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Business groups quick to protest taxes, not so visible when they’re getting a break

January 12th, 2010 · 16 Comments

The region’s business groups have been out in force the past week, protesting TransLink’s parking-stall tax, complete with all the doodads of a contemporary marketing campaign (social media, instant ways to blast your local politician) and their research that proves, as it always does, that businesses are being done in by evil cash-grabbing governments.

Business groups have been wildly successful in recent years getting governments to scale back on their taxes, using those arguments. But they might want to consider ensuring that their campaign also includes thank-you notes after the fact.

It was noted with some resentment around Vancouver city hall, as budget mayhem was swirling before Christmas, that business groups were noticeable by their absence over the several nights of public speakers on the budget.

That left politicians, who were giving them a tax break of millions of dollars through the shift of business taxes to residential, to take a few tonnes of steaming flak from the public while those benefiting — with the exception of the indefatigable Bob Laurie — didn’t bother to show up and make their traditional argument about why this tax shift was so necessary.

Vancouver businesses can expect that they may not get such an automatic pass from council next time around.

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  • landlord

    It seems that every time tax policy is discussed someone has to point out yet again that businesses don’t pay any taxes. Their customers do. Taxes are just another overhead expense like rent or advertising. All of those costs are added to the price-tag of their service or product. Pay no attention to misleading statements to the contrary masquerading as arguments for tax “fairness”.

  • spartikus

    It seems that every time tax policy is discussed someone has to point out yet again that businesses don’t pay any taxes. Their customers do.

    And will they pass on their new tax savings to their customers? Yeah, I didn’t think so either.

    Modern economies are based on consumer spending, and there has been a massive tax shift onto consumers in this province (and elsewhere)…all while median wages have stagnated or worse. As they, it’s a vicious cycle.

  • landlord

    The same consumers demanding lower taxes are the ones demanding more and more government services. Those services are paid for through taxation. So which will it be, a tax-cut from a pandering, deficit-spending, war-mongering politician, or a speedy hip replacement and a thousand new busses?

  • Sharon

    I know for an absolute fact that at least 2 other members of the Vancouver Fair Tax Coalition (aka the business community) besides Bob Laurie spoke at 11pm after waiting 3 days for his turn at the evening budget hearings. Several of the Vancouver business community also attended the community public consultations meetings. I also know for a fact that the business community applauded the Mayor and Council in a public letter printed in the Vancouver Sun for making a tough decision.

    It is disrespectful to both the public and to Council to have 50 people say exactly the same thing – especially when public meetings such as the budget meeting are more theatre than consultation. Historically, the decisions about the split between commercial and residential rate payers are saved for a later date. At this stage of the debate the decision is usually the global budget number and the spending priorities. In past years we have been told we were off topic to discuss tax fairness at this juncture. We can’t seem to win for trying!

    Leet me also be clear – The 1% is not a gift or a tax holiday. It was recommended by an independent blue ribbon panel committee in the acknowledgment that the employers (yes, employers) of this city are being squeezed unfairly.

    Also be clear that even with the shift last year, the employement/business community is still staggering under a tax ratio that is unsustainable. This years decision only prevented it from getting worse.

    The business community does not speak en mass at council meetings – they speak with their hiring and with their choice of location. That is far more important that sitting in council chambers for hours on end listening to political theatre.

  • owner

    I am always amazed at how uninformed and narrow minded everyday Canadians are about how the economy and business works in their own country. Citizens missunderstand the very economy that they live in! The basic premise of business is to compete; we do it absolutely every day and Canadians benefit by it every time they pull out their wallets. If a business owner cannot compete … they die and another rises up because they run better or have something that customers want more. That is ever present. So any costs that any one business has over another can determine its success. So when customers say, “will they pass that savings (when taxes go down) onto the consumer?” Of course they will if it means a competitive advantage. Or they will add some benefit on because it is how they are going to survive. It is very very simple and yet customers continue to make the same arguements to justify passing (hiding) taxes onto businesses and instead of holding their politicians to account for hiding taxes in the cost of business. They blame the business. Crap! Think beyond the most narrow minded first thought… take it at least to the next step. Business are part of the community; we depend on them in every way yet at the same time we want them to pay for everything else that citizens want. When parking taxes go up it has an effect on everyone in some way but it can mean selecting out some businesses to be much less competitive. In this case Translink is choosing a very narrow part of the population and telling them to pay a very high price to finance their ineptitude. They know that citizens want something for nothing, and they also know that there is a serious prejudice against business in Canada, so they know where to strike. If you think they care about the economy you should think again. They only care about their own jobs and survival in a population that thinks it is deserving of something that someone else should pay for. THINK!

  • MB

    I would feel less cynical about Sharon’s comments above if we homeowners could write down a portion of our mortgages against taxes.

  • Sharon

    MB- in the last 5 years, how much money have you made in equity on your house?

