Wednesday, August 27, 2014

2014 Property Taxes in Metro Vancouver

The other day, someone was telling me that taxes in the Township of Langley were lower than in the City of Langley. This was, as they told me, because the residential tax rate was lower in the Township than the City. I knew that taxpayers in the City pay less on average, and decided to do a bit more research.

Local governments in BC use property taxes to fund a great deal of local government services. Property taxes are charged based on the assessed value of a property multiplied by a tax rate. This seems simple enough, but it gets a bit more complex.

When local governments figure out their budget, they find out the expected increase in operating and capital expenses and they figure out what revenue will be needed. Based on the revenue needed, they will adjust various property tax rates and fees.

The tax rate is based on the assessed value of property, for example on my tax bill, the tax rate will go up and down based on the change in property value; even as the total tax collected increases.

The tax rate is more an indication of property value in a community, and is completely useless as a tax comparator. The following graph notes the residential property tax rate, and compares it to the per capita residential taxes paid. It also compares it to the total taxes paid which include school taxes, user fees, Metro Vancouver taxes, and TransLink taxes (to name a few.)

Residential property tax rate compared with per capita total residential property taxes and per capita total taxes in 2014. By municipality. Source: Local Government Tax Rates and Assessments. Select graph to enlarge.

As you can see, when looking at the per capita data, City of Langley residents on average pay less taxes than Township of Langley residents. Also interesting to note is that most communities in Metro Vancouver have similar per capita taxes.

Local governments in Metro Vancouver rely on more than just residential property tax to fund operations.

Total and percent total of different local government taxes in Metro Vancouver in 2014. By municipality. Source: Local Government Tax Rates and Assessments. Select graph to enlarge. Please note that the source document contains a typo re: user fees in the Township of Langley, corrected in the graph. See Township of Langley budget presentation for more information.

The graph shows that some municipalities rely more heavily on business property taxes than other. For example, West Vancouver almost entirely relies on residential property taxes while the City of Burnaby relies more on business property taxes. Of course on top of that, many municipalities charge user fees for things like water, sewer, and solid waste collection. This shifts reliance away from property taxes to user fees.

I did want to point out that the “All Other Taxes” includes School Tax, Metro Vancouver Regional District Tax, and TransLink Tax whose rates are sets regionally.

As you can see, property tax is fairly complex. Looking at residential property taxes is only a small part of the equation.

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