Vancouver wants to raise house property tax

According to this story on News 1130 Vancouver city council would like to double property tax for homeowners from the original four percent increase they recently decided on. This move is an effort to shift some of the tax burden from businesses in the city to homeowners.

Councillor Peter Ladner explained businesses have been paying six times what homeowners pay in property taxes. He said, “We have to catch up because we are hearing very clearly from the business community that our taxes are killing them, and they’re killing our neighbourhoods and they’re making it impossible for people to keep businesses going in the city.”

If this proposal goes through, local businesses would see very little or no increase in their tax bill. Their goal is to bring our current 6-1 ratio closer to the standard 3.5 to 1 ratio of other cities, and what better time to raise taxes then a housing boom?

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Warren
Warren
13 years ago

patriotz:And who would the winners and losers be in such a scenario? Think about it. Do you really think a Yaletown shoebox should pay the same taxes as a Pitt Meadows house?I think the winners would be the City of Vancouver, which are currently "the losers". The industrial land users, moving outside of the City, are surely paying less, yet its the city that keeps them in the area. Specific examples include the endless office parks and warehouses in Richmond.I've argued before that Vancouver residents pay a lot to keep things in "the City" going (Stanley Park, policing, etc), that arguable everyone in the GVRD makes use of.

patriotz
patriotz
13 years ago

California and Florida have such schemes.They are basically Ponzi schemes. As long as property values keep going up, cities can hit new buyers with all the tax increases. Old timers can vote for their favourite spending projects and not have their taxes go up. This actually encourages irresponsible government spending.As property values are now going down these Ponzi schemes are going to unravel.

the pope
the pope
13 years ago

Warren: I believe they mean 8%, a doubling of the original 4% increase, not a doubling of the current rate.Note some US jurisdictions have property taxes based upon what you pay for the home. So if you bought 30 years ago your tax is very small but if you bought recently you are screwed.I haven't heard of this system, thats an interesting way to do things..

patriotz
patriotz
13 years ago

When is this area going to wise up and amalgamate the GVRD?An amalgamated city would presumably have the same mill rate for all residences.And who would the winners and losers be in such a scenario? Think about it. Do you really think a Yaletown shoebox should pay the same taxes as a Pitt Meadows house?

Warren
Warren
13 years ago

Sorry do they mean doubling the increase or doubling the overall rate? 8% increase is reasonable, given the total imbalance with commercial taxes.When is this area going to wise up and amalgamate the GVRD?

jesse
jesse
13 years ago

"I can assure you that taxes do not rise and fall with assessments."Yes this is true. Note some US jurisdictions have property taxes based upon what you pay for the home. So if you bought 30 years ago your tax is very small but if you bought recently you are screwed.

patriotz
patriotz
13 years ago

it is scary to think how high the rates will have to climb during a bust, when assessments and therefore tax revenue will plummet.That's not the way it works. The city (and other local authorities) draw up their budgets, take the total assessment base, and then sets the mill rates (for that year, and that year only) to raise the budgeted amount.Property taxes are not a function of assessments, rather they are identical (within wiggle room) to budgeted spending. It's the mill rate that is the dependent variable.Of course the rate will have to rise if assessments fall, but that is completely irrelevant to the homeowner. What matters is the tax bill.I've been through several Vancouver RE cycles (including the biggie in the early 1980's) and I can assure you that taxes do not rise and fall with assessments.

canadidan
canadidan
13 years ago

If the government needs to increase taxes during a housing boom it is scary to think how high the rates will have to climb during a bust, when assessments and therefore tax revenue will plummet. Here are three options other than increasing the tax rate in the case of a bust in housing.1) The city goes deeply into debt. (Let our grandchildren pay for our excess.)2) Massive layoffs or salary reductions. (More people needing to get out from under their mortgages.)3) Service reductions, increased user fees. (Best place in the world to live despite the garbage in the streets?)Maybe the government should get its spending under control now while times are good and start planing for the inevitable economic down turn.

dosh
dosh
13 years ago

With a six to one ratio between business and homeowners a 4 or even 8% increase won't hurt the market at all, we're talking about a tiny increase when property values are growing by double digits each year. This will make some people grumble, but wont have any effect on our market.

-\/-
-\/-
13 years ago

Great…..tax wedges are usually effective in reducing P/E ratios in other sectors…..this might be the last drop which makes housing markets tip…

the pope
the pope
13 years ago

Hat tip to reductimat for the story link – this relates to this earlier story about the tax imbalance in Vancouver.