Kimberley City Council has approved an $80 reduction to the flat tax by adopting the 2018 Tax Rates Bylaw.
Chief Financial Officer Jim Hendricks explained that this will be the third reduction to the flat tax since 2016. The $80 reduction to flat tax in 2018 will result in the flat tax rates going from $626 to $546, which results in about a $311,000 shift to the variable tax.
Despite concern from Mayor Don McCormick, Councillor Albert Hoglund, and some residents, the flat tax bylaw was approved at a regular Council meeting on Monday, May 14, 2018.
At the same meeting, resident Chris Willis was present to discuss a letter he recently submitted to Council stating that the flat tax adjustment is “unfair” especially for those with higher valued homes.
“It is obvious that the decision to lower the flat tax, which will result in an increase in taxes to some homeowners with a reduction to others, does not meet the criteria for a ‘fair’ decision,” wrote Willis.
“Basing taxes solely on the value of the property is not fair, just, equitable, impartial, unbiased, dispassionate, or, treating someone in a way that is right or reasonable, or treating a group of people equally and not allowing personal opinions to influence your judgement,” he added. “Many of these higher valued properties were purchased/built years ago before any changes to the flat tax were considered. Now with these changes, those homeowners are being penalized and supplementing others.”
Councillor Hoglund, who voted against the motion, says he hasn’t supported the flat tax reduction from the start.
“The flat tax began when Cominco was still [in operation] here. Cominco paid 52 per cent of the taxes but we didn’t deviate from the flat tax either. As our Chief Financial Officer says, Council put it in because they were concerned about the higher taxed houses [that] were getting hit a lot harder and we wanted to try and make it a bit more fair,” said Hoglund. “I know Council at the time were hoping [home] building would grow a little quicker with the ski hill and all the development that was happening…I don’t think there’s enough of an amount of building yet to solve that problem.”
Hendricks explained that the averaged assessed value of a single family dwelling, in 2018, is around $250,000.
“At that point, the $80 reduction to the flat tax and the increase to the variable tax to make up for that, cancel each other out. Properties valued at $250,000 and below will pay nothing or get a break and $250,000 and above will end up paying more,” said Hendricks.
Councillor Bev Middlebrook, who was present at the meeting via teleconference, says she has always been supportive of the flat tax reduction based on the fact that it is no longer available as an option for municipalities.
“One of the reasons I think it makes sense is because the entire province, besides some communities, supports the flat tax being removed. I feel there has to be a reason; it just doesn’t work anymore…If it worked, I believe that it would still be available.” said Middlebrook.
Mayor McCormick added that not all municipalities in the province have flat tax, and when it first came to be in the early 90’s there was a short window for municipalities to sign up, many of which didn’t.
“If we go back to 1991 or 1992, when we talk about the difference in assessments on new builds versus those [homes] that were there, what we’re talking about is cost of construction. The cost of construction at that time, and arguably still today, is considerably higher when you get a new home built than it is for resale homes that have been in the market for a long time,” said McCormick, who voted against the motion. “The differential between new builds and older homes is still substantial. The argument that was there back in the day is not necessarily an invalid argument today either.”
Councillor Kent Goodwin says that another factor before the flat tax was available was the fact that there was no minimum tax at the time.
“There were people who were actually not paying any tax at all and yet getting the same services. They would apply the home-owner grant, or whatever they had, and in some cases it was coming up negative, they were actually getting money back,” said Goodwin. “Now there’s a $350 minimum that you must pay before you can apply for the home owner grant. That was the case before the flat tax, but that was part of the dissatisfaction with how it was working at that time.”
The crux of the argument, says McCormick, isn’t wether or not the flat tax should be reduced, but how municipalities make up for it when they do so.
“If we want to get rid of it, we have to find a way of doing so that is fair to all taxpayers in town,” he said.
“Realistically as long as we have as big of an infrastructure deficit as we have, we are never going to use a new tax to reduce an old tax, because we need all the new tax we can get to reduce the infrastructure deficit,” responded Goodwin. “There isn’t going to be a time, soon, where we get more industrial tax and we can say ‘okay we can back off some of the other taxes’ because even with that we still have a deficit. I think it’s unrealistic to think we will find a new source of income and then we can reduce the flat tax without increasing the variable rate tax; I just can’t see it happening for a while.”