    Did you know that for every dollar of services you consume in the city of Vancouver you pay 50 cents for it?

    you know who pays the other 50 cents of what you consume?

    The business community would be happy to pay a premium for the fact that they write off taxes as an expense. No problemo! Truth is, that level of fairness is so far away from the numbers we are talking about, you would be shocked.

  • owner

    What is this thing about writing off property taxes? Look at the facts: 1. If a business owner takes money out of their business they pay taxes just like anyone else – no extra write offs and the same tax rates. 2. When the business writes off the property taxes as an expense to the business it is against business income taxes. Business income taxes are very low compared to personal income so the write off (if there is any because the write off is only if there is income in the business and may businesses operate on surprising little profit) is against business profits. OH MY you are going to cry foul! Why are business income taxes so much lower? The reason is that in Canada we are desperate to keep our business owners investing in their businesses so governments make sure there is an incentive to do just that. Whether it is to pay higher wages, to make a better product or to grow their business. It works for everyone in our economy to have our employers prosperous. But property tax is not business tax; it is property tax. And some properties pay way more tax than other properties and the tenants of commercial properties pay all the expense to the property because they are the ones ‘using’ it. They pay disproportionately more taxes. As sweet as that sounds to the residential rate payer that businesses should pay more they are ultimately the looser in the deal. Employers look elsewhere to locate and employ people and before you know it we have a situation like we have in Vancouver where more and more people have to leave the city to get work. The only ones that are fooled in all this are those that listen to the politicians that tell them that the so-called ‘businesses’ should pay more and more. In the case of Vancouver the share of the property taxes paid by commercial property owners has been way out of whack for many many years but since it is easier for politicians and civic staff to just continue with the inequity rather than face the wrath of voters they have let it go until now it is clear that something has to be done. And that is what the 1% is. It is not a tax break. It is about time.

  • spartikus

    Citizens missunderstand the very economy that they live in! The basic premise of business is to compete

    Ah yes, the Invisible Hand is infallible, the markets always behave rationally and, as Betamax users and Window users can attest, the best product always triumphs.

    Of course they will if it means a competitive advantage.

    Indeed. I’m still delighting in all the savings passed on for imported goods from the rise of the Canadian dollar.

    So far, consumer spending has held up in Canada – may it remain so. But disposable incomes are shrinking. But I kind of get the idea that the two business owners here cater to a high-end clientele who don’t have to worry about such things.

    The fact remains that Vancouver has one of the lowest business property taxes in the country, and the business bankruptcy rate is the lowest in the province and is dropping over time.

  • Sharon

    Spartikus, go and do a little more research. Lowest property taxes in the country is 100% false.

  • spartikus

    Lowest property taxes in the country is 100% false.

    Well lucky me I didn’t actually say that.

    That said, I can see what I wrote is confusing (though not in the way Sharon suggests) so I will restate for clarity – “has one of the lowest tax rates amongst major cities in the country.”

  • spartikus

    Another point worth noting: Many businesses, especially the smaller ones, lease their commercial space. Will landlords pass on their tax savings to their tenants or will they do what landlords do and pay what the market will bear?

    As the Property Tax Policy Review Commission notes itself: There is little evidence to suggest that property taxes have
    had a negative impact on business investment or the demand for commercial space.
    Indeed, competition for commercial space has kept market rents higher in the City than
    in other GVRD locations.

  • spartikus

    and pay what the market will bear?

    That should read charge what the market will bear.

  • Glissando Remmy

    Owner @ 5 says:

    “The basic premise of business is to compete; we do it absolutely every day and Canadians benefit by it every time they pull out their wallets.”
    Oh really? Please check out the following link.

    http://www.vancouvergasprices.com/

    If the competition is so fierce, it must have a blinding effect on me ’cause I can’t see it.
    Could you please point it out for me?

    We live in Vancouver and this keeps us busy.

  • MB

    In response to Sharon’s query regarding increasing home equity, that is completely irrelevant to me until I decide to sell, which in all likelihood will be never.

    It IS relevant to the level of taxes that I pay. There have been very substantial tax increases over the last decade based on the increase in assessed value, and on resdistributing a greater share of the tax burden to home owners from businesses.

    I’ve made this point before, but we in the city of Vancouver pay a larger per capita share of the largest single annual municipal budget than every other city in the region because we are a city that provides a huge array of regional services and amenities. The city administration over three councils has also decided to place its taxpayers at far greater risk with SEFC.

    I think it’s time to look at a fairer distribution of taxes throughout Metro Vancouver where the region pays in part for regional amenities located in Vancouver.

  • Otis Krayola

    @MB (#15),
    Right about here (I predict) we’ll hear the howls of those in the ‘burbs, who will complain that Metro (in the guise of TransLink) gouges them and shorts them on transit service.