City of Powell River’s finance committee has requested comparative information about the effects of its flat tax on various assessed values of homes.
The committee reviewed correspondence from Terry Faubert, a city resident, requesting the city eliminate or substantially reduce the flat tax. Currently, the tax is being reduced by five per cent per year and according to that schedule the tax will be off the books in 2030.
Councillor Maggie Hathaway said she thought Faubert made good suggestions.
“The points are really valid,” she said. “At five per cent per year it will be years and years before it levels out. I would like to take this to council to maybe discuss increasing the amount of the reduction per year.”
Councillor Karen Skadsheim said she thinks everyone was in agreement that this is not a fair tax. Mayor Dave Formosa said he was not in agreement.
Hathaway suggested the committee go along with the 25 per cent per year reduction of this tax as recommended by Faubert to speed up the implementation.
Mac Fraser, chief administrative officer, asked if the intention was for the flat tax to go to zero in this council’s term. Hathaway said that was the intention. She said Powell River is one of the very few communities in BC that still has the flat tax and she thinks it is time that it was gone. She then moved a recommendation to council to implement a 25 per cent reduction based on base year 2014.
Shehzad Somji, chief financial officer, said the flat tax amounts to about $380 per household and there are about 6,000 households on the tax roll so that amounts to about $2.2 million.
“You are not going to eliminate the revenue coming in,” he said. “You are just going to transfer it among all the residents. It’s going to be added to the mill rate, so now it’s going to be based on your assessment. Total tax revenue coming in is going to be the same, but how it’s going to be allocated among the households will be different.”
Hathaway said a request could be made for staff to provide a comparison of households and the effect of the change. She said, for example, staff could look at the effect of the change on a $50,000 house, a $200,000 house and a $1 million house.
“We could see in dollar amounts the pressure we might be putting on the higher value households as compared to what relief we’ll be giving to the lower value households,” she said.
Councillor Jim Palm said when putting reports together, it’s important to consider the time the city is in financially and economically.
“If you look at it historically, we had a lot more employment and a lot more business when this tax was initiated,” he said. “Now, if you eliminate it with a knee-jerk reaction to that extent of 25 per cent, I think that’s the wrong thing to do in these times. A large percentage of our homeowners on the upper end, who once had good-paying jobs, are now on fixed incomes. I think that largely has to be taken into consideration. I will be voting against this motion.”
Councillor Rob Southcott said he had concerns, too, about people on fixed incomes and wondered if there is some way of graphically providing details about what sector of the population Palm’s consideration actually affects.
Fraser suggested the matter be referred to the next finance committee meeting so that staff can bring back more details. He said he seemed to recollect that elimination of the flat tax has a positive effect on houses valued at more than $259,000 and diminishing positive effect for houses valued at less than $259,000.
He said there is no hurry to potentially make alterations to the taxation regime before the next budget. He said staff could refresh the information.
The finance committee passed a motion to defer the matter to a later meeting.
