Small businesses hit with big property taxes
How would you feel if you were paying two, three, four, even five times as much property tax as your next-door neighbour, and yet not getting the same amount of services? That’s the reality facing small business owners in British Columbia every day.
This week, the Canadian Federation of Independent Business released its 2012 Municipal Property Tax Gap Report, finding that B.C. small businesses pay an average 2.78 times the residential tax rate for properties of equal value.
Small business has a big impact on B.C.’s economy, accounting for 98 per cent of all B.C. business, providing well over half of all private sector job creation and generating just under a third of our GDP. Between 2009 and 2010 alone, small business created close to 14,000 net new jobs, or around 36 per cent of all jobs created. Ensuring conditions that encourage small business success is vital.
This year’s report shows progress toward achieving property tax fairness has essentially flat-lined. On the one hand, this is good news – the trend of increasing the unfair tax burden on small businesses is unsustainable. On the other hand, the failure to achieve any meaningful reduction in the gap is irresponsible and harmful. This lack of political willpower continues to cost not just small business owners, their families and employees, but also the economic health of our province. A recent CFIB survey found that 69 per cent of our members ranked their municipal property tax as the tax most harmful to their business, and this had grown from only 38 per cent six years ago.
Municipal governments rely on property taxes for funding, and so increased spending requires higher property taxes. Business always pays a higher rate than residents, making them especially vulnerable to the impact of excess spending. Property taxes must be paid regardless of whether a business makes a penny in profit. Their property tax bill can be the difference between a business thriving, surviving or dying. In any case, it is not money being used for job creation, expansion or innovation.
In Surrey, the CFIB found the municipal tax gap increased in the last year to 3.12 from 3.00, and is over the provincial average. This is an abdication of political responsibility and is unacceptable – this gap of more than three to one represents a real burden on local businesses, and on the regional economy. This matters for your families and communities. That’s why it’s important, and that’s why all of us should care.
And that’s why the CFIB will continue to speak out for a sustained commitment to greater tax fairness. This will require more action, more progress in narrowing the property tax gap, and a greater effort to reduce municipal operating spending.
Small business owners are the lifeblood of the B.C. economy. They deserve to be treated fairly. Healthy communities depend on it.
Shachi Kurl is the Director of Provincial Affairs, B.C. & Yukon, for the Canadian Federation of Independent Business.