Vancouver’s small businesses, the places that give our neighbourhoods their unique character, identity and vibrancy are at risk of being lost due to a myriad of compounding issues, with inequitable and unfair property taxation policy being front and centre. On April 25, after having just approved a 10.7% property tax hike, Vancouver City Council will now decide how to distribute the burden between its residential and commercial classes.
Without the ability to vote municipally, a previously held right that was taken away by the province in 1993, the commercial class has had to endure its unfair share of property taxation for years, both municipally and provincially. From valuing property at its highest and best use, which results in small businesses paying taxes on development potential at the much-higher commercial rate (essentially the air above the property until developed, if ever) to businesses subsidizing the ever-growing residential Vancouver tax base, we have witnessed so many small businesses close and be replaced by chains.
Today, commercial properties contribute 43% of the city’s property taxes but pay on average, 3.4 times more in property taxes than residents, and only occupy 7% of the land base. They also face many compounding pressures which impact their bottom line, not the least of which are property crime and vandalism. They also pay a premium for services like water and garbage collection, which are not covered in their taxes, unlike residential property owners.
If we want to maintain healthy and vital commercial high streets and walkable neighbourhoods throughout Vancouver, there must be a shift in the level of taxation facing neighbourhood cafes, restaurants, retailers and small businesses. They are the social, cultural and economic fabric of our communities; the places we gather to connect with friends and loved ones, they are the people that know us by name and support our local fundraisers, events and sports teams.
The Vancouver BIA Partnership, which represents 22 business improvement associations across the city, will make a presentation to Vancouver Council, where it will seek a 2% shift in the commercial and residential tax distribution ratio.
“We recognize that the prospect of changing the ratio is never an easy discussion,” said Neil Wyles, Executive Director of the Mount Pleasant Business Improvement Association. “However, a shift is necessary to help reflect the reality facing small businesses which make up a resounding 98% of all businesses in the city.”
According to the City of Vancouver’s annual Storefronts Inventory Report, the overall storefront vacancy rate on high streets was recorded at 11.9% in 2022, which is equivalent to about one-in-every-10 commercial retail units. A range of 5-7% vacancy is considered to be the target healthy range; however, currently only one out of the 22 BIA commercials districts is under 7% vacancy.
"We are losing businesses all across the city and we cannot take on anymore of the tax burden”, states Alyssa Sager of Leis de Buds, a flower shop on West 4thAvenue. “There are already so many additional costs and obstacles currently for businesses, and the idea of more property tax will absolutely devastate and close the doors of more small businesses in every neighbourhood."
In a city facing an affordability crisis, asking Vancouver residents to pay more is a difficult task, however, it may be the difference between a small business remaining open to welcome you or having to close. The BIA partnership is urging Vancouver residents to show support for their local commercial neighbourhoods and businesses by sharing public support on social media using hashtag #savesmallbusinessinvancouver and/or speaking at Council on April 25.
“We understand that for every business lost there is a unique reason. While there may be more than one contributing factor, business taxation and its impact, is the one common thread. Equitable property taxation policy is critical in shifting small businesses from surviving to thriving.” concluded Wyles.
About the Vancouver BIA Partnership:
The Vancouver BIA Partnership is the network of all 22 business improvement associations across the City of Vancouver, and together represents more than 25,000 businesses and commercial property owners, accounting for $39 billion in assessed property value and $457,327,096 in annual property taxes.