Abbotsford defers proposal to slash business taxes while hiking residential rates

Chamber of Commerce 'disappointed' as council passes across-the-board tax bump of 2.01 per cent.

Abbotsford City Hall

Abbotsford City Hall

A proposal that would have cut business taxes at the expense of homeowners has been shelved for at least a year.

Council voted Monday to raise taxes by 2.01 per cent across the board, while delaying an adjustment to tax ratios that would have doubled that increase for residential taxpayers.

The two per cent hike will see the owner of a $400,000 property pay $47 more this year in taxes. A 2.57 increase had been anticipated last November, but was reduced after increased development prompted a rise in expected revenue for the city.

Council opted to defer a proposal that would have fixed the tax ratios between various property classes. During the 2014 election, Mayor Henry Braun had suggested that the tax burden on businesses was too high, and that commercial tax rates should be no more than twice as much as the residential rate. Currently, the ratio floats due to market forces that include changes to the total assessed value of the property classes.

With commercial operations now paying 2.38 times as much as residential taxpayers, staff had presented council with the option to move to a fixed 2:1 rate. Doing so would have increased homeowners’ tax bill by four per cent, while commercial rates would been chopped by 10 per cent, notwithstanding the annual increase in taxes approved by the city.

The ratio has decreased naturally over the past 10 years, and was 3.19:1 in 2005. The chamber of commerce had argued the move was fair, given small businesses use fewer services than homeowners. Braun, meanwhile, had suggested it would draw more businesses to Abbotsford.

But while he had expressed support for fixing the rates just last week, by Monday Braun had changed his mind and spoke and voted in favour of allowing the rate to float.

“Historically we’ve had a much higher multiplier,” he said. Coun. Dave Loewen, meanwhile, said the rapidly increasing cost of living made him reluctant to impose more taxes on residential taxpayers.

The city – which already has the fourth-lowest business-to-residential tax ratios in the province – will again consider fixing the rates next year, and staff will prepare more information at that time.

After the vote, Chamber of Commerce executive director Allan Asaph said he was “disappointed” in the decision.

“The fact that the city was looking to set the rate at 2:1 recognized the fact that businesses are paying more than their fair share,” he said. Given that, he asked how the current ratio could be allowed to continue. He added that the commercial rate – which applies mostly to small businesses – should not be lower than the rate for light industry, given that those taxpayers use many more city services.

Although assessed values have gone up dramatically over the past year, the tax hike reflects the increased revenue the city will look to collect. That means homeowners whose assessments increased more than the average citywide rate will see taxes increase in excess of 2.01 per cent, while those whose assessments decreased less than the average could see a smaller hike, or even a reduction in taxes.