Council approves shift in tax levy to benefit businesses
City Council on Monday night approved a 2% tax shift from non-residential to residential property classes. The shift―which totals $15.8 million―will be phased in over three years at 1% in 2019, and 0.5% in each of the following two years. These changes will be reflected in the 2019 tax bills, which will be sent out starting May 17, 2019.
Every year Council approves the tax share for residential versus non-residential property classes prior to the annual property tax billing. The previous tax shift ($23.8 million) from non-residential to residential property classes was approved in 2008, and was phased in at a rate of 1% per year. That program was complete in 2012.
The effect of the decision will be to increase the residential tax share to 55.9% and reduce the non-residential tax share to 44.1%.
City’s General Purpose Tax Levy
Examples of the tax impacts by property type (based on average property value):
| Property type and 2019 taxable value | 2018 tax | 2019 tax change | 2019 tax (before 1% shift) | 1% tax shift | 2019 tax (after 1% shift) | Year-over-year tax increase |
|---|---|---|---|---|---|---|
| Average single family ($2.3M) | $3,027 | -$32 | $2,995 | $54 | $3,049 | 0.7% |
| Average condo ($0.9M) | $1,071 | $137 | $1,208 | $22 | $1,230 | 14.8% |
| Average rental apartment ($5.9M) | $6,696 | $1,030 | $7,726 | $140 | $7,866 | 17.5% |
| Average residential ($1.7M) | $2,137 | $81 | $2,218 | $40 | $2,258 | 5.7% |
| Average commercial ($5.3M) | $21,954 | $996 | $22,950 | -$508 | $22,442 | 2.2% |
While the Council-directed property tax increase applies to the overall tax levy, the extent of change, year over year, in an individual property’s tax is determined primarily by how that property’s assessed value has changed relative to the average change within its property class. Properties with a higher increase in value relative to the average change of the class could experience a much higher increase in property tax beyond the Council-directed increase, while properties with a lower increase in value could experience no change or a reduction in property tax. This applies to both residential and non-residential property classes.
Providing relief to businesses
The approved tax shift for 2019 is intended to provide savings for business property owners. To further address challenges faced by small businesses, in particular those affected by tax increases arising from development potential, City staff are working with an inter-governmental working group to identify viable solutions such as split assessment, split tax bill, and tax deferral.
Council also directed the inter-governmental working group to consider other financial models that may provide relief to small, independent, and locally-owned businesses, such as City grants, rebates, or property class amendments (some of which require provincial government action).
The decision to shift the tax share is about redistribution of the tax levy among property classes. The City will not collect more taxes as a result of this decision.