City Hall

Penticton council votes to shift tax burden to businesses

“The businesses staying afloat are what’s going to keep our community afloat,” said coun. Watt

Penticton’s city council had a lively discussion during their May 4 meeting regarding their continuing efforts to shift the city’s tax burden.

Coun. Frank Regehr proposed to go with the compromise recommendation, one of three, to shift the city’s tax burden to fall more on businesses.

Councillors Katie Robinson and Campbell Watt voted to support Regehr, while coun. Judy Sentes and Mayor John Vassilaki voted against the decision, citing how much businesses are hurting through this pandemic.

The tax burden, with the 3-2 vote, would shift so that 26.27 per cent of the burden would be covered by businesses, who make up 15.24 per cent of the assessed value in the community.

The approved 1.91 multiplier is still short of the 2.0 goal that council had set to reach in 2019, but higher than the 1.75 that was set in 2020. For every $1 a residential property will pay in taxes, a business will pay $1.91 under the multiplier.

READ MORE: Penticton council approves tax increase of 2.25 per cent after budget deliberations

The average residential tax bill will be $1,769 for 2021, an increase of $15 or 0.85 per cent from 2020. Businesses can expect a higher increase of 5.71 per cent, or $469 for an average bill of $8,695 for 2021.

Coun. Regerh called for the compromise, acknowledging that there would be those who would protest the increase.

“There are five per cent of businesses that pay 50 per cent of the business taxes,” said Regehr. “We don’t have all day to talk about taxation, nobody wants to believe their getting their fair value. Taxes are collected not because of services you receive, but rather that’s the taxing formula and a lot of people don’t get value for their taxes.”

Regerh also noted that he had put together the numbers for the downtown, and he found that for businesses and local restaurants their tax assessments were around $600,000, compared to the average business value of $1.2 million.

Robinson also expressed concerns about it.

“We do realize how difficult this is on our business community, however we can’t be oblivious to the fact that the residential tax base has been shouldering this burden for many years and we need to move on and catch up with other communities,” said Robinson.

“I have to tell you, my concerns are that of all the subsidies we see our federal government giving are to businesses. Businesses really need the help, and I don’t think there is anybody here who hasn’t seen that in our community.”

Watt noted that the decision to incrementally increase the business tax rate multiplier had been agreed on prior to the COVID-19 pandemic.

“The businesses staying afloat are what’s going to keep our community afloat. Small business is our backbone. I fight for business and small business every opportunity I can get. But what I also know, that for those small businesses that are closing, for each of those employees they still have to find a way to pay their mortgage. I can see where we were going, but now we have to think community-wide and community-wide takes compromise.”

READ MORE: Project delays and budget overruns due to COVID-19 in Penticton first quarter update

Coun. Judy Sentes took Watt’s hesitancy further, calling for the city to hold to the existing tax rate ratio for a second year while the pandemic continues. She also took issue with comparing Penticton to other communities and using other municipalities as benchmarks for progress.

“As you talk with businesses in our community, despite what the federal government has attempted to do, we’re losing businesses,” said Sentes. “I don’t care what other communities in our neck of the woods are doing, Penticton is its own place.”

Mayor John Vassilaki joined Sentes in voting against the motion. He pointed to the discussions he has with the people of Penticton on a regular basis, and the many businesses he sees closing.

“I do a lot of my work, not at my office but on the streets of Penticton,” said Vassilaki. “We’re the ones who deal with our public more than the other two levels of government, they are our people. We have to do something to help them out, no matter how little it is.”

The average business tax rate multiplier for other communities in the Okanagan is 2.15.

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