Commission on Tax Competitiveness Report

A Provincial commission has released a report aimed at improving business tax competitiveness in British Columbia. The Commission on Tax Competitiveness has delivered four recommendations to the Province, one of which addresses the issue of industrial taxation.

While the findings of the report show that overall municipal business rates are not an issue, the Commission expressed concerns with respect to Industrial tax rates (Class 4 assessment) in some communities:

The Commission found that the overall level of business property taxation in B.C. at both the provincial and local government level does not represent a competitiveness issue or a significant impediment to economic performance. Excessive property tax rates for large industrial properties in a few municipalities are a concern however. High property tax rates can have devastating effects on unprofitable plants. Also, the rates themselves and the uncertainty about future rates can have a chilling effect on investment when upgrading existing plants and developing new plants.”

The fourth recommendation in the Commission's report deals with the issue of “excessive” property tax rates in a few municipalities:

RECOMMENDATION 4 – Industry-Municipal Investment Arrangements

The Commission recommends that, in the short run, government introduce a mechanism for businesses contemplating significant incremental investment to trigger negotiations with a municipality for an arrangement that provides certainty about the contributions that will be provided to the municipality over the life of the investment.”

The Commission on Tax Competitiveness was first announced in the 2016 Provincial budget. Minister de Jong appointed the members of the Commission in July 2016.  Bev Dahlby, Distinguished Fellow in Tax and Economic Growth from the School of Public Policy at the University of Calgary, chaired the Commission.

UBCM’s delegation met with the Commission and delivered a presentation on October 13, 2016.  The UBCM delegation was comprised of Director Wendy Booth with Dale Wall and Gary MacIsaac in support. UBCM’s impact on the deliberations of capping business taxation is acknowledged in the report:

A common recommendation made to the Commission to address these issues is to put caps on the business-to-residential tax rate ratios, or implement tax rate “fairness ranges.” Rules would then be put in place for communities falling outside the cap/ranges to become compliant over a period of time

In exploring solutions to the above issues the Commission also heard from communities through input provided by UBCM. This input was very helpful in understanding the complexity around municipal property taxation and some of the issues to be aware of when exploring solutions.”

During its presentation to the Commission, UBCM also pointed out that the Province studied the issue of tax competiveness as recently as Expert Panel on Business Taxation in 2012.  The Expert Panel provided a fairly comprehensive set of recommendations on municipal taxation that were generally supported by UBCM. The Province of BC, though, has not acted upon these recommendations. The Commission’s report includes a supplemental recommendation that the prior recommendations on property taxation by the Expert Panel be implemented.

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