Analysis

Vancouver's looming 5% property tax hike more evidence funding reforms needed

We'll spare the suspense: even though the vote is a week away, Vancouver is going to pass a budget with the highest property tax increase in a decade, after an election fought on issues of affordability.

With so few funding tools at the city's disposal and so many new costs, the current trend is unlikely to last

Vancouver council is considering a 4.9 per cent property tax increase for 2019, the largest in a decade. (Peter Scobie/CBC)

We'll spare the suspense: even though the vote is a week away, Vancouver is likely going to pass a budget with the highest property tax increase in a decade, after an election fought on issues of affordability.  

"[An increase of] 4.9 per cent will allow us to do things citizens have asked for, so I think it's a reasonable increase," said Vancouver Mayor Kennedy Stewart.

After a day of presentations by different city departments on why their funding is needed, it seems clear a majority of council will side with Stewart — if only because eight of them are brand new to council and seem reluctant to override staff who have been working on the budget for months. 

"We weren't involved in the development of this budget. At the same time, we have a responsibility to take a second sober look," said Coun. Lisa Dominato.

"I don't think anyone wants us just to rubber stamp a budget. And so, we're really trying to take our time to review carefully and do our due diligence. But definitely, it's a difficult spot to be in."

Yet, while the focus will be on the number council settles on for its property tax increase, the longer-term question of whether Vancouver's taxation system is sustainable remains. 

Vancouver Mayor Kennedy Stewart says he'll support the increase, arguing that for most homeowners, it will only be between $40 and $100 extra a year. (Darryl Dyck/Canadian Press)

Property tax or bust

While the provincial and federal governments have a myriad of options to raise fees from citizens, municipalities are more limited. It's why personal property taxes make up 56 per cent of Vancouver's revenues, but personal income taxes only make up 18 per cent of B.C.'s revenues. 

"The property tax ... is a bit of a blunt instrument, and the city has limited financial tools for bringing in revenue," said Coun. Christine Boyle.

She wants the city to explore a land value tax, which would take some of the profit when people sell properties that have increased in value due to municipal zoning changes or other local infrastructure upgrades.

"One of the goals of a land value capture is increasing the tools that we have ... it's one creative and efficient solution for addressing these challenges," she said.

Her motion passed council on Wednesday, but it will require the provincial government to create legislation allowing such a tax — and Mayor Stewart is already planning to lobby for more revenue tools, regardless of whether Boyle's motion passes.

"In the future, I'll be looking at new revenue streams, and I have been starting to figure out what those might be and would come back with some suggestions," he said. 

Up and up and up

Of course, some will look at Boyle and Stewart's long-term solution to the budget crunch as simply taking more money from taxpayers, instead of looking for places the city could save money. 

"I'm hoping that we'll continue to move through and be able to find those efficiencies to really focus on the priority of affordability in the City of Vancouver," said Coun. Melissa De Genova. 

However, De Genova focused most of her criticism on the provincial government, both for downloading the cost of the new employer health tax (which comprises over a third of the proposed tax increase), and for not covering the full costs of fighting the city's overdose crisis.  

"I think that there needs to be some really open conversations with the province of B.C.," she said. 

It's a common refrain in big Canadian cities: they have increasing amounts of responsibility, yet limited ways to deal with them — and that's not even touching on the millions Vancouver is targeting toward affordable housing, something municipalities once left to higher levels of government.

Meanwhile, the dollar signs go up.

In its 2010 budget, Vancouver recorded expenses of just under $1 billion. Less than a decade later, it's proposing to spend 51 per cent more than that. Property tax increases have gone from 2.3 per cent in 2016 to 3.9 per cent in 2017, 4.24 per cent in 2018 and the 4.9 per cent increase proposed for next year. 

You can have lots of thoughts about what the taxation solution is or whether Vancouver politicians are spending too much time blaming others and not enough time finding efficiencies.

But the trend of the last three years is likely unsustainable.  

About the Author

Justin McElroy

@j_mcelroy

Justin is a reporter for CBC Vancouver, covering political stories throughout British Columbia.

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