Campbell River tax burden to be borne by residents

Business owners will likely not see any increase in their tax bill from the city this year

Business owners will likely not see any increase in their tax bill from the city this year.

Council voted at Tuesday night’s financial planning meeting to not increase business taxes and have all taxation changes be borne by residential taxpayers.

The city is facing a $3.6 million budget deficit for 2012 and if the shortfall were to be made up only by residential taxpayers, homeowners would be saddled with a 24 per cent annual tax increase or $288 more per year.

Council has three options for balancing the budget – increasing taxes, cutting city services, and drawing from reserves. Keeping in mind council may have to resort to option number one, Coun. Andy Adams said it would not be fair to small business owners to raise their property taxes as well as taxes on their business.

“Small business owners are also typically property owners here in Campbell River, so it would be a double whammy for small business owners who are right now on the margin,” Adams said. “They’re on the margin because disposable income is down in our community and the first thing that takes a hit is the small businesses. To hit them with a residential tax increase and a business increase tax increase, I think it’s putting some of our small businesses at an increased risk and they are the lifeblood of our community and keeping the economic engine running.”

Coun. Claire Moglove was hesitant to make a decision regarding taxes so early on in the budget process when council doesn’t know what the bottom line of the operating budget will be.

Moglove also acknowledged that some business owners may prefer to have the tax increase on their business as opposed to on their property, as often business taxes can be written off.

“It possibly may be in the business community’s best interest to increase the business tax and limit the increase in residential tax,” Moglove said. “Maybe the business class would actually prefer a business tax increase because it’s tax deductible.”

Coun. Larry Samson agreed with Moglove that council should hold off on making a decision.

Adams countered that a decision now would define some of the parametres and council could, at a later date, rescind the motion to not increase taxes and re-consider its decision. In the end, Moglove and Samson were the only councillors opposed to not increasing business taxes. Last year, business taxes increased by half a per cent. For the average business, valued at $147,000, that meant an increase of roughly $25 per year.