Few other tax sour British Columbians -are not alone in # their search for an alternative to the mee property tax, The B.C. School: Trusteas Association's report on property tax also. - looked into alternative forms of taxation — for local governments, as well as some current issues in the field. “The prospects of finding same new: ° kind of tax which will provide the de- : ea sired relief are not promising," says the « fe report. Il quotes a report of the Vienna me Congress of the International Union of aa Local Authorities of 1969: i ‘..it seems unlikely that completely’ | m new taxes will come to light.-New taxes ee ate nol even ‘referred to in the answers mm (to a questionnaire from 33 countries): & Local. authorities may’ well be: driven. or to share with ‘local authorities some. : will be cast, first upon the taxes of in: come, both personal and private”... Mm = ©There ere several tests which must be B spplied to any new local tax: (a) Is it ‘pos- MH sible to’ set the rata of the tax ‘locally? s (b) Is the tax sufficiently: visible to tax" - | payers, a0.they will be‘serialtive to local *: - m@ consistent with the provincial economy? . mw and (d) Does it provide: about the. same = measure of support in all dreas of the provinca? a earn rT «Here are some brief descriptions ‘of : r j other: Jocal taxes, taken. from: the White, raport: ml - Payroll-Tax, A local tex on, incomes is “kh A attractive because Itis based more direct: _- g ly on sarnings and thus on ability-to pay.) @. There are several kinds: Local diatricta. .:P! g (municlpalities) could: desig and Jevy- een thelr own: tax, ‘but ‘the ‘disadvantage’is, °. | that'it would result'in wide disparities” q _AN APPLE... . FOR THE TEACHING — _ The search ts:on fo painful way of fluanch: . our schoola,\.° levy the tax as a flat rate (no Progressive, _ as the federal income tax), but this again ° “imposes ils own inequities. . school boards (and hospitals and muni- cipalities)-a share-of the local federally- o ’ collected income tax, but this would pre- clude the -possibility. of -setting varying, . rates. throughout the province, one of the main tests of a local tax. The Oritario , Committee which ‘studied property tax concluded that such.a tax would be.ad- __ ministrative folly, ~. plied a local-sales tax in 1934, and many . schools were'aiso given: the right to levy ‘ a'local sales tax. Along with the provin- | /yclal salés ‘tax, this. made ‘three: separate authorities, inthe: sales tax field, so a. -Sommion sales tax base was. agreed ‘upon. - he right of local au- taxes, and the gov- athe sales: tax. and — somo of its raveriues with - inicipalities.“In effect, the tes arise. with Ih sales taxes, a ‘major. one eing t {th th which ‘a‘high tex.in be avoided by sim-, aps ina neighboring: the taxis equal. g: between. districts... Administration. ‘of. | B such a tax would be difficull, particular. ly tn ‘small collection ‘céntres,” A ‘way. ground the administrative problems isto 4 Ec ESE ” Another suggestion’ is to assign to © North’ American. cities have followed | ; i : ; _ ;_ Suit, In Canada suoh taxes have bean lim.’ H fiald of taxation. Inevitably envious-eyes “ied to Quebec, where every major city -. : I: -for-all three and the province collected. - i expenditure decistona?-(c)’ Would it, be y rr re . overnment grant. Difficul- TE, \ x |meet local tax criteria _ large and there Is a kind of discrimina- |, tion against certain industries. aa e Gasoline tax. Cars and traffic control” tepresent @ high part.of local municipal. : costs, and a taxon gasoline sounds at- tractive; But the provincial government: . cuirantly taxes ‘gasoline for proyincial toad-building usss, and while an addi- . tional local tax'on gasoline could raise ~ ‘considerable revenue, its yield would - vary greatly from,one area to another If - varying rates. were set to compensate, | - motorists would soon devalop the - _ THE HERALD, TERRACE, B.C. aot ” w Other tax increases. The White study ' p showed that Property taxes increased = ee “BR reperat 169-- ¢ * “Property taxes are too high, skyrock- sting higher every. yaar, and they’ra not — fairly applied.” — The above statement will meet with discussion on taxes. It is quite disturb- ing, therofore, to. learn that study. after study-into the property tax has failed to > find any evidence to substantiate such claims, though there is evidence that * property taxes are often poorly adminis- tered. . ° - 4, Public schools in British Columbia are - and so tha B.C. School Trustees Associa- tion has been sympathetic to critics. of _the property tax who charge that the tax ‘two studies of property. tax in B.C; The first, in 