Not only should the flat tax be kept in place, but it should increase at the same rate as the residential tax. That was the main thrust of a presentation Powell River resident Paul McMahon brought before City of Powell River council at the committee of the whole meeting February 6.
“I would propose that the flat tax serves the same function as minimum wage,” McMahon said. “When market forces do not produce an acceptable outcome, such as minimum wage for example, we have a defined minimum,” a system that McMahon said creates a vast disparity from home to home when it comes to property assessments within defined neighbourhoods. In both cases, he said, market forces are relied on to create a certain outcome. These outcomes may vary based on geographic locations and on geographic dynamics in a given region. In the case of McMahon’s argument, Invermere Court was used as the example showing the disparity he interpreted.
“When growth isn’t there via competition, then we have a minimum wage-type scenario to fall back on,” said McMahon. “I would suggest that a flat tax is needed when the market forces cannot handle the economic reality in that specific area.”
Market forces alone will not provide for Powell River’s tax distribution process, he added. “A big part of the problem is that the average age of a residential unit in Powell River has increased significantly over the years, thus creating the need to supplement the market assessment system with a flat tax in order to provide a fair and equitable means of tax distribution.”
McMahon pointed out that the median assessment on the average home in this area was down by 35 per cent. He said this was due to Powell River’s slow and sometimes stagnant growth rate. For instance, a two-bedroom, one-bathroom home assessed at $138,000 is located on the same street as a new, two-bedroom, two-bathroom home assessed at $351,000. McMahon indicated that all of the lots on Invermere are fairly small and relatively the same size. “The average home price was down by distribution of the tax burden at 10 per cent,” he pointed out, “thus suggesting that something is skewed to the lower end. When the total assessed value of the building becomes equal to or less than the assessed value of the lot, then clearly there is a failure to cover the basic service costs.”
The flat tax was brought in, he explained, to better create a fair and equitable assessment process. He suggested considering what to do to try to fix the problem. “What problem is council fixing by making the flat tax redundant? I would encourage council to reconsider the benefit of the flat tax. I am into double-digit year-over-year increases and my investment is declining in value.”
Councillor Debbie Dee agreed, stating she believed the flat tax should remain and that she does not believe income and home assessment should be correlated. “I do believe that the flat tax has a levelling effect and is a good tool.”
Dee gave the example that a homeowner on one of the view lots down on Marine Avenue, who was working in the mill when he bought the home years ago, might now be retired and could be faced with losing the house altogether if property tax payments become unmanageable.
Mayor Dave Formosa also agreed, saying that when he first got into office he was approached by many people who have said the town is lucky that it is one of the few places that still has it in place. “Seniors today cannot afford increases and stand the chance of getting pushed out of their homes,” Formosa said.
Council requested a staff report and referred the matter to upcoming budget meetings.
