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_ The following article
Vancouver City Committee

ode

is from the brief of the
of the Labor-Progressive

Party to the Goldenberg Commission on provincial-
municipal finance. The brief sets forth much-need-
ed reforms in city financing aimed at basing taxa-
tion on the principle of “ability to pay,”” and thereby
finding the needed revenues for greater post-war
reconstruction and progress.

Other sections of this instructive brief will be
featured in Succeeding issues of the Pacific Tribune.

The revenue from taxation of real property

in round

figures is some 70 percent of the present gross revenue of

the

City. This has been the main revenue source in the

Past and undoubtedly will continue to be so in the future.

It is of the utmost importance,
then, that this revenue source
be examined to determine whether
it is fairly and properly levied.

It is claimed, in the City’s brief
te your Commission, that real es-
tate is carrying an excessively
heayy tax burden and cannot
Stand the additional taxation re-
quired to yield the increased rev-
enue that the City needs. We
Cannot agree with this conten-
tion. That the tax limit on small
properties, particularly homes
and small businesses, has been
reached is readily admitted. But
te say that all real property is
Over-taxed is an evasion of the
fact that higher priced commer-
cial and industrial property is not
Carrying a reasonable or a fair
share of taxation. That this is so
Can be seen when the three com-
ponent factors of the real property
tax are examined.

(a) Assessments: It is funda-
mental that the assessment, as
the primary factor in the real
Property tax, be a sound and ac-
curate reflection of actual real
values. Vancouver’s assessment
is far from this desirable condi-

_ tion. It is interesting to note that
this contention

is the opinion,
also of the provincial govern-
ment if their views are accur-
ately reflected in the brief to your
Commission by the City Council.
On page 8 of the City’s Brief it
is stated.

“Ehe Provincial Government
in the past has been inclined

to argue that Vancouver's as-
Sessments were very much out
of line with real values and
that the remedy was in the
hands of the City Council.”

The emphasis in the above is

ours and eXamination of such in-
formation as is made public re-
Sarding the assessment roll fully
bears this out. Wancouver’s as-
sessments are very much out of
line with real value.
,One indication of this can be
seen by comparing the assessment
for a period of years and the
cumulative addition of the build-
ing permits over the same period.
This would tend to show the
gross potential assessment assum-
ing that the assessments for the
year chosen to begin comparisons
is fully up to a proper figure.

1932 ;

Assessment ...... $374,524,630
Building Permits

1932-44 ns ay eke 76,142,561
1945 Possible

Assessment $450,667,191
1945 Actual

Assessment ...... 345,083,714
OSS) ee

$105,577,477

Even allowing a very wide mar-
gin for building permits not util-
ized this table indicates that as-
sessments have very Seriously
failed to keep pace with the econ-
cmic advance registered.

However all assessments are
not out of line in the same de-
gree. Those on homes and lower
priced properties tend to corre-
spona more closely te real values

RUT TTT

@ Feature Section

SEE _. ;

@ PACKING
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than the assessment on higher
priced properties. In other words,
the higher priced properties are
assessed at a lower fraction of
their value than the lewer priced
properties.

e@

We are convinced that this
Situation does in fact exist and it
had been our intention to sub-
mit factual assessment tables for
the city. Unfortunately either the
City does not have such essential
tabulations or we were denied ac-
cess to them. However we have
noted with very great interest
the Report of Dr. Max Cameron
On Education Finance in B.C. In
his report, pages 45, 46 and 47 he
demonstrates that this is the
situation generally in the Prov-
ince with considerable support-
Ing evidence. We presume that
you will have ready access to the
City’s, records and will examine
most closely this aspect of the
assessment.

(b) Tax “Convention”: The
foregoing picture of inadequate
assessments upon business and

commercial property, with con-
sequent large losses of revenue
to the City, is not complete with-

out a study of the present tax
eonvention. The real property
tax is not levied merely on the

basis of assessing land at soe
much, improvements at so much
and multiplying the total by the
balf of the assessed value of the
improvements is used in calculat-
ing the tax, while all the as-
sessed value of the land is used.
In other words the tax on one’s
Eome is calculated in the follow-
ing Manner:
Assessed value of

Jand (say)) “2.3.2. $ 500.00
Assessed value of

house (say) ......... 2000.00
Total assessed

Value: see ee $2500.00
Less half of value of

DOUSC arse ee eee eee 1000.00
Value for taxation $1500.00

{This sum is multiplied by the
Mill Rate to get the actual tax).

This method of calculating
the tax, known technically as
the “Tax Convention” is vicious—
ly regressive. It penalizes tax
payers whose land assessment
is high when compared with
the value of improvements. It
favors the taxpayers whose
land assessment is low when
compared with the value of the
improvements.

And who are these respective
taxpayers?

