B.C. Assessment puts too low a value on business properties

Problem with disparity between business, property taxes is assessed values

Re: Less talk, more commitment needed on taxpayer pledge (Guest Comment, Oct. 26)

Laura Jones complains that businesses pay higher taxes than residents on “the same valued properties.”

The problem is that B.C. Assessment usually puts too low a value on business properties.

The proof is that, when they are sold, they often obtain prices much higher than their assessed values. There are several reasons for this.

Since business properties turn over infrequently, assessments lag behind the inflation rate. Evaluators may attribute rising sale values to entrepreneurial skills rather than the properties themselves.

Unlike residents, business property owners have the opportunity to increase value through rezoning.

The thinking in Victoria is that businesses and residences should contribute about equally to tax revenues. Since business assessments are too low and rise slowly, the tax rate must remain high.

However, the top 30 taxpayers have regularly paid a third to a half of all business taxes, lessening the burden on Ms. Jones’ small business clients.

Businesses in general have many advantages over residents: they earn income from their property; multiple businesses can share premises; ultimate owners are often a large number of corporate shareholders; and business taxes are deductible for income tax.

I too am sympathetic to the small business operator, but he is more often a renter than an owner. We must be sure that any concessions to him are not captured by his landlord, and are not made available to large companies that need no assistance.

Perhaps we could introduce a tiered structure in which the small operator who absorbs his landlord’s tax is accorded a lower preferential rate.

Finally, there should be a thorough review of B.C. Assessment’s techniques. Businessmen who assume their assessment is OK but their tax rate is too high are seeing only the tip of the iceberg.

David Bodenberg

Victoria