Industry seeks tax reprieve

Bruce Walkinshaw - Penticton Western News Published: February 04, 2010 6:00 PM

Penticton’s industrial sector, along with hundreds of local jobs, is in dire straits and needs tax reductions, according to the Penticton Industrial Development Association. PIDA president George Little appeared before council last month at the request of Mayor Dan Ashton, council’s representative to the association, to discuss PIDA’s concerns with the taxation rate. “The higher levels of industrial property tax as a result of the change in the tax ratios by the council previous have left their sting over the past few years,” said Little, reporting that with industry now in the middle of an economic downturn many firms have been forced to cut back operations in order to remain profitable.“Plant closures, layoffs, falling order levels and red balance sheets are more often the order of the day,” said Little. “A number of the remaining larger firms may not be able to remain here. Some of the firms, who have been in business for longer periods, are operating by using their invested capital, bank loans and huge belt-tightening initiatives.” Little said that like private companies, council should also be making difficult decisions to tighten up the city’s bottom line. “We cannot help but notice that as the private sector and their many workers go without paycheques, the City of Penticton continues to increase in size, reward it staff with pay increases and approve increased spending,” he said.

Little asked council to return the civic industrial sector tax rate to previous levels, as an encouraging gesture to firms in desperate economic circumstances. He also applauded council and the city’s economic development committee for initiating a process to establish economic development zones, including one for the manufacturing and industrial sector. “Every job saved will pay dividends to all of us,” said Little. “We do not want to lose these great companies simply because the property taxes levied are Inequitable.”

Prior to Little’s appearance before council, he and Coun. Mike Pearce had exchanged abruptly-worded emails, the spirit of which continued in the council chamber. “So, Mr. Little, I assume the thrust of your argument was that we move the industrial rate back and shove (the tax burden) on the residents. Is that what you are saying?” asked Pearce. “I would say that, ‘Shove it on the residents,’ is a bad choice of words,” responded Little. Pearce: “Well, where is it going to go then?” “There are many communities where the municipality tax was enough to close businesses,” said Little. “So if you are hoping to get enough money to run the city, you have got to find it from somewhere and empty buildings will not give it to you.”

After stressing that he realizes nobody really cares about his finances, Pearce said that he resents having to pay $10,000 a year in property taxes for his house. But with such a small assessment base in Penticton and a long list of city services — like the fire department, and capital projects, such as renovations to the community centre pool and the Shatford building — Pearce wondered where Little thought the money should come from. “I guess you are saying we should just shut the door on those things?” asked Pearce.

“Cities are different than businesses, we understand that. But in the economic portion of a city, they operate very much like a business: they have expenses and they have costs,” said Little. “What businesses do when times get tough, they have got to reduce their costs. That may mean lower wages; that may mean layoffs; and it may mean doing without all sorts of different things. So, with the greatest respect, perhaps that is going to be your only solution. “There are some 4,000 jobs (in Penticton’s industrial sector) and at last count most of the jobs are from $20 up. And I can’t remember the last time we came and asked you to clean our beaches, cut our lawns or prune our trees. We don’t ask for very much, when we pay a significant amount of tax. So if you asked me what you have to do, I say that you have to review the whole issue of expenditures and taxation. “We are big boys, we can pay our taxes, but there comes a point when it’s on the balance sheet and somebody is saying why are we paying so much tax here, when the City of Surrey, Maple Ridge or Medicine Hat are offering better deals. Companies eventually make decisions, especially the larger ones. We’ve got a couple of good firms here that are teetering right now and need some help. I suppose in years to come you may want to look at it again but for the next few years it’s going to be tough going up in the industrial area.”