A majority of City of Powell River council voted at the March 1 meeting to reduce the flat tax levied on residential properties, despite new information brought forward by Councillor Maggie Hathaway.
A flat tax is a levy of a specific dollar amount on a property, regardless of the assessed property value. It is used in conjunction with variable taxes. If the city eliminated its flat tax, owners of lower-valued properties would pay less, while those who own higher-valued properties would pay more.
In 2011, council voted to reduce the flat tax by five per cent. The motion before council on March 1 was to reduce the flat tax in 2012 by five per cent of the 2011 rate, or $455.
Hathaway, who was not at the February 16 committee-of-the-whole budget meeting where the issue was discussed, pointed out in 2010 the flat tax was $479. Because of the five per cent reduction in 2011, it was lowered to $455.
She said reducing the flat tax by 95 per cent of $455 rather than 90 per cent of $479 was not a five per cent decrease.
“By using the method suggested here, in the year 2083, there will still be a $10 flat tax owing,” she said. “Are we really attempting to eliminate the flat tax or is this simply lip service?”
By using an actual five per cent reduction per year from the starting point of $479, the flat tax would be eliminated by 2030, Hathaway said. “Using this method you would still owe $171 in 2030,” she said. “Using the method of 95 per cent of the previous year, you’re never going to get rid of it.”
Hathaway, who voted in opposition to the motion, held up pages of math she had done to work out her reasoning.
Councillor Russell Brewer said Hathaway had come to the same conclusion he did. “We’ll never actually get there if we use five per cent of the previous year,” he said. “She just went ahead and did the math.” He added he also supported reducing $479 each year.
Councillor Myrna Leishman agreed as well that the reduction should come off the original amount.
Councillor Debbie Dee said she was fine with the flat tax. She said it was beneficial for seniors, for example, who may be living on a fixed income, but who own a house that has experienced increasing assessments over the years. “They’ll never be able to afford the taxes if that flat tax is taken off,” she said. “This doesn’t actually look at if you can afford to pay those taxes or not. It only goes by assessed value.”
Although he said he understood both sides of the issue, Councillor Jim Palm supported the motion. “As Councillor Dee pointed out, someone that’s living in a modest home is not affected greatly by that flat tax and it kind of evens out the tax overall,” he said.
Dee, Palm, Councillor Chris McNaughton and Mayor Dave Formosa voted in favour of the motion, while Hathaway, Brewer and Leishman voted in opposition to it.
In 1990, the provincial government amended the Municipal Act to allow municipalities to apply a flat tax to residential class parcels as a means of mitigating inconsistent assessment changes. The flat tax section was only in provincial legislation for 1990 and 1991. It was removed in 1992 primarily because BC Assessments began annual assessments, smoothing out large assessment jumps. While municipalities that introduced flat taxes in 1990 or 1991 are allowed to keep them, no municipality can now introduce a flat tax.
Powell River introduced a flat tax in 1991. In 2009, there were only five municipalities in the province that still levied a flat tax.
