9.3% tax increase? How high is too high? Vancouver’s property tax dilemma: Comments by Mark Ting on CBC

Dollar signs, CHW

At the Special Budget Council Meeting starting 9:30 am on Tuesday, December 3, 2019, Vancouver City Council will discuss the draft 2020 municipal budget (#VanBudget2020).

Here is the link to the agenda, live stream video, and instructions on writing or speaking to Council.

If you go to Vancouver.ca/budget you can also access many other info resources on this topic, prepared by City staff.

Many opinions have been expressed in mainstream and social media about the rising budget, but in the midst of all that, we think Mark Ting (Certified Financial Planner and CBC columnist) has offered good comments. Some of his points we highlight below. For the full text please visit CBC online (https://www.cbc.ca/news/canada/british-columbia/how-high-is-too-high-vancouver-s-property-tax-dilemma-1.5379887).

One additional point we would like to say based on ten years as CityHallWatch observing the City’s budgeting and reporting process. Many people have pointed out that the 600-plus-page draft budget reads like a sales pitch and lacks the presentation of information people need to really evaluate the budget. This is a trend that became entrenched under Vision Vancouver. Of course, the municipal government is a large organization, so expertise and knowledge is required to truly evaluate budget efficiency. No person or organization we have seen has the time or capacity do to a comprehensive evaluation of Vancouver’s operating and capital budgets. But the newly approved position of Independent Auditor General Office, proposed by Councillor Colleen Hardwick, will be a valuable step in that direction.

How high is too high? Vancouver’s property tax dilemma: Columnist Mark Ting considers the effect on renters, landlords and homeowners (Mark Ting · for CBC News,  1-Dec-2019)

[Excerpts / highlights selected by CityHallWatch]

  • If the City of Vancouver’s proposed 2020 budget is approved, homeowners can expect an 8.2 per cent property tax hike — 9.3 per cent when factoring next year’s increase in utility fees.
  • It is a hefty increase considering the average Vancouver property tax increase over the past five years was only 3.46 per cent.
  • However, it is being justified by the City of Vancouver as a necessity in order to fund initiatives to address the housing crisis, protect our environment and deliver quality core services.
  • Also, several economists have defended the increase as Vancouver’s “mill rate” or the tax owing per $1,000 in property value, is lower than most other municipalities in B.C.
  • My take on the 9.3 per cent increase is a little different. Comparing Vancouver’s “mill” rate to other municipalities across B.C. or Canada, while interesting, doesn’t make me feel any better about paying the 9.3 per cent tax hike.
  • …  comparing mill rates is like comparing apples to oranges.
  • The effect on renters: It will be interesting to see how the tax hike will affect renters. Those currently renting won’t be affected too much as B.C. limits rent increases to the cost of inflation...
  • The news isn’t as good for landlords or new renters. Landlords add up all their costs such as financing, property taxes, strata, utilities and maintenance. Then, if the market allows it, set their rents hoping to cover their expenses. Therefore, a large increase in property tax ultimately be will be passed down to the renter in the form of higher rent.
  • …. Currently, many landlords are factoring in a bigger buffer into their cost analysis. The provincial government restricts rent increases to the rate of inflation, which for 2020 is 2.6 per cent. This limitation is problematic for landlords as many of their expenses are increasing by five to 10 per cent. I’d anticipate that some are planning to increase their rents to new renters or economize elsewhere by spending less on maintenance.
  • … ‘Worrying’ inflationary trend: Just five years ago, Vancouver’s property tax increases were roughly in line with the rate of inflation, around two per cent. But in 2017, they jumped to four per cent, and are now proposed to be 8.2 per cent for 2020. This is a worrying inflationary trend as it far exceeds most homeowners’ salaries or landlords’ profit margins.
  • … When I reviewed the 600-plus-page draft Vancouver budget, it read like a highlight reel of the city’s dreams and initiatives. However, critically, it lacked a cost/benefit breakdown for each initiative.
  • I understand that it is expensive to run a city and that Vancouver is “only” asking for an additional $354 from the owner of median single-family home. However, between this and all the other increases in fees, such as Hydro and ICBC increases, homeowners are tapped out.
  • Rather than relying on homeowners as a captive and endless source of revenues, the city should instead focus on cutting costs, adjusting its goals and finding new sources of revenue.
  • I’m not against property tax increases. I know they are necessary.
  • But let’s makes it easier for homeowners with smaller, more gradual increases as they too have a budget that needs to be balanced.

Leave a comment

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s