City of Langley proposes resolution for creating two residential tax rates

Earlier this month, I posted about the City of Langley’s 2016-2020 Financial Plan. I noted in that post that because of how the property taxation system works in BC, people owning apartments are likely to see a property tax decrease while people owning single-family houses are likely to see a property tax increase.

In BC, local governments apply different tax rates to the nine property classifications defined by the provincial government. The property tax you pay is the value of your property as defined by the BC Assessment Authority, divided by 1,000, then multiplied by the tax rate for your property classification.

This year, the City of Langley is proposing the following tax rates:

Residential, 3.8794
Utilities, 40
Supportive Housing, 3.8794
Light Industry, 9.9003
Business/Other, 8.8947
Recreation/Non-profit, 8.7947
Farm, 3.8794

The challenge with this is that there is only a single rate for all residential property types. The value of a typical apartment in Langley has gone down by 20% while the value of a single-family house has increase by 17% over the last 5 years. While an apartment owner should pay lower property tax than a single-family house owner, having some people’s property tax going up while other people’s property tax going down creates challenges around equity.

Some people have suggested the current single residential tax rate is good as it captures the value of massive property value increases. If people’s property values rise, but income doesn't, this idea doesn’t really work. Capturing windfall property value increases is better handled with changing the current property transfer tax legislation.

Because the values of single-family housing, townhouses, and apartments change at different rates, local government should be able to apply different tax rates to these different residential property types. This currently isn’t permitted under provincial legislation.

City of Langley Council is considering putting forward the following motion at the UBCM conference for the provincial government to consider:

WHEREAS the Province of British Columbia through the BC Assessment Act – Prescribed Classes of Property Regulation B.C. Reg. 438/81 specifies that there is one assessment class for all types of residential properties and the Community Charter outlines that a municipal bylaw to establish the property value taxes each year under section 197 (3) specifies there is a single rate for each property class;

AND WHEREAS the assessed value of the multifamily strata units are remaining constant and the single family residential properties are increasing at an accelerated rate causing a greater share of the property value taxes generated in the residential class to be borne by the single family residential properties;

THEREFORE BE IT RESOLVED that the Province of British Columbia amend the BC Assessment Act and the Community Charter to allow the residential class to be split into two distinct residential classes so that a different rate may be applied to each type of residential property to more equitably share the tax burden between the single family residential properties and the multifamily residential strata properties.

If this resolution passes at the next UBCM conference, it will be interesting to see the province's response.