Columns: Latest In The Loewen – Neufeld Debate

UPDATED – Today columnist Walter Neufeld responded to Abbotsford Councillor Dave Loewen’s claims about Abbotsford taxes in what has become an ongoing debate.

Councillor Dave Loewen has made a rather public and rather determined fuss about the figures quoted in Today columnist Walter Neufeld’s piece on Abbotsford’s high taxes.

Neufeld’s break down of the taxes paid in the communities of the Fraser Valley showed Abbotsford taxpayers paying the highest rates.

Loewen has taken the stance that, if you take the enormous amount Abbotsford pays for a private police force out of the equation, our taxes actually look much better when compared to other jurisdictions.

Dear Councillor Loewen,

Your responses are showing a disturbingly evasive pattern. Your latest email is no exception (it warrants neither further comment nor response)

At issue is the City’s fiscal mismanagement. Its harmful spending habits, high taxes and currently ill-advised YMCA proposed funding contributions all suggest a strategically fundamental fault-line at the center of its governance.

The property tax comparisons I provided are crystal clear. Abbotsford taxpayers pay higher taxes than most of their significant neighbouring municipalities. Those municipalities deliver the same, or better, services to their taxpayers. That’s the issue. We pay more taxes.

Put differently, the Titanic has been ruptured. Abbotsford’s taxpayers want to know how the City will fix the immanent threat to the vessel we all share?

I am asking you to answer the questions asked rather than the questions you’ve asked and answered.

For our guest readers, I’m providing a link to a National Post article by Terence Corcoran, titled “City politicians focus on utopian visions while citizens just want simple things, like passable roads.” You should consider reading it too. Although the article isn’t about Abbotsford, our community will immediately recognize its state-of-affairs described by many of the “issues” in the article.

I request that Council receive this correspondence in full and add it to Mondays agenda.

Finally, I urge all able constituents to attend the upcoming Council Meeting this coming Monday @ 3:00pm regarding the City’s propose tax gift to YMCA

Sincerely,
Walter Neufeld

———- Forwarded message ———-
From: Dave Loewen (Councillor)
Date: Sat, Jan 19, 2013 at 2:11 PM
Subject: Fwd: YMCA: Concerned constituent Delegation presentation to Council, Jan 21 @ 3pm
To: walter neufeld
Cc: _CouncilMembers , Jim Gordon , George Murray

Walter,

The focus of this response is the modified table you provided, taken from the latest municipal statistics provided by the BC government. That same link you included has other interesting tables and the one that draws my attention is entitled “Tax Burden”.

This table underlines a municipality’s capacity to carry their “tax burden”. I’ve attached my condensed version (‘A’). You will see that Whistler has the highest followed by West Vancouver, which makes sense. You will note that Abbotsford’s is less than half that of West Vancouver. Per Capita taxes in West Vancouver are $1125, while Abbotsford’s are $517 – 23rd highest, with many of the municipalities west of us higher. In fact, if you rank all municipalities on this table, you will find that Abbotsford is approximately 60th from the top. Surrey is noticeably lower than all Valley and Lower Mainland municipalities, due to its large population.

With respect to the table you have included (with your 4 additional columns), I have examined the original as provided by the Ministry and sorted it from highest to lowest for two columns: “Total Residential Property Taxes and Charges”, and “General Municipal Total”. I am not clear on what your additional columns are meant to say, other than Abbotsford has a higher mil rate, which in itself is really of little significance. Mil rate is simply the equation applied to arrive at the revenue required from property taxes to meet the municipality’s budgeted revenue for any given year. If the total assessed property value is high, the mil rate will be lower (eg. West Vancouver).

The table provided, by virtue of its title, is basing this information on a “Representative House”. Perhaps I’m misunderstanding what your additional columns are meant to support; I’m assuming you have added an additional calculation that would skew the original intent of the table itself. This table tells us that for “Total Residential Property Taxes and Charges”, Abbotsford is 26th, with West Vancouver having the highest; and that for “General Municipal Total”, Abbotsford is 18th. (My condensed versions ‘B’ and ‘C’ respectively.)