1966, pointed out some deficien- . Gies in the property tax; the second, pub- ‘lished in May of this year and presented to the BGSTA annual convention, re- dated it where necessary, and added a "New. section on alternatives for local tax- ation. Dean Philip White, of the Faculty of UBC, was involved in both studies. His . ‘conclusions in 1972 didn’t change from his conclusions in 1966: “Those who are realistically minded will not be surprised or disappointed to learn that our survey of alternative local - faxes has not led to the discovery of a new. source: of revenue which will at a stroke render the real property tax obsol- ete, put a larger amount of money in the . hands of school trustees and at the same 7 time reduce the burden of taxation.” In a word, despite its imperfections, the property tax is the best way we have to financing schools. - "But the report goes further. Evidence _ collected by Dean White and his col- league, Dr. Stanley W. Hamilton, does * not indicate that property taxes are “too high", or that they show evidence of “skyrocketing higher’. ae 7 compared property taxes as a Propor- . tion of house values in nine Canadian cities; Here is what these thres com- parisons yielded. = “18.7 . “shopping instinct" for lower a ya “in neighboring municipalities. * Poll Tax. It Is often suggested that an. fa vp annual flat-rate poll tax be paid’ b @ back on the willingness af higher author: © ¢ Local: Sales Tax. New. York City ap- mf ities to transfer taxes to local government Sons: who don't: otherwise. pay local assumption that renters don’t pay tases. Poll taxes, once ‘the primary sourca of a nt ub in most "(except Hull) sot a local tax, and in 4949, |”. parts of the Western world: . + "The report ‘cofiiments on three other. a ‘tax, have now been. abolished - contemporary issues in taxation. Site Value. ‘Taxation. The principle’ * * *. hare is to levy tax on land only, elimina- ting .asdessment “and “taxation on im- provements. One of the major effects of F such a taxation method would be tomar. * "|, Fow the tax base and to lose the consider- |. ~~ able taxes’ paid by industrial-and com- : mercial taxpayers. It would also add to ~' the weight of:tax‘on farms, and have the effect of taxling small homeowners higher than they are now. The tax is based on: _ There is expras- perty tax bears, ¥ per- taxes. This ‘argument rests on the false _ 1950 Direct and indirect taxes expressed as a OBS, reported in ‘The Real Property Tax — An Analysis’, BCSTA, 1972. foe ' Fates to the varlous classes of property -— sesidentlal, commercial, industrial, . - and agricultural — in order to provide... Tellef to.cartain kinds of users. While the \ ~ Concept 18 worth exploring, the raw data. "+. Fotmula provides fo te :~ @bove the basic yield of the property tax: .. Tate fer schools to eng I court canes. have Seah ‘lows to ‘property tax’ as ihe urce for school funds in several ‘stalas, general agreement in any coffee break . '~ financed through .local property taxes: ‘. fs oppressive and that a change is needed - . to some other taxing-system. in the past — “six years the BCSTA has commissioned - ‘Niewed the work of the 1966 study, up- - Commerce and Business Administration, ° ‘Are property taxes really too high? The ~ ~ question is‘only answerable by making . Comperisons with other taxes or tax rates” >: in‘ other provinces. Dean White made three’ comparisons: first, he compared *“the increase of federal, provincial, and * > local taxes in Canada since 1926; then, - "he compared the rate of property tax “. in BC: to other provinces; and third, he PROPERTY TAXES ” twelve times between 1039 and 1969, but this figure isn’t very meaningful because everything else — including wages, Prices and other taxes — have also in- . creased. Dean White compared the three texes | — federal, provincial and local — -ex- pressed-as a percentage of the Grass Na- tional Product, between the years 1926 and 1969. The graph shows that federal taxes rose from 6.9-per cent to 16.6 per | ‘cent of GNP; Provincial taxes rose from 2.1 percent to 9.1 per cent of GNP; and _ local taxes (mainly property) actually fell from 4.9 per cent of GNP in 1926 to 4.4 per cent in 1969. This certainly doesn't bear out the prevailing opinion that taxes are too high or have skyrock- eted in recent years. ¢ Tax and personal income. Gross Na- tional Product cannot be applied to pro- vinces, so to get a B.C. comparison Dean White compared property tax as a per- - centage of personal income in seven pro- - vinces (Because' local government and taxation structures ara so different in . New Foundland, New Brunswick and Prince Edward Island, they couldn't