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Homeowners to bear brunt of tax increase

Homeowners in Victoria will bear a seven per cent property tax increase in 2011, compared to a one per cent hike for business owners. That means property taxes on an average house, worth $537,654, will rise by $135.

City council decided on this year’s tax ratio last week, determining how different property classes will share the city’s 3.96 per cent overall tax increase.

The burden on residents might seem disproportionate, but Coun. Marianne Alto pointed out that business and industry pay slightly more than half of the city’s total taxes.

“Business drives the economy,” Alto said. “Business taxes need to be competitive.”

To that end, eight of nine members on council voted to lower the tax ratio from 3.594 last year, to 3.59 this year.

While the ratio hasn’t changed significantly, residential property owners will carry most of the tax increase because residential assessments rose this year while business assessments fell.

Since 2010, taxable commercial assessments dropped about $10 million, to a total value of $3.8 billion in the city.

This drop in value is generally related to a drop in revenue for business, said Bruce Carter, chief executive officer of the Greater Victoria Chamber of Commerce. Leading up to last week’s decision, he argued for keeping business taxes low at a time when business revenue is down.

“If you want to keep the restaurants in the core, how are we going to do that?” he asked.

The argument didn’t convince Coun. Philippe Lucas, who owns a home and business in Victoria.

“I’ve got a foot in both camps,” said Lucas. There are many reasons why businesses succeed or fail, and it’s seldom because of the tax rate, he argued.

He voted in favour of an equal tax increase for both business and residents.

“I’d prefer residents with more money in their pockets,” he said.

The decision will be reviewed and finalized at the next council meeting tomorrow evening (April 14).

rholmen@vicnews.com