Background

2.1    Purpose of the review – The Property Tax Distribution Commission has been established by Council in response to concerns expressed to Council by the business community about the impacts of the City’s current property tax policy on the health and competitiveness of Vancouver’s economy. In recent years, the Vancouver Fair Tax Coalition (led by the Vancouver Board of Trade, and made up of representatives from local business improvement associations, small business owners and managers, industrial and office property owners and developers and business associations) has been telling City Council that they feel annual property tax increases are exceeding local business’s ability to pay and are affecting the long-term competitiveness of business in Vancouver. They also feel that Council’s land policy has been resulting in disproportionate growth of the residential class, and that these policies may ultimately be counter-productive to achieving the City’s long-term goals.

In response, on April 20, 2006, Council recommended:

THAT Council instruct staff to propose a process to engage the business community, residential taxpayers and other key stakeholders to arrive at a long-term goal of defining and achieving a “fair tax” for commercial taxpayers. The goal should be achieved within the current framework of a “fixed burden” approach where the allocation of the levy among the classes of property remains constant over time subject to physical changes within classes or to Council action, and the report is to articulate processes on how shifts might occur.

2.2    Study of Consumption of Tax-Supported Services – In 1995, at the recommendation of the Property Tax Task Force, Council commissioned KPMG Consulting to undertake a review of the consumption tax-supported City services by the residential and non-residential classes of property. The report was received by Council and has formed part of the rationale for the shifts of property taxation from the non-residential to the residential property classes in subsequent years. On July 18, 2006, Council commissioned MMK Consulting to undertake an update of this 1995 study. It is expected that the results of this work will be used by the Commission as an important component of their review of the City’s property tax distribution.

2.3    The Current Tax Distribution – This table shows the share of the City of Vancouver’s property tax levy paid by each of the seven property classes in 2006.

	2006 TAX LEVY ($000s)	% SHARE
Class 1 - Residential	$214,239	44.9%
Class 2 - Utilities	$6,296	1.3%
Class 4 - Major Ind.	$5,542	1.2%
Class 5 - Light Ind.	$4,529	0.9%
Class 6 - Business	$246,451	51.6%
Class 8 - Seasonal	$291	0.1%
Class 9 - Farm	< $1	< 0.0%
Total	$477,348	100.0%

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