be used in the comparison). The result was. .. that in 1968, Saskatchewan led the List, with property tax representing 6.3 per " cent of provincial personal income. On- - tatio and Quebec came next with 5.8 per’ .cent each, followed by Alberta and B.C. - with 5.4 per cent, Manitoba was lowest with 5 per cent. The average for the- whole country was 5.4 per cent. The con- clusion is that the burden of the property tax in B.C. compares very well with other ‘provinces. ° ® Tax and. Capital Value. , The third Comparison shows property «taxes as a percentage of the selling price of houses “in nine Canadian cities, including Vic- - toria/Sdariich © and: “Greater “Vancouver. Several royal commissions and other-tax ‘studies in Canada have concluded that @ property tax is excessive when it ex- caeds two per cent of the capital value (selling price) ofahome. * | ' ' The nine-city.comparison, then, found that the highest median rate was 3.2 par ceat {Montreal), Victorla/Saanich wes lowest with a median rate of 1,1, and . Vancouver was second lowest in Canada with a median rate of 2.2 per-cent, Fig- ures are for homes sold between June and December, 1971. Again, in compari- _ son with other cities, B.C, property own- | 16.1- 1080 percentage of Grogs National Product, for selected cal in particular a California court decision, Serrano Vs. Priest, The Serrano decision . said financing schools through property taxis unconstitutional because tt pro-_. ‘duces ‘substantial disparittes ° between “school districts with varying tax bases. The report’ pointe out, however, that. this decision hes-no relevance to: B.C. . ‘where education, is also: supported. by: — perty tax. ‘The: difference is that in .° ~ Fro British Columbia, the Education Finance’. for government grants the ‘admlnistratio tax” to pay for sch MM rrovincia [_ ure equal finanting . of education in all districts, regardless of. “their rolative Wealth.’ Most other. critica ‘ot property tax:in the United States ‘sug. . gas : We ols} ere seem to havea significant break when it comes fotaxes. ~ , _ Whera does all of this leave-us?-The Property taxes are too high compared to . other Poviness and while the data indl- there is nothing to indicate’ they're in- * creasing any more than’ wages or prices, . and are certainly increasing less. than . other taxes, . - en, . PROPERTY TAX UNFAIR? | The third complaint is thatthe prop- erty tax is unfair. Dean White produces evidence that this is true, in part, But ” there are some surprisés in his findings. ‘Dean White's study of assessments showed wide divergences between asses- sed values of homes and actual. sale prices. Variations in assessment 10 per cent above’ or below the actual’ market value (selling price) of a home is accept- ‘able, but the study found that in seven of nine 8.C. municipalities studied, 44.3 ’ per cent of the assessments were inerror by plus-or minus 10. per cent of the sel- ‘ling price of the homes,. Part of the reason for such discrepan- cles, the report noted, is government: [ee regulations restricting increases in as- ~. sessments beyond certain. limits. The “five per cent rule’ limits the total‘ as- sessment increase in a school district to ’ 5 per cent in any year. The “10 per cent rule” limits Increases in the velue of a ‘single property to 10.per cent in any one year, except where the land has been, physically improved, Both of these artifi- cial limitations on assessment will tend ‘to exacerbate the discrepancies in assess- ments and to'this extent the study con- cedes the property tax is sometimes’ un- fairly administered. - Senior citizens and others on low fixed incomes often need relief from higher costs from all sides, including food pri- ‘ces, transportation, utilities and services as well as property taxes. Dean White makes the point in his study that, while the nead is evident in these cases, per- sons such as senior citizens on low fixed incomes should received financial zeliof_ from the burden of tising-costs, but this ’”” should come from a more -direct source than reduction or elimination of prop- - erty taxes. An obvious example would © & be higher pensions. . _ '. Another “unfair aspect of the prop- _ arty tax uncovered by the study was the rate of hidden property taxes tenants of apartment buildings: pay through their rents. A study of 65 apartment buildings in Greater Vancouver showed that ap- & proximately 14.5 per-cent of a tenant's Tent goes into property taxes, a much higher rate than a home-owner, who at least can vote on financial matters. —ltocaL 1965. - must be m and evidence at hand does not indicate that . (iam ‘Cates that taxes are increasing. steadily, .