‘Tax Gap’ in P.G. Not out of Line Says CFIB
Prince George, B.C. – When it comes to the difference in what business and residential property owners pay in taxes, a new report indicates Prince George is about the middle of the pack among B.C. communities.
It’s called a tax gap, and represents the difference between what residential and business property owners pay in taxes based on the same assessed value .
According to the Canadian Federation of Independent Business, the “tax gap” in Prince George is 2.05 meaning a commercial property owner pays just over two times what a residential property owner would pay.
CFIB’s B.C. economist, Aaron Aerts, says the P.G. “gap” is not out of line “We think Prince George is at a number businesses feel comfortable paying. When you look at some other municipalities, like Vancouver, where it’s 4 times what residential properties pay, that’s where we have a really significant issue for businesses.”
Aerts recognizes demographics are an important consideration when a City sets its tax rates, with an aging population and more residents on fixed incomes, but says business has its own challenges “Businesses also have restraints, a property tax is profit insensitive whether you have a lot of money or no money at all, essentially you are going to have to pay that property tax. It’s not adjustable like an income tax which is based on an income for that year. So, many businesses have thin margins, and if you have a significant property tax burden that’s going to be difficult to absorb.”
The Provincial average is 2.60 however the average among communities in Northern B.C. was 2.69.
Terrace had the worst tax gap among Northern communities at 4.97, Fraser Lake was next at 4.54 and Kitimat was 4.13.
The northern community with the lowest tax gap was Mackenzie at 1.45.
“61% of our membership say that it’s the most harmful type of tax they have to deal with because it’s profit insensitive” says Aerts “If you want to encourage business growth, a good way to do it is to try and shift the tax balance.”