At a regular Council Meeting on Monday, April 23, Kimberley City Council approved first, second and third reading to the City of Kimberley Flat Tax Bylaw, despite Mayor Don McCormick and Councillor Albert Hoglund being opposed. Council will vote on the adoption of the bylaw at a subsequent meeting.
Chief Financial Officer Jim Hendricks explained that this will be the third reduction to the flat tax since 2016.
“We’ve been charging flat tax at some level since 1990,” explained Hendricks. “In 2016 Council passed a resolution to reduce the flat tax $60 per year over a ten year period, eventually phasing it out. There is a corresponding increase to the variable tax rate to make up that lost revenue and ensure there is no loss in tax overall.”
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.
“The higher assessed properties will end up getting taxed more because of the shift in variable tax, while lower valued properties will see more of a benefit with the reduction to flat tax,” Hendricks said. “If adopted, flat tax will be reduced to $546 for 2018 and will be revisited again in 2019’s budget deliberations.”
Councillor Darryl Oakley says that the current situation with the flat tax is a “burden” on Council, especially with the lack of an industrial tax base, however he believes it still needs to be “dealt with”.
McCormick, who has been opposed to the reduction of flat tax since first recommended, says that moving the lost revenue over to the variable tax rate is not a good long-term solution.
“Should we want to reduce it [flat tax] further, we need to figure out a way of reducing it without moving it onto the variable tax. We are in the third year and I think we need to take a very close look at this next time,” said McCormick.
Councillor Albert Hoglund said he would be voting against it because he has done so from the start.
“I understand the onus it will be putting on our CFO, but I have disagreed with it from the start and I can’t agree with it just so it continues,” Hoglund said.
Oakley says that Council has reduced the flat tax quite a bit, and it will be something for the new Council to debate after the election this fall.
The Mayor says he would describe the current process as “tinkering”, as opposed to a fundamental change for how they approach taxation for all tax payers.
“We need to come to grips with the fact that moving money around is not the goal. The goal is to get new money and figure out ways that we can, should we choose as a council to reduce the flat tax, that it’s not at the expense of other taxpayers,” said McCormick. “Our job as a Council here is to look out for all of our taxpayers, not just a certain group within the tax base. It’s really important that we remain objective in that regard.”
Councillor Kent Goodwin says that those who can afford to pay more should do so.
“I definitely believe that the fairest forms of taxation are based on having people who have the ability to pay more pay a little more, and the people who can’t make ends meet pay correspondingly less,” Goodwin said. “I think that’s what graduated income tax is all about and I think that’s what variable tax is all about, to some extent, but I’ll admit it’s not perfect. We have the flat tax, we have the parcel tax, and we have all the utility fees, some of which we’re raising by five per cent a year for the next couple of years. Those are similar to another flat tax, so it’s the same burden on everybody whether they have a lot of money or very little money and I think taking another step this year to try to rebalance things a little bit is the right way to go.”