The small home owner almost
invariably has a house “improve-
ment” as it is technically called,
worth not so very much mors
than the land on which it stands.
Big commercial enterprises on
the other hand, almost invariably
ewn buildings whose value is
wastly greater than that of the
land which they occupy. Conse-
quently, the present tax conven-
tion, by giving a 50% exemption
to the largest portion of the as-
Sessment against a business (the
assessment of the building) in

axation On

Ability
‘To Pay!

effect reduces the tax payabte
by that business. In short the
present tax convention is a con-
venient, effective and inconspicu-
9us device for giving big business
huge tax exemptions, while at
the same time it saddles the smail
Gwner with 2a tax ,on a higher
proportion of the total value of
his property.

That our contention is correct
can be seen from the following
examples:

In the Citys own
for taxpayers” 1945 edition,

“statement
the

“average” home owner’s assess-

ment is stated to be: :
Por Wands 22 esha s $000.00
For improvements .... $2000.00

This is a ratio of land to im-
provements of 1 to 4.

While there are undoubtedly
instances of properties where the
vatios are smaller (e.g. 1 to 3, as
in the case of Shacks located on
fairly valuable property) it also
cannot be denied that throughout
the industrial and commercial
sections of the city the propor-
tions are substantially different.

in table form this truth can be
illustrated thus:

Average home, Land $500; Im-
provements, $2,000; Proportion, 1
to 4; Total Assessed Value, $2,500;
Taxation, $1,500.

Marine Bldg. (a large business

block: and, $102,600; Improve-
ments, $1,285,000; Proportion, i
te 12%; Total Assessed Value,
$1,387,600; Taxation, $747,100.
% of Assessment by Taxpayer
Average Home ......... 60%
Marine Bldg.
(a large business
DIOCI) eee ee ee 53.8%

Ehis table means that the
ovunmer of the Marime Building
pays taxes on 53.8% of his as-
sessment while the average

- Small home owner pays taxes
on 60% of his assessment. An-
other way of putting this is to-
say that the large owner gets
an extra 6.29% exemption over
the small owner. Clearly then,
; the home owners and small
business people pay a dispro-—
portionately higher share of the
property taxes than do the big
busimess, higher valued proper-
ties.

@

We vigorously object to this in-
Stance of discrimination against
those least able to pay not only
because of its patent
but also because it causes an
enormous loss of income to the
City. We submit that your Com-
mission should recommend revi-
sion of the tax convention so as
te lighten the burden on those
least able to pay and to shift a
greater proportion onto those
best able to pay. Specifically we
urge: .

i 2 continuatien of the present

taxation on land at 100% of as-
sessed value;
If a basic exemption from

taxation of the first $2,000,00 as-
sessment on all* homes, together
with a graduated scale of tax
able assessments on improve-
ments. This scale would have the
eifect of increasing the taxable
assessments on improvements
until the largest properties would
pay 75% of the assessed value of
improvements.

iit. Mill Rate: The very sharp
advance in the mill-rate in the
last ten year period reflects fin-
ancial mismanagement ef the
worst kind.

injustice _

NAAA

4

No other conetusion can
be drawn from a jump in
the mill-rate from 37.886 in 1937
to 545 in 1946; an inerease of
43.85% in 9 years. This catas-
trophic advance in the mill-rate
is a direct result of the failure
of successive city councils to halt
the raiding of the assessment
roils by owners of the higher
valued properties and a direct
result too, of perpetuating dis-
proportionately high tax exenip-
tion on the same higher-valued
properties. :

@

We suggest that the proposed
adjustment of the assessments
2nd with the adoption of our pre
posed tax-convention it would be
immediately possible to make 2
sharp cut-back in the mill-rate.

The combined affect of the
above proposal woula ont only
place the taxation of real prop-
erty on those best able to pay
but also simultaneously yield
greater revenues to the city. --

IV. Special taxation of blocks
of vacant land which have not
been sub-divided and are being
withheld from- the market until
such time as they have enhanced
in value by virtue of the growth
and deveolpment of the city. Ini
the meantime these blocks of
land are being taxed at a very
nominal figure and the city is
developing around and beyond
such lands. The City is being
put to considerable extra and un-
economic expense by providins ~
services to urban development
beyond these vacant properties.

In our opinion, it would be only
fair-and proper that the ordinary
tax be levied against such lands
as though they were sub-divided
and held by various owners. In
addition we propose that the large
vacant blocks being held for in-
erement in value at the expense
of the other taxpayers be subject
to a special development levy to
pay in part at least for the cest
of extending city services un-
economically beyond such proper-
ties. :

Pacific Tribune :

ON
THE ;
AIR

‘Behind the Headlines ;

“No, big business never did
allow a little thing like focd
for the people te interfere
with a higher rate of pre 4

with
AL
Parkin ,

fit. The lumber operaters
are not concerned about
fruit going to waste. They

are more interested in deny-
ing the striking Woodwork-
ers a decent wage and the
right to organize. For de-
cent wages might interfere
with prefits, and that is
met comsidered good busi ¢
mess.””

MONDAY
THROUGH FRIDAY ;
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