City of Powell River council voted at the February 3 meeting to reduce the flat tax levied on residential properties by five per cent in 2011.
In 2010, council made a decision to hold the flat tax without an increase, which, according to Dave Douglas, director of financial services, was equivalent to an eight per cent reduction, Councillor Chris McNaughton said when making the motion to set the 2011 flat tax on residential properties at 95 per cent of the 2010 rate. Council also agreed last year to consider gradual reductions to the flat tax.
A flat tax is a levy of a specific dollar amount on a property, regardless of the assessed property value. It is used in conjunction with variable taxes.
In 2010, the city charged a $479 flat tax on residential parcels with houses, the same rate as in 2009, in addition to the property value tax. Reducing or eliminating the flat tax and building the equivalent tax revenue into the residential mill rate means that less expensive properties pay less and more expensive properties pay more.
Councillor Maggie Hathaway said she thought a 10 per cent reduction would be more reasonable. “Five per cent seems awfully low,” Hathaway said. “At this rate it’s going to take us 20 years to reduce it to nothing.”
McNaughton pointed out that council has not agreed to eliminate the flat tax. “What council has done is agree to review the flat tax and to reduce the flat tax,” he said. “It wasn’t recommended by staff that the tax be eliminated, nor was the conversation held by council at the committee of the whole that that would be the end result.”
The flat tax recognizes that all of the services provided by the city are consumed by all of the residents, McNaughton added. “We’re moving in a direction to transition away from the current rate,” he said.
Councillor Debbie Dee pointed out reducing the flat tax affects higher priced properties. “That’s higher priced properties, not necessarily high income earners,” she said. “This could be seniors in our community who bought decades ago and their property values have gone up and up and up and they’re now living on pensions.”
Powell River is one of five local governments in BC that divides residential property taxation into flat tax and property value tax.
In 2009, the flat tax represented just over 36 per cent of the total residential property tax collected. The city collected $2,559,144 as flat tax and just over $4,510,304 as residential property value tax.
In 2010, the flat tax represented just over 33 per cent of the total. The city collected $2,574,086 as flat tax and $5,185,831 as residential property value tax.