I’ve included a fourth table (condensed version ‘D’), which is sorted according to “% of Total Assessment” that is based on residential. At 82%, Abbotsford is 25th from the top (West Vancouver again, is 1st at 97%.). Surrey’s is 87%.

Regards,
Dave

Dear Councillor Loewen,

Thanks for your response.

Walter Neufeld

On your recommendation, I read the property tax report (see link below) and must admit it was a painful experience.

The report reviews, “…the impact of municipal property taxes on business on the overall competitiveness of British Columbia’s tax system.” It compares BC’s property taxes to a select group of other provinces (Ontario, Alberta, Quebec, Manitoba and Nova Scotia) and a select group of BC cities (Vancouver, Surrey, Abbotsford, Kelowna, Kamloops, Cranbrook, Prince George, Fort St. John, Victoria, and Nanaimo). Although some of the select provinces have higher tax rates than BC, there are a least three significant contributing factors: 1) some of those provincial municipalities pay a much larger role in funding social services, social housing, and land ambulance (for example- $864 per capita in Ontario versus $13 in BC); 2) snow clearing costs would be much higher in many eastern provinces; 3) road building/maintenance costs would be much higher in extreme whether provinces.

With all due respect, I suggest the “Property Taxes and Competitiveness in British Columbia” report adds little or no support for your defence of Abbotsford’s property taxes, Abbotsford’s spending habits and neither does it validate Abbotsford’s tentative support for YMCA funding.

Your suggestion that the report vindicates Abbotsford’s reasonable “… if not low property taxes….would suggest that we have among the lowest in Canada, not to mention British Columbia” is is not supported by the document actual contents. It is also at odds with the BC governments statistical data. To view an accurate comparison of Abbotsford’s status next to BC’s other municipalities, please see the BC government’s attached, “Local Government Tax Rates and Assessments” (see also web link: http://www.cscd.gov.bc.ca/lgd/infra/tax_rates/tax_rates2012.htm ”
Taxes & Charges on a Representative House”).

I’ve added four columns on the far right side (columns “N”, “O”, “P” & “Q”).
Column “N” provides the tax mill rate charged by each municipality.
Column “O” to its right represents a standardized house valued @ $400,000.00 in each of those municipalities.
Column “P” is the total assessed tax value in each community for a standardized house valued at $400,000.00.
Column “Q” is a simple numeric listing from 1 through 162 (“1” represent the highest municipal tax rate while “162” represents the lowest municipal tax rate for a standard $400,000.00 house)

The outcome is shocking. West Vancouver has the lowest tax rates, while the small community of Granisle has the highest rates. In other words, this review reveals that the least expensive houses are charged the highest proportionate tax while the most expensive houses get charged the lowest proportionate taxes. Abbotsford is highlighted in rust while our significant neighbouring municipalities are highlighted in green. Abbotsford ranks as the 92 highest tax rate charged for a 400,000.00 house value. Particularly interesting to this discussion is which municipalities pay less tax than Abbotsford (please see condensed summary table below). Greater value for less money. The question is why?

Now, back to the report where it notes, “… taxation of business properties (commercial and industrial) at higher tax rates than residential properties is a common practice across Canada, as it is in other countries (Bird and Slack, 2004).” (p58).

The report goes to great lengths to highlight the difficulties faced finding just the right balance between residential & business ratios by noting, ” Tax incentives are often wasted on firms that would have located there anyway. Moreover, tax incentives can lead to unfair competition among businesses and can lead to a situation where no major investments occur without them. Tax cuts need to be financed in some way and, if they are financed by cutting public services that businesses want, the net effect on economic development could be negative.” (p66).

