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Salmon Arm, B.C. Council shifts tax structure in favour of Canoe Forest Products

April 13, 2016

By: Salmon Arm Observer

It’s not nearly as much as Canoe Forest Products asked for, but Salmon Arm councillors are giving the company a tax break that will be picked up by property owners and businesses.

On Monday, council approved the shift of $25,000 to general municipal taxes from Class 4 (Major Industry).

Chief financial officer Monica Dalziel advised directors the shift is in keeping with the objective of maintaining tax stability among the various tax classes.

Coun. Alan Harrison said councillors had spent an hour-and-a-half discussing the issue at the April 14 planning meeting.

He explained that about 50 per cent of the city’s revenue comes from taxes, while the other 50 per cent is derived from revenue and grants.

Of the 50 per cent derived from taxes, the single residential class pays 65 per cent while business taxes account for 28 per cent and industry 5.5 per cent.

“What we do, is we can adjust rates between classes to make it fair,” he said.

Harrison explained  the operation of Canoe Forest Products, the only company in Class 4 Major Industry category, has changed over time. The plywood mill continues to be in operation but the sawmill no longer runs.

As well, the company made necessary improvements in technology to increase efficiency, but those efficiencies were captured in a B.C. assessment last year.

That would have meant a $49,000 increase in taxes for Canoe Forest Products.

“If we left the tax multiples and comparison the same, they’d pay $554,000, up from the $490,000 they paid last year,” Harrison said, noting the company felt $388,000 would be a fair amount. “But the city will charge them $478,000. “We’re reclassifying the taxes on improvements and shifting $25,000 so they will be paying $11,500 less than last year.”

Acknowledging the amount is a far cry from the requested reduction of $122,000, Harrison felt the $25,000 shift to the other classes is fair.

For residential, the shift means an increase of 79 cents for every $100,000 of assessed value. For businesses, the shift will cost $1.95 for every $100,000 of assessment.

Calling tax multiples confusing, Coun. Kevin Flynn said he thinks it is smart to remove the reliance on one class to another over time.

“I think this small move is a step in the right direction; it has a very small impact on the average home – about $2 to 3 a year,” he said, noting he would like to see the Class 4 rate further reduced in future years, but not necessarily to what Canoe Forest Products wants. “It’s not our job to make them competitive, but they spend a lot of dollars to be competitive, so we shouldn’t tax them heavily.”

Coun. Chad Eliason pointed out the cost of garbage and recycling collection has gone down from $135 in previous years to $101 this year, a reduction he says will save most property owners just over $11.30 and help offset the shift.

The only councillor to protest the shift of $25,000 from Class 4 to the other classes was Tim Lavery, who said he understood the rationale but is not in favour of shifting.

But Harrison pointed out that most communities have multiple businesses and residential classes while Salmon Arm’s heavy industry class has only one industry.

“It would be very different if their were five or six or even three or four others,” he said.

 

Couns. Louise Wallace Richmond, Flynn, Harrison and Eliason voted in favour of the tax shift, with Lavery opposed.

By: Salmon Arm Observer

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