It’s possible we’re moving into a very low property tax era?
Testy taxpayers in Esquimalt, Sidney and View Royal are smiling these days, after politicians recently approved near zero per cent residential tax increases. It may very well be an early sign of a broader trend of politicians finally listening to their paymasters and moderating their insatiable need for tax revenue.
After an increase in its federal Payment in Lieu of Taxes for the naval base, Esquimalt council increased taxes by only 0.5 per cent. View Royal agreed to 0.47 a few weeks ago and continues to run a trim administration for its suburban town of 10,400. Down the road in Sidney – probably encouraged by a high senior population on fixed income – councils set a rate of 0.66.
Many property owners and businesses are feeling the financial crunch and are fed up with excessive property tax increases. Those hikes also contribute to high rents and housing affordability in the region.
Property tax increases have outpaced inflation and population growth for the better part of 15 years, while increases in wages for many homeowners has been nominal.
There’s only one taxpayer out there and they are stressed: Last year, 7,000 homeowners deferred taxes in the region, property tax assessments increased as high as 40 per cent, many homeowners are finding themselves short of money, and charity giving has dropped for several years, according to various surveys.
If you need further convincing, consider that all major banks in Canada have just had their credit ratings downgraded a notch by Moody’s. The debt rating agency worries about high personal debt levels and soaring house prices. Higher interest rates on loans and stiffer mortgage rates may not be far behind.
Emptying a different pocket
Stress or not, local politicians usually don’t moderate property taxes or relinquish a tax dollar if they can find a way to empty a different pocket.
Some councils are handing off service delivery demands to the Capital Regional District: This year the operating budget escalated eight per cent and the capital budget an eye-popping 50 per cent, to fund 210 program areas. When the bills show up though it’s on the CRD part of your tax bill and that gets little scrutiny, if any.
The cost of delivering regional services by the CRD this year is $1,245 per capita for its 383,000 residents, a staggering 425 per cent more than residents of Metro Vancouver Regional District at $284 per capita for 2.46-million people. It’s a huge differential even when you consider the CRD operates the Capital Regional Hospital District with its consolidated budget of $62-million.
Some councils moved utility charges such as sewer and water out of the general tax bill to make increases less obvious and more palatable. Garbage collection fees, and most recently, a so-called rainwater tax has been added to the tax bill.
During the last few years some councils have moderated business property taxes, but most continue to pay a disproportionate burden effectively paid for by you and I through the cost of goods and services.
The commercial rate ratio – a multiple of residential rates that business pay – ranges from 2.0 in Central Saanich to a staggering 6.0 in North Saanich. Additionally, specific commercial designations such as utility or heavy industry may be pay even higher tax multiples.
Among the 13 regional jurisdictions all but Langford increased commercial rates in 2017, according to the Greater Victoria Chamber of Commerce. In growing Langford, council also committed to a 10-year program to reduce the business multiple from 2.95 to 2.5 on business properties.
The end of the mandate for current councils is next year, so taxpayers must again remind our agglomeration of 91 councilors to redouble their efforts to run more efficient and economical administrations. There’s no reason, for example, why politicians are hindering the consolidation of fire dispatch in the new South Island Dispatch Centre in Saanich.
Considering a low rate of inflation, an expanding tax base with a healthy economy, and escalating assessments, there are few compelling reasons for any municipality to bring in major tax hikes.
The biggest potential game changer for moderating property taxes is the iced report of the Capital Integrated Services and Governance Initiative (CISGI) ordered by the Liberals almost a year ago. Recommendations on how to deliver more efficient local government sit on a shelf at the Local Government Division of the Ministry of Community, Sport and Cultural Development buried from taxpayers who paid for it.
Disgruntled taxpayers will get their chance to hold local politicians to account on election day Oct. 20, 2018.