Kimberley City Council had their annual discussion about doing away with the flat tax at a special budget meeting last week. This year council decided to hold steady rather than continue the $80 reduction to the tax.
In 2016, council of the day voted to begin reducing Kimberley’s flat tax by $80 a year, until it was gone. The reasoning behind it was that it as not fair that cheaper homes pay the same tax as higher priced homes.
The flat tax was introduced during the 1990s as a way to entice investors to purchase homes in a community. Only a few municipalities took on a flat tax, Kimberley being one of them. A couple of years later, the opportunity to bring on a flat tax was phased out but it was grandfathered for communities that had started it.
Every once then, Kimberley property owners pay a combination of mill rate and flat tax. As the flat tax goes down, the variable tax rate is adjusted so it’s a revenue neutral for the city.
“It wasn’t you in to shelter higher priced houses,” said Mayor Don McCormick. “It was to encourage development. In the 90s we had miners’ houses worth around $40,000 and new construction was worth maybe $200,000. The fear was new development wouldn’t come to town because of the difference in taxes.”
Now is not the time to reduce it further, McCormick said, because things are far from stable, given rising construction costs and inflation overall.
CFO Jim Hendriks explained that for every $80 decrease in the flat tax there is a corresponding three per cent increase in the variable rate.
“If your home is valued at the average, it evens out. If it’s lower, you get a decrease, if it’s higher, an increase.”
Coun. Jason McBain said that while he agreed that it was a regressive tax, in the current environment stability was necessary.
Coun. Sue Cairns said she had a hard time with properties being levied at the same rate no matter their value, and she was worried that if it wasn’t reduced this year, it may not be reduced again.
McCormick said that it wasn’t reduced in 2o19 but then it was in 2020 and 2021. It comes up for discussion every year, he said.
“We also have to remember that a house that was worth $300,000 a few years ago is now worth $600,000. These are not necessarily wealthy people living in them.”
Cairns said that as long as it was discussed every year, she was okay with not reducing it this year.
One interesting note pointed out by Hendriks was that a good number of lower-value homes in Kimberley are actually owned by non-residents. For instance, homes in the $100,000 to $200,000 value total 376. Out of that 61 per cent are owned by Kimberley residents and 39 per cent by non-residents. Non-resident ownership goes way down as housing prices rise.There are 209 properties in Kimberley worth between $700,000 and $800,000. Only seven per cent of them are owned by non-residents. Of homes worth a million and more, 31 per cent are owned by non-residents.
READ: Time to end flat tax, Coun. Goodwin says
READ: City of Kimberley will reduce flat tax again in 2022
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