City approves business tax break

By DARREN HANDSCHUH Tuesday, May 1, 2007http://www.dailycourier.ca/stories.php?id=41682

Local businesses will be getting a break on their taxes this year. Vernon mayor Wayne Lippert said the decision to lower the tax ratio that businesses pay was made to “level the playing field” for employers. “There‘s been a shift with the rate structure,” he said, adding it is good for the city to reduce taxes for businesses because they employ people and help the economy beyond just providing taxes. The average business will save $315 per year in taxes next year leading to, a $411,700 drop in city revenue. Lippert said residential taxes won‘t go significantly up because of the move, but there is a planned residential tax increase of 1.17 per cent. Residents will cough up an additional $275,000 or nearly $18 per average home. This increase is on top of the planned two per cent residential tax hike.

Coun. Pat Cochrane said before the reduction, the ratio for businesses to residential was 2.82, meaning for every dollar in residential taxes paid, businesses paid $2.82. The ratio will now be 2.75. Cochrane said much of the difference in taxes will be made up in the utility sector, which will affect only a handful of businesses. “We are hitting the utility sector with a huge increase,” said Cochrane. “We are increasing it by about five times. The target of that is B.C. Hydro with its new building.” Cochrane said some other smaller companies could be caught up in the increase, and letters are being sent to all affected parties to inform them of the changes.

Coun. Barry Beardsell, who is in his third term as councillor, said the city reduced business taxes for several years, before entering a phase of raising the taxes again. He said the current plan to reduce taxes is a good move. “It‘s a move in the right direction in my estimation,” said Beardsell. “I‘ve been pushing for this for years.” Beardsell said other B.C. communities are taking similar steps. He said the increase in utility rates will offset the money lost by reducing business taxes. “That will be more apparent next year than this year,” he added. Beardsell said he has heard from several businesses about the tax rate and the decrease will make Vernon more enticing to businesses. Lippert said the 1.17 per cent residential increase is needed for infrastructure needs. “We‘re still catching up on infrastructure,” said Lippert. “There were a lot of years when infrastructure was not the priority it is now.”