With the 3 weeks that have passed Council will have the time to reconsider what they are doing and therefore should consider passing a resolution along the following lines:
- The light industrial class ratio s/b increased to the same ratio that will be charged to the business class. Increases to a different higher ratio can be addressed in the 2008 budget cycle if necessary.
- The industrial ratio s/b increased to the recommended 6.5 for the 2007 tax year.Increases to a different higher ratio can be addressed in the 2008 budget cycle if necessary.
- The effect of these ratio adjustments s/b revenue neutral and any increased revenue will be applied to reduce the business tax ratio towards council's stated target policy of 2.0.
History and Financial Implications of this Ratio Debate:
After years of arguing with council about the business tax ratio and the lowering of it by taking the money from the residential class and lowering the RATES in the business class, I was pleased when the finance committee were charged by council with the review of the Light Industrial and the Utility classes as a possible source of revenue to stop this raid on the residential taxpayer. Councillor Nichol had always asked the previous Finance Manager each year whether there was any other source than the residential class and was always told there wasn't. Finally in June/06 the Finance Committee brought forth a report addressing this matter.
This report from the previous Finance Manager proposed raising the lt. industrial ratio to the business class ratio of 2.82 (from 2.26) and to raise the Utility class ratio from 2.82 to 3.5. This would produce additional City Revenue of $48,756. It also correctly asked the proper question with respect to this additional revenue:
a. Reduce the tax increase that would otherwise be required in 2007? OR b. Reduce the business taxes only, to lower the residential/business multiple? OR c. Reduce the residential taxes only, resulting in a higher res./bus ratio?
This report was debated by council and the decision was to request a new analysis of the situation by the new finance management team to be tabled in Oct./06
On Oct 16/06 the new report recommended to the fiance committee and ultimately passed by the full council by a 6-1 vote on Oct 23 intended to raise the ratio on the lt. Industrial Class from 2.26 to 3.2 and the Utilities ratio from 2.82 to 6.5 . This would raise $147,000 (146,462) in revenue. This report used a more detailed analysis of ratios across the province and demonstrated that our ratios in these classes were indeed lower than they should be and had been for at least10-15 years !
DON QUIXOTE OBSERVATIONS:
- The $146,462 Tax revenue in the 2007 year at the proposed ratios would raise $57,802 from Utilities class and $88,660 from Lt. Industrial Class.
- There was no indication of the magnitude of the taxes that will be gained when the $21 million Hydro Control Centre comes on line. Remember that these classes had a tax advantage for over 10-15 years at the expense of all classes including the business and residential taxes. (The revenue raised when this extra $21.7 million dollar project is fully taxed at the proposed ratio of 6.5 will be $532,394 per year. The present business tax ratio could be reduced from 2.82 to 2.58 if this new money were used solely to reduce the business tax RATES.
- If we used the Lowest Langley Tax ratio of 9.3 the increased revenue would be $761,733 or $229,339 more. The reason Langley is used is because there are only 2 Control Centres in the entire province of B.C., one in Langley presented being constructed at at Building Permit Cost of $28.7 million for a 61,860-square-foot facility and one in Vernon being built at a Building Permit Cost of $21.7 million for ?? Sq. Foot Facility.
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