You and I agree on at least one issue. The report hints at shifting a greater portion of the tax burden from business to residential homeowners. Disturbingly the report describes the appeal for higher residential taxes this way:

“The tax on residential property meets the criteria for a solid municipal tax better than any other tax. Its base is largely immobile. Revenue is generally predictable and stable in that it does not vary with the cyclical swings in economic activity as much as personal income and consumption- based taxes. The part of the tax that is on residential property is unlikely to be exported. It is highly visible and fair as long it covers the cost of providing those services that provide collective benefits to the local community. If the property tax is a local tax only (the federal and provincial governments do not levy the tax), harmonization problems and wasteful tax competition should not be a problem. A potential downside of a local property tax is that it may be more expensive to administer than other local taxes (income, sales, fuel, for example) that could be piggybacked onto existing federal or provincial taxes. This cost may be a small price to pay, however, if local governments are to have autonomy and flexibility in setting tax policy – important ingredients of responsible, efficient, and accountable local governments (Bird, 2001, at 3). (p57)

While the report suggests the potential for a greater tax burden shift from business to residential taxpayers, in-spite of the fact that it notes, “For residential properties, the share of taxes was 54 percent in 1985 and has risen to almost 60 percent in 2011” (p19). This potential threat will, no doubt, be hotly contested politically. We will leave battle for another day.

Tellingly, the report does not in any way evaluate the management of the taxes collected by municipalities. Why would you not have directed us to a report that included a section on “Living-within-your-Means & the Sustainable Benefits of Balanced Municipal Budgets”?

Currently, Abbotsford residents are looking to our elected representatives to break the cycle of previous tax mismanagement. The City’s decision about the upcoming YMCA funding proposal will tell Abbotsford taxpayers how well Councillors understand the reports missing “Living-within-your-Means & the Sustainable Benefits of Balanced Municipal Budgets” section.

I’ll take back the reference to “malfeasant spirit.” I don’t want it to distract from the dialogue.

I believe most residents are hopeful that City Council will decline approval of YMCA funding for the many compelling reasons already given herein and by others.

I’m hopeful that you’ll respond to the other outstanding issues raised below, especially my request for a referendum if council is unable to decline the YMCA funding request.

I request that Council receive this correspondence in full and add it to Mondays agenda.

End note: I believe this information to be accurate and look forward to any insights that might correct the above evaluations and thereby further insights. On the other hand, if the findings are correct then taxpayers have cause to be very upset.

Sincerely,

Walter Neufeld

Ps: I apologize in advance for any typos. I am nearly blind from this review.

———- Forwarded message ———-
From: Dave Loewen (Councillor)
Date: Thu, Jan 17, 2013 at 8:56 PM
Subject: Taxes et al
To: walter neufeld
Cc: _CouncilMembers , Jim Gordon , George Murray

Walter,

Councillor Dave Loewen

A recently released report (2012) entitled “Property Taxes and Competitiveness in British Columbia” was prepared by Harry Kitchen (Professor in Economics at Trent University) and Enid Slack (Professor at University of Toronto, interest in property tax) for the BC Expert Panel on Business Tax Competitiveness.

http://munkschool.utoronto.ca/imfg/uploads/208/business_property_tax_competitiveness_report.pdf

Terms of Reference for the report reads as follows:

The purpose of this study is to provide a basis for the Expert Panel to:

•
consider the impact of municipal property taxes on business on the overall competitiveness of the British Columbia tax system; and,
•
evaluate options – within the panels overall terms of reference – that could address areas where the analysis suggest municipal property taxation challenges the overall competiveness of British Columbia’s tax system.

The 85-page report focuses on a number of areas, including historical context as well as some national comparisons. The report provided both province-wide information and information on 10 specific cities: Vancouver, Surrey, Abbotsford, Kelowna, Kamloops, Cranbrook, Prince George, Fort. St. John, Victoria, and Nanaimo. They were chosen to include major cities, regional centres and to capture the range of tax rates.

I recommend this report for your reading, and therefore, I will only reference two sections to substantiate an assertion that has been made on more than one occasion – that Abbotsford has reasonable, if not low property taxes. In fact, this report would suggest that we have among the lowest in Canada, not to mention British Columbia. I might further add that if I read between the lines of the report, it could be deduced that the ratio of residential property to business property taxes is in need of adjusting; that residential property taxes should be higher, in favour of business property taxes (my personal read on this). I am not advocating for that.

