Whereas housing affordability is impacted by the rising cost of housing for both rental and ownership, and incomes have not kept up to the cost of living across the province: Therefore be it resolved that UBCM advocate to the Ministry of Housing and Municipal Affairs and BC Assessment Authority to support housing affordability through taxation changes and financial commitment by undertaking the following: - adjust the assessment value of rental properties to reflect the existing building on the site instead of the full development potential the highest and best use; - explore variable tax rates for land and improvement including a land value tax to help control land price escalation and speculation; - amend property taxation regulations to allow for variable property taxation rates with sub-classifications within each property class and a new classification for affordable housing; and - allow for progressive property taxation based on the assessed value and current use including rates for vacant lands.
Ministry of Finance Assessment of Rental Property Basing property assessments on highest-and-best-use, rather than existing use as proposed acts as an incentive for landowners to make the most productive use of scarce land. While older housing stock is more affordable, it may provide lower occupancy capacity and standards of livability with higher maintenance costs. At a time when the provincial government and many local governments are seeking to increase the utilization of land and improve the energy-efficiency of buildings, the proposed change in assessment policy would be counterproductive. Further, the proposal to adjust the assessment value of rental properties with a different methodology would result in a tax shift towards other properties, resulting in potential unintended consequences. However, BC Assessment may take some limits on use into consideration when determining the highest and best use of a property, such as zoning restrictions or covenants registered under section 219 of the Land Title Act. Land Value Tax Land value makes up approximately 70 percent of the current residential assessed value in the province. The land portion of property values is more volatile than combined values. Including improvement values in the total taxable value stabilizes property values and protects taxpayers from large shifts in their tax burden. The Community Charter, Part 7, Division 5 Local Service Taxes authorizes a municipality to establish a local area service, subject to elector assent, and use a local area service tax to raise some or all the revenue needed. Section 216 specifies that a local area service tax can be imposed on land, on improvements, or on both. If a municipality wishes to establish a local area service for the benefit of part of the municipality, Section 216 may allow the municipality to use land value-only taxation to fund it. Additional Property Tax Classes and Progressive Property Taxation BC has nine property classes and four assessment approaches, which is already a more complex system than other provinces and territories. Adding progressive tax rates for municipal taxation or having separate tax rates for land and improvements values would increase administrative complexity and may result in a rise in property assessment appeals, which pose challenges for municipalities. Further, such additions would add considerably to the burden of administering the property tax system.