxes. These included dikes, cuts in library grants, policing policy, fire fighting, first responders, and new regulations governing water and sewer water and sewer.

Later in the afternoon Professor Harry Kitchen, an Ontario economist specializing in local government, reported with more cheerful news for mayors and councilors. BC, he told them, had lower property taxes than most other provinces. Kitchen also identified other jurisdiction where local governments had access to other taxes including sales and income tax.

One wonderfully ironic aspect of this is that one of the members of the Expert Panel on Business Taxation was Laura Jones, a senior vice president of the Canadian Federation of Independent Business.  It must have been painful to have her named attached to this report after railing against local taxes for so long.


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