Surrey Board of Trade says governments need to reduce tax burdens to business – Surrey doing better than most cities.
In a just-released study today by the C.D. Howe Institute, it finds that business property taxes and land transfer taxes together represent about two-thirds of the total tax burden on investment in Canada, a large share for governments to continue to ignore.
In “The 2014 C.D. Howe Institute Business Tax Burden Ranking,” authors Adam Found, Benjamin Dachis and Peter Tomlinson conduct groundbreaking research that includes business property taxes and land transfer taxes in measuring the tax bite that can drive away or attract new business investment.
The Surrey Board of Trade – the only one in British Columbia, along with more than 15 Chambers Boards of Trades across the country, asked for this study to be researched and composed by the C.D. Howe Institute. Though it doesn’t address Surrey specifically, generalized estimates for the Vancouver statistics include all of Metro Vancouver.
“To speak to Surrey, specifically, the City continues to maintain a reasonable distribution of property taxes between properties across all assessment classes which include: Class 1 Residential, Class 2 Utilities, Class 4 Major Industry, Class 5 Light Industry, Class 6 Business & Other, Class 8 Rec/Non Profit, Class 9 Farm. Surrey established a goal to obtain by 2021 60% of its property tax revenues from Class 1 residential properties and 40% from the combination of Class 4, 5, and 6 properties; being the major industrial, light industrial and business classes. This goal is to be achieved by growth in the business classes of properties across Surrey – and not by increasing the tax rates of business-related properties at a rate faster than the residential properties,” said Anita Huberman, CEO, Surrey Board of Trade. “Surrey provides a sharp contrast to Vancouver, which draws 45 per cent of property tax revenue from businesses compared to only 31 per cent in Surrey. It is clear that Surrey’s municipal taxes for business are one of the lowest in the Metro Vancouver area. This is one of the reasons that business should consider a relocation to Surrey to create the jobs for our growing 2,000 people a month population.”
Despite years of concerted provincial and federal efforts to reduce the tax cost of investment, such as by lowering corporate income taxes, governments need to address a gap in their tax burden measure.
It was noted in the report that current government estimates don’t take into account either provincial and municipal business property taxes or land transfer taxes. “Current government estimates don’t take into account either provincial and municipal business property taxes or land transfer taxes,” remarked Found. “In our estimate, we find that business property taxes and land transfer taxes together represent about two-thirds of the total tax burden on investment in Canada, a large share for governments to continue to ignore.”
The authors recommended that the Federal Department of Finance—which provides the provinces with tax burden estimates—include business property taxes, both provincial and municipal, in its interprovincial comparison of tax burdens.
Tomlinson concludes: “Despite years of concerted provincial and federal efforts to reduce the tax cost of investment, such as by lowering corporate income taxes, governments need to address a gap in their tax burden measure. Our hope is that a more accurate measure of business tax burdens will prompt a closer examination of their potential detrimental impact on business investment.”
The study found that Saint John, Charlottetown, and Montreal have the highest total tax rates. Calgary and Saskatoon lead the pack with the most competitive all-inclusive taxes. The study measured the largest city in each Canadian Province.