Property tax is the most important source of revenue for municipalities. In British Columbia, municipalities have a higher degree of discretion and flexibility in setting property tax rates. This discretion and the high levels of taxation undermine B.C.’s overall industrial competitiveness, create uncertainty, and deter capital investment.
In many B.C. municipalities, large discrepancies have developed between industrial property tax rates and residential tax rates. Differing assessments, municipal costs, service levels and benefits, and the varying industrial structures of local economies, have all given rise to significant variations in property tax rates and burdens across municipalities, and sometimes result in a single mill or a small number of industrial operations shouldering a large share of the overall municipal tax burden.
There is clear evidence that Major Industry property tax rates have increased much more rapidly than residential tax rates over the past few decades. On average, the tax rate for Major Industrial (Class 4) properties in B.C. is nine times that of residential properties. In some municipalities, the ratio is as high as 18-20.
The property tax system in B.C. should be built around the principles of certainty, fairness, and competitiveness. As it is currently structured, the system falls short on these fundamental criteria.
The Business Council believes the provincial government should work with municipalities to find ways of creating greater long-term tax certainty and improving the competitive environment for capital-intensive industries. The Province will need to impose some limits on the ratio of Major Industry to Residential property tax rates. These limits need not be onerous or overly restrictive, but they should be structured to provide stability, create more certainty and address legitimate concerns around tax equity and competitiveness.