The following extracts are taken from pages 40 & 44:

6. Inter-provincial Comparison of Property Taxes

Table 14 records property taxes plus payments in lieu of taxes per capita by class of property for municipal and education purposes in six representative provinces. Across these provinces, property taxes per capita were highest in Ontario at $1,785 per capita, followed by Alberta at $1,738, Quebec at $1,566, British Columbia at $1,342, Manitoba at $1,156, and Nova Scotia at $1,140.

The municipal portion of the property tax plus payments in lieu per capita in BC ($830) was lower than in Quebec ($1,566), Ontario ($1,251), Alberta ($1,325), and Nova Scotia ($919) but it was higher than in Manitoba ($787). Education property taxes per capita were highest in Ontario ($534), followed by roughly comparable levels in British Columbia ($512) and Alberta ($502), but considerably higher than in Manitoba ($369) and Nova Scotia ($221). The per capita education property tax in Quebec is less than $1.

A comparison of property taxes by property type reveals some variation across provinces. For municipal purposes, residential properties contribute the majority of property taxes in every province except for Alberta where the property taxes on non-residential and linear properties contribute the majority. Property taxes for education show a similar pattern where property taxes are used to fund elementary and secondary schooling – the majority of taxes are levied on the residential sector in every province except for Ontario where the commercial and industrial sectors pay more.

When municipal and education taxes per capita are combined, the residential sector contributes over 50 percent in every province except for Alberta where all other properties account for more than 50 percent of the total.

7. Inter-city Comparison of Property Taxes

Table 14 was an aggregation of all municipalities in each of the provinces. For this reason, it had the potential to hide variations in property taxes by source across municipalities of different size and importance. Tables 15 (only for BC) and Table 16 (for the rest of Canada) record property taxes and PILS for the major cities.

For BC cities (Table 15), the range of municipal taxes and PILS was quite large extending from highs of $1,263 per capita in Victoria and $1,024 in Prince George to lows of $483 in Surrey and $788 in Abbotsford. Such a wide variation from city to city is similar to the variation noted in earlier parts of this report.

For competitive purposes, the municipal tax on the business class of property is likely to be of greatest interest. In BC, the per capita average for the ten cities was $321; however, there was considerable variation across cities. For example, the tax ranged from a high of $605 per capita in Victoria to a low of $123 per capita in Surrey. Five of cities recorded per capita business taxes in the $200 range. (Abbotsford’s was $216.)

As with municipal taxes, education property taxes showed variation across BC cities with levels extending from highs of $639 per capita in Vancouver and $617 per capita in Victoria to lows of $267 in Prince George and $392 and $394 in Abbotsford and Surrey, respectively. The business class contribution to education taxes also shows wide variation across the cities. Per capita levels ranged from highs of $313 and $288 in Victoria and Vancouver respectively to lows of $110 in Prince George, $113 in Surrey, and $117 in Abbotsford and Kamloops.

The sum of all municipal and education property taxes varied considerably, ranging from highs of $1,879 and $1,592 per capita in Vancouver and Victoria, respectively to lows of $877 and $1,180 per capita in Surrey and Abbotsford

Walter, I think this report sheds a more positive light on Abbotsford than you are willing to admit. I regret that you associate words like “cavalier” and “malfeasance” with Council members. We are all property owners in Abbotsford and pay taxes like the next person; we believe very strongly in the future of this city, and that is why we decided to serve in this capacity. We want nothing but the best for our community, however, that “best” does have a price tag attached to it. Priorities are seldom, if ever, seen through the same lens by all.

Are we perfect? Absolutely not. Can we make improvements in how we manage City finances? Certainly, and complacency is not an option, as far as we are concerned. As you may know, we are in the process of effecting strategies that will result in greater financial sustainability. We expect to complete critical Service Reviews this year, and our DCC rates will be reviewed as well.

You should know that Council has only approved for the YMCA to proceed with next steps. At this point, I believe all Council members are keeping an open mind, and that much more dialogue will occur before any final signatures are affixed.

Regards,

Dave

For The Original Column Simply Click Here.