Families and businesses are concerned about the rising property tax grab and rightly so. While federal and provincial tax burdens have fallen, municipal tax burdens head skyward. This is because municipalities first decide how much they are going to spend, then calculate what the property tax bill needs to be to pay for that spending. This backwards system puts taxpayers at the mercy of local councils every year.
Hard-pressed taxpayers are speaking out against gouging municipal governments. Recently, the Canadian Taxpayers Federation delivered almost 2,000 petitions to the Minister of Community and Rural Development demanding legislation be passed to cap property tax rates and limit property tax increases to no more than the rate of inflation.
Right now there is no limit to what a municipality can spend. As a result, spending is spiraling out of control. Between 2002 and 2008, municipal spending in B.C. rose by almost 50 per cent. Property tax revenue rose from $2.8 billion to $3.8 billion, a 36 per cent increase. Given a general inflation of about 12 per cent, and population growth of 8.5 per cent during that period, these increases represent a tax grab that must be reined in.
Why limit property tax increases? The current property tax system is unpredictable and punishes property owners. Every year, property taxpayers anxiously await the delivery of their property tax bill to find out whether they need to cut back on their own budgets to cover an unexpected hike. If property tax rates are capped at current levels and the property tax bill can only rise by the rate of inflation, homeowners and businesses will know what their property tax bill will be for the following year. Better yet, municipalities will know how much revenue they'll have and be forced to do as every family does and live within their means.
The Minister of Community and Rural Development says he agrees with the goals of the Canadian Taxpayers Federation. Citizens should not be burdened by inefficient or uneconomical municipal service delivery. He also agrees that municipalities must stop gouging businesses and industries.
In most municipalities, businesses and industries are hit with the biggest part of the property tax bill. That's because municipal councils tend to deliver benefits to those who can vote for them while sending the bill to those who, like business owners, cannot. The problem here, as Minister Bennett points out, is municipalities risk killing the goose that lays the golden eggs. Stopping the tax spiral would put an end to job-killing property tax hikes.
Municipalities must start budgeting like everyone else. Budgeting in the real world is about allocating scarce resources. It's not about creating a spending wish list then figuring out where the money has to come from to fund it.
Property taxes are spiraling out of control because there is no municipal tax or expenditure limitation. It's time to cap property tax rates to create predictable payments for local ratepayers and predictable revenues for local governments by making revenues, not spending wish lists, the first consideration in the municipal budgeting process. A property tax cap will impose a limit on spendthrift governments and bring certainty to hard hit families and businesses.
Maureen Bader, BC Director, CTF
