There’s growing concern about the burden of Sooke property taxes, and this time complaints are coming from the business community.
The issue stems from the multiplier effect applied to business tax rates – a method that sets the business rate at nearly three times the rate paid by residential properties.
While a residential property assessed at $500,000 will pay approximately $1,195 in property taxes in 2019, a business property of the same value will pay about $3,274.
“It’s totally ludicrous. The mill rate is three or four times higher for businesses and for those of us who are leasing our properties to business owners, it means we will pass those costs along. [Businesses] then pass along their increased costs to customers,” said Jim Mitchell, who owns and leases a number of properties in Sooke.
“Taxes end up eating up one-third of the rents we can charge here, and it keeps going up.”
Mitchell said property owners are forced to charge less rent here, due to the potential earnings of businesses in Sooke as opposed to elsewhere.
He added when a developer is told that they will be required to incorporate commercial components into a housing development, some are choosing to walk away.
“You put in a commercial site and it sits vacant because we have to charge too much just to cover the taxes,” Mitchell said.
Herb Haldane, a local developer, expressed similar concerns.
“This is the problem when you have a council where they don’t understand development and business costs,” said Haldane, a former district councillor.
“You need a certain amount of knowledge in order to understand what’s really going on. The multiplier number doesn’t tell the whole story because there are other factors like whether sewer, water and garbage are included in the calculation Saanich, for example, includes all of that and, although their multiplier is higher, our actual charges exceed theirs.”
Haldane said by his calculation, Sooke has the third highest tax rate of the 13 Capital Regional District municipalities. (Those calculations have not been independently verified by the Sooke News Mirror.)
The multiplier effect is not unique to Sooke as every one of CRD municipalities has a multiplier that sets the tax rate for commercial properties higher than the rate for residential properties. Those multipliers have varied widely and, in 2018, ranged from a high in North Saanich of 6.o4 to a low of 2.04 in Central Saanich, where the airport plays a significant role.
In 2018, Langford passed a budget with a 2.95 multiplier.
Mayor Maja Tait is not convinced the business tax rate is having a dampening effect on the commercial sector in Sooke.
“We’ve had a number of new businesses start up in Sooke including the brewpub, Sheringham Distillery, now Tim Hortons and more,” Tait said.
“You have to understand that if we were to lower the tax on business, it means that the average homeowner would have to shoulder more of the tax burden and nobody wants that either.”
The secret, said Tait, is to work with organizations like the chamber of commerce to grow the business and commercial sector in the municipality.
“The more businesses we have, the greater the tax amount generated by that sector and the lower the rate that can be applied.”
While the budget bylaw has received third reading from council, there’s one more chance for the public to weigh in when the tax rate bylaw is sent to council in late April.