THE CORPORATION OF THE CITY OF PORT COQUITLAM

MAR 7 = 1998

B. Kirk, DATE: March 03, 1988
City Administrator.

FROM: Administration Committee.

SUBJECT: Tax Prepayments.

RECOMMENDATION:

That Council authorize the Clerk to Prepare a bylaw instituting a tax prepayment
scheme in July 1988 for 1989 property taxes.

BACKGROUND & COMMENTS:

Details of the plan are that the City would accept prepayments of property

taxes by automatically charging a property owner's bank account or accepting
payments in advance over the counter. The City would pay interast on the tax
prepayments cn a monthly basis at the proposed rate of bank prime rate less 2.524,

The main advantages of permitting tax predayments are:

To assist our taxpayers in their own budgets. At the present time property taxes
are the largest single bill that many taxpayers receive in 4 year, encouraging
prepayment through paying interest would help many taxpayers with their budgets.

For taxpayers with interest income they will find the plan even more attractive
than earlier thought with the changes taking place in the income tax act all
interest income will be taxable, not just interest over $1,000. Interest earned
under a tax prepayment scheme authorized by bylaw is not taxable as Revenue Canada
treats the amount as a discount for prepayment rather than interest.

The proposed interest rate would be attractive to property owners. For example as
of today:

Bank prime rate 9.75%
Daily interest savings rate 4.50%
Savings on min monthly balance 4.75%
Term deposit on min $5,000 5.75%

So an interest rate of prime less 2.5% or 7.25% would be attractive to property
owners.