Municipalities continually complain that fringe area residents come into the city to work, shop and recreate but do not pay taxes to the city. This may be true in the sense of who sends their tax payment to city hall, but it is generally mistaken when who really pays taxes is considered. Furthermore, businesses, which benefit most directly from attracting employees and shoppers over a larger area, are significant direct taxpayers to the municipal government such that their tax revenues have been found to be in excess of the costs of servicing business, commuters and shoppers in studies that have been taken.
The most comprehensive study in British Columbia by KPMG for Vancouver, found that the business community in Vancouver covered their municipal servicing costs, including the costs of shoppers and commuter. They also provided such a surplus that Vancouver residents had to pay only 50 cents for each $1 worth of city benefits they received.
Claims of exploitation by fringe area residents where the municipality is the business centre just do not stand up. Given the extensive research on this issue, municipalities are better off because they don’t have the responsibility for funding roads, water, sewer, social services or policing costs for the fringe areas. This is why annexations to include fringe areas virtually always involve a net financial loss to the city.
The residents of West Bench, Sage Mesa, Westwood, Red Wing and Husula Highlands consisting of approximately 1,000 homes contribute to the City of Penticton approximately $280,000 for fire protection and $50,000 for library every year.
Another interesting fact is there are 1,000 homes in our area, and conservatively speaking there is an average of about $20,000 of disposable income from each home. This would equate to an economic benefit of about $20 million per year for goods and services purchased by our area in the City of Penticton.