Council is set to consider two options that would cut property taxes on Abbotsford businesses while hiking fees for residents and industry.
Increased development is expected to reduce the overall anticipated tax increase from the 2.57 per cent first suggested last fall to 2.01 per cent, city staff told councillors at a committee of the whole meeting Monday. But that increase won’t be shared equally if council approves one of two options to reduce the burden of taxes on businesses – a move Mayor Henry Braun advocated during his successful election campaign in 2014.
The proposed adjustments aim to reduce the business tax rate to twice that of residential properties. Businesses currently pay 2.38 times the residential rate. That figure has been decreasing recently as business property assessments outpace those of homes, but a staff report suggests the two-to-one ratio wouldn’t be achieved for five to eight years.
To speed up the process, council was presented with options that would see the rate reduced to 2:1 either this year or next. The quickest adjustment would result in an additional four per cent tax increase for residential properties this year, on top of the two per cent increase. The total six per cent hike would see a home assessed at $400,000 result be subject to $123 in additional annual taxes (A typical home in Abbotsford in 2016 was assessed at $424,000). Industry would see a tax hike of just over 10 per cent that would result in $413 in additional taxes. Businesses, meanwhile, would see a total reduction in taxes of 8.54 per cent, or around $416 on a $400,000 property.
A second option seeks to spread the adjustment over two years. For 2016, that would mean an $82 increase on a $400,000 home, a $325 increase on a $400,000 industrial property, or a $172 decrease on a $400,000 business.
The Chamber of Commerce supports the proposal, arguing that businesses currently pay more tax but use fewer city services and don’t receive a vote.
Chamber executive director Allan Asaph told The News the proposal would “bring taxes more in line with the proportion of municipal services used.”
Council will make a decision on the options at a future meeting.
While a move would result in rate hikes to non-business taxpayers, Braun told The News the aim is to eventually increase revenue by drawing more businesses to the city.
“The more businesses you can attract to your community, it will increase the industrial and commercial tax revenue so it doesn’t put upward pressure on residents,” said Braun, who referenced a Canadian Federation of Independent Business study.
Council, he said, would have to decide which property classes would see increased taxes to make up the revenue lost from lowering the business rate, and how quickly any adjustment would be made. Braun said making the move in one year may be too dramatic, and suggested that spreading the adjustments over two or even three years might be preferable.
The report to council shows Abbotsford already has one of the lowest business-to-residential multiples in the province. Among other B.C. cities measured, only Kelowna, Prince George and Chilliwack have lower multiples, and only in Chilliwack do businesses pay less than twice what residents pay. By contract, Vancouver and Coquitlam both have multiples exceeding 4:1. Abbotsford also has one of the lowest industrial-to-residential multiples in the province.