Tax on Improved Parcels

Ministry of Community Services Regional Districts have various ways of recovering the costs of providing services. These include property values taxes, parcel taxes, fees and charges, and revenue from other sources. They may be used alone or in combination with each other. The Ministry does not support amending the parcel tax provisions to permit the levy of parcel taxes on improved parcels only as there is sufficient flexibility in the existing system to provide for fair and equitable cost recovery. Parcel taxes may be varied according to parcel size andor or other characteristics of the property e.g. steep slopes, rocky ground, amount of tree cover, waterfront, etc. Property value taxes generate revenue based on assessed values, so that controlling for other factors, an unimproved parcel will generate less tax revenue than an improved parcel of the same size. User fees target the beneficiaries directly. Regional Districts should select the method or methods of cost recovery that alone, or in combination, most closely match the charges to the beneficiaries. MINISTRY OF COMMUNITY SERVICES DIRECT RESPONSE TO SPONSOR As my staff understands your request, the RDEK has been looking for cost recovery mechanisms that allow a more direct relationship between those who benefit from the service and those who pay for it. From your perspective, a parcel tax on improved parcels -- which are presumably occupied in some way -- would be more equitable than a property value tax for certain services, as it would allow you to charge each parcel the same amount. You suggested a 911 call answer service as an example of a service that might be better funded in this way as people experience the same benefit of having the service, whether or not they use it. In relation to parcel taxes in general, although the legislation permits their use to fund general services, the Ministrys view is that they are best used to pay for services which provide a more direct, specific benefit to the property or property owner subject to the tax. Property value taxes are the more appropriate mechanism to fund general services where the beneficiaries are the citizens at large. While I agree that the property tax system does not allow a perfect relationship between service received and tax paid, it is preferable to the parcel tax for general service funding. The legislation does provide some flexibility on the use of property value taxes for most services. This includes the ability to assess tax on the basis of the assessed valuenet taxable value of land only, or improvements only. See: Local Government Act, section 804.3. Using this mechanism, RDEK could effectively exempt unimproved i.e. unoccupied parcels from paying for a service.... In conclusion, the Ministrys position is that there is already sufficient flexibility in the tax system to distribute the costs of services in various ways that provide a reasonable match between beneficiary and benefit received. Although the property tax is not perfect in this regard, it is preferable to the parcel tax.