STATEMENT | Provincial Legislation for Interim Business Property Tax Relief a Step in the Right Direction
On January 17th, the provincial government announced plans to introduce legislation in the Spring of 2020 to provide interim property tax relief to small businesses, non-profits, and arts and culture organizations facing unusually steep property tax bills due to sudden large increases in the value of their leased property.
According to the government news release, the legislation would give municipalities the ability to exempt part of the value of a select number of commercial properties from taxation, easing the tax burden for tenants responsible for property taxes through their commercial leases.
Under the commonly used system of triple-net leases for commercial properties, small businesses pay the property expenses such as property taxes, building insurance, and maintenance in addition to rent. The result is that the tenants pay most of the costs associated with owning the property but see none of the windfalls from increased values.
Over the past few years, many triple-net lease businesses across the Lower Mainland have faced steep increases in their property taxes that have often proved untenable, forcing them to close down. Several of these have been longstanding businesses with decades of history in their communities. The problem is complex but has generally been found in areas where property values have risen dramatically due to zoning or official community plan changes. Nonetheless, the problem involves a number of intermingling factors.
“This is an issue that we have championed for over a year so we understand its complexity and appreciate the province’s desire to solve the problem without unintentionally creating new ones”, said Chamber CEO Michael Hind. “I am happy to see this issue getting the attention it requires, and await further details on the new interim measures so we can properly assess their impact. Nonetheless, our Chamber stresses the need for a comprehensive solution such as the one supported by the lower mainland chambers – namely, to achieve a split assessment through the creation of a new commercial subclass.”
The proposed legislation would apply to the 2020 tax year and be in effect for a maximum of five years. It is being designed to provide a tool for municipalities with enough flexibility to provide tax exemptions to target specific businesses and non-profit organizations to support those most impacted by the current framework, without changing an already complex assessment system.
For the BC government’s news release, please click here.