Property Taxes on Business and Industrial Property in British Columbia
Property taxes are an extremely important tax for the kind of local government structure we have in British Columbia. They finance local services by municipalities and regional districts and schools by the provincial government. Most of the services that property taxes finance are for the area where the taxes are raised. In other words, property tax is a group-user charge for benefits received for relatively small geographic areas.
Most jurisdictions tax different classes of property at different rates so that a class of property can pay for the services it receives. Business classes most often pay higher rates than residential classes. In general, the closer the balance between taxes paid and benefits received for local government services, the more efficient are the decisions on taxes and services. However, there exists the opportunity for municipal councils to tax some classes of property to subsidize services to others. The greatest risk is that residents, who are voters, will elect councils that simply tax business classes of property to keep residential taxes low without really considering the full impacts of such a decision.
Business investment has become increasingly mobile and jurisdictions have been forced to pay more attention to their own taxation relative to that of adjacent municipalities, provinces, and states in order to maintain a favourable business climate. High property tax rates can be a very significant factor for businesses as they decide whether or not to remain open, or to make a new investment. For this reason, it is in interests of all municipalities and others concerned with the business climate in British Columbia to look more closely at our property tax system.
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