Money How high is too high? Vancouver's property tax dilemma
Vancouver councillors send budget with 8.2% tax hike back to the drawing board
"We're hearing loud and clear that the increase is too high," said NPA Coun. Sarah Kirby-Yung.The city's controversial draft budget for 2020 was rejected by councillors Tuesday, who asked staff to come back Wednesday with suggestions to get the hike down to between five and seven per cent.
Editor’s note: The opinions in this article are the author’s, as published by our content partner, and do not necessarily represent the views of MSN or Microsoft.
If the City of Vancouver's proposed 2020 budget is approved, homeowners can expect an 8.2 per cent property tax hike — 9.3 per cent when factoring next year's increase in utility fees.
It is a hefty increase considering the average Vancouver property tax increase over the past five years was only 3.46 per cent.
However, it is being justified by the City of Vancouver as a necessity in order to fund initiatives to address the housing crisis, protect our environment and deliver quality core services.
City of Vancouver considering biggest property tax increase in over a decade
If council passes the city budget as proposed, it would mean an estimated increase of $354 for the City of Vancouver's portion of the property tax bill on the median single-family home, from $3,809 to $4,163. Council is expected to vote on the budget by the end of the year and may propose amendments to reduce the tax increase — as they did last year — when a proposed 4.9 per cent increase was eventually reduced to 4.5 per cent.A special meeting is scheduled on Dec. 3 for members of the public to speak to council about the budget.Why the big increase?Overall, Vancouver's operating budget is proposed to increase by 7.
Also, several economists have defended the increase as Vancouver's "mill rate" or the tax owing per $1,000 in property value, is lower than most other municipalities in B.C.
My take on the 9.3 per cent increase is a little different. Comparing Vancouver's "mill" rate to other municipalities across B.C. or Canada, while interesting, doesn't make me feel any better about paying the 9.3 per cent tax hike.
I consider the many variables which affect a city's budget.
In Vancouver's case, factors such as density, property values, and snow-removal will be very different from a city's like Terrace, or even Surrey or West Vancouver. Therefore, comparing mill rates is like comparing apples to oranges.
The effect on renters
It will be interesting to see how the tax hike will affect renters. Those currently renting won't be affected too much as B.C. limits rent increases to the cost of inflation.
Anonymous pro-China letter and a fight at Richmond high school prompt district-wide meetings
Senior staff spoke to principals at all 10 high schools after two incidents erupted at Richmond Secondary School.On Nov. 25, a fight broke out between a group of students and an open letter was posted on another student's locker in support of China at Richmond Secondary School in B.C.
Also, the city is planning on using some of the revenue generated by the tax increase to fund new affordable housing, tenant relocation and tenant protective policies.
The news isn't as good for landlords or new renters. Landlords add up all their costs such as financing, property taxes, strata, utilities and maintenance. Then, if the market allows it, set their rents hoping to cover their expenses. Therefore, a large increase in property tax ultimately be will be passed down to the renter in the form of higher rent.
Currently, many landlords are factoring in a bigger buffer into their cost analysis. The provincial government restricts rent increases to the rate of inflation, which for 2020 is 2.6 per cent.
This limitation is problematic for landlords as many of their expenses are increasing by five to 10 per cent. I'd anticipate that some are planning to increase their rents to new renters or economize elsewhere by spending less on maintenance.
Fight over $18M East Vancouver parking lot escalates with lawsuit
Local property owners and merchants believe they bought and paid for the Hastings Sunrise parking lot years ago. But the City of Vancouver is on title and plans to develop it for social housing.The Hastings Sunrise parking lot in the 2500-block of Franklin Street is a throwback to bygone days: a paved half-city block containing 180 free parking spots to lure car-driving customers to the neighbourhood's small shops and hipster restaurants.
As this is a draft budget, there is time for the City of Vancouver to make changes and lower the property tax hike, perhaps somewhere in the seven per cent range.
Psychologically, seeing a tax drop from 9.3 per cent down to seven per cent is a lot more palatable than experiencing an increase from 4.5 per cent (the 2019 rate increase) to seven per cent.
This is a common tactic used in sales and negotiations which, in the field of behaviour finance is referred to as "anchoring bias."
'Worrying' inflationary trend
Just five years ago, Vancouver's property tax increases were roughly in line with the rate of inflation, around two per cent. But in 2017, they jumped to four per cent, and are now proposed to be 8.2 per cent for 2020.
This is a worrying inflationary trend as it far exceeds most homeowners' salaries or landlords' profit margins.
When I reviewed the 600-plus-page draft Vancouver budget, it read like a highlight reel of the city's dreams and initiatives. However, critically, it lacked a cost/benefit breakdown for each initiative.
I understand that it is expensive to run a city and that Vancouver is "only" asking for an additional $354 from the owner of median single-family home.
However, between this and all the other increases in fees, such as Hydro and ICBC increases, homeowners are tapped out.
Rather than relying on homeowners as a captive and endless source of revenues, the city should instead focus on cutting costs, adjusting its goals and finding new sources of revenue.
I'm not against property tax increases. I know they are necessary.
But let's makes it easier for homeowners with smaller, more gradual increases as they too have a budget that needs to be balanced.
Vancouver empty homes tax nets another $39M as number of vacant properties drop, city says .
According to the report released Wednesday, $39.4 million in revenue was raised during the 2018 tax year, which was collected from the owners of 1,989 vacant properties. That's a 22 per cent drop from the number of vacant properties taxed in 2017, when 2,538 homes generated $38 million in revenue.The revenue collected by the empty homes tax goes towards affordable housing projects and programs in Vancouver, including the creation of new housing and enhanced protections for renters.
Top 3 Housing Bubble Signals that YOU MUST KNOW (2017 New Ver.) | Investing 101
Old Version: https://youtu.be/k5hc2jcxrHM ) This is an updated version for 2017. If you want to get a house this year, please watch it first and get to know the ...
????⬇ Housing Bubble and the Great Recession | 2008 Financial Crisis
2008 Financial Crisis (The Great Recession) was initiated by bursting of the housing bubble. But why there was a housing bubble in the first place? What was ...