Vancouver's small business sector is being killed by unfairly high property taxes, says a group of small-business owners.

"Unless people scream and get vocal nothing will change, because the current Vancouver city council, with few exceptions, sees there is nothing wrong with the way property taxes are being assessed right now," says Deanna Geisheimer, owner of Art Works, a small Vancouver art gallery with eight employees.

Geisheimer was among a group of small-business owners and representatives from the Vancouver Board of Trade who appeared last week before Vancouver city council to protest what they call the city's inequitable property tax policy.

Dave Park, the Board of Trade's assistant managing director and chief economist, told council that over the past 20 years, property tax increases have resulted in business taxpayers bearing the majority of the tax burden.

George Froehlich, Business Edge
Leonard Schein advocates a 20-year phase-in period to reduce the mill rate on business properties in Vancouver.

"Businesses have been unfairly subsidizing the tax bills of the residential tax base," Park said.

In his statement, Park also noted that city council has not taken action on the high business property taxes because it wanted to finish a tax policy review - something that the board requested two years ago. "We have waited for two years for the tax policy review, it has not occurred and appears to becoming an excuse for inaction," he said.

Leonard Schein, spokesman for a newly formed group called the Fair Tax Coalition - which represents more than 50,000 businesses in Vancouver, including the Board of Trade - said the high property taxes are causing small Vancouver business owners "grave hardship."

Schein, an entrepreneur and president of the Point Grey Village Business Improvement Association, pointed out that not only is there an inequity between the taxes businesses and homeowners pay, but that Vancouver also has the highest business property tax rates in the Greater Vancouver area.

The business property tax in Vancouver is 5.5 times higher than the residential property tax, compared with an average business rate tax of three times higher in the surrounding municipalities. Vancouver's business mill rate is 16.75 per thousand dollars, and when all taxes from the Greater Vancouver Regional District are added, it rises to 29.39 per thousand dollars.

However, Vancouver city Coun. Anne Roberts says she would like to see the situation studied in more depth.

"I'd like to see more of an examination of what the problems are. Maybe rents are too high or it is hard to get good employees," she said in an interview.

Roberts also said she is not convinced that high taxes are mainly responsible for the problems facing small businesses. "We need a much larger discussion on the whole taxation issue," she says. "I was a bit dismayed that the assumption was made that tax rates are the main reason. Business can generate an income and write off the taxes but individuals can't."

But fellow Coun. Sam Sullivan said the Board of Trade's presentation was strong. "They made a very good presentation and it was well done. I have kept their presentation because it was so well done," he said.

Sullivan added it is a brutal fact of politics that the business sector as a whole does not vote, and hence there is not always a lot of interest in its viewpoints.

Schein's group is proposing that the mill rate on business properties in Vancouver be reduced by one-twentieth over a 20-year period. "This is not a pie-in-the-sky proposal. After 20 years we would have the same rate as the surrounding municipalities," he said.

The conversion of high office buildings in downtown Vancouver to condominiums is adding another burden onto the small-business owner, he said. One major office building that was converted was assessed at $20 million and paid $576,000 in property taxes when it was an office building. When it was converted into a condominium, its assessment shot up to $47 million, but with property taxes totalling $310,000.

That loss of $260,000 in revenue to the city "has to be made up through the business property taxes," Schein said.

He estimated that based "on a gut instinct," property taxes for Vancouver homeowners would rise by $50 a year if city council adopted his coalition's proposal. Such an increase would not be a burden on residential homeowners, he argued.

The coalition hopes that its arguments will be so overwhelming that city council will revise its policy to a more reasonable tax for small-business owners.

But Geisheimer is not that hopeful. During her presentation, she said, it became clear to her that the majority of city councillors do not understand the problem. "The majority of them don't have a clue about business," she said. "I got the impression that they think businesses have an endless amount of money and because we are not screaming, they can continuously tap into our well. So unless business owners start screaming and making a fuss about the high taxes, the current council with few exceptions see there is nothing wrong."

She added that the only way to make politicians pay attention is for the business community to start an active letter campaign aimed at city council. "I hope to mobilize businesses to become more vocal," she said.

However, Roberts counters that there is a variety of experience on council, and while some council members may not understand business, "most of us try to understand how important a prospering economy is to a thriving city."

(George Froehlich can be reached at george@businessedge.ca)