Business support for B&O tax once there now waning
It is approaching two years now since the formation of the Finance Working Group, comprised of city staff and representatives of the business community and neighborhoods, whose charge was to recommend a financing plan to stabilize funding for public safety and transportation capacity for the City of Vancouver.
Ultimately, the Group recommended a three-pronged solution comprised of an increase—two-tenths of 1 percent—in sales tax, a property tax increase and a surcharge on the business license fee.
In addition, the Greater Vancouver Chamber of Commerce polled its members and brought a number of business organizations together, providing feedback to the council on financing methods, even to the point of supporting the business license fee surcharge.
Time delays, and what appear to be ongoing political cold feet, seem to have knocked the legs out from under their recommendation. In fact, the most recent staff proposal recommends abandoning a city wide vote to lift the property tax levy lid and instead to get all they possibly can from the business community through the reinstatement of a B&O tax. Of course, levying a B&O tax doesn’t require a city wide vote—does it?
Let’s remember, the city surveyed residents about this and learned that city residents were willing to pay from two to three times the $14 per month it would take to collect $11 million dollars annually.
In March of this year, we acknowledged that businesses ought to pay a fair share but that more work needed to be done as to where the demands on public safety and transportation were coming from, and to look for more user driven methods of covering the need.
A review of the growth over the last 14 years, since the B&O tax was deemed a barrier to business growth and the phase-out started, shows growth in almost all sectors. In 1992, the city’s population was about 48,000. When East Vancouver was annexed in 1997, the population had jumped to 128,000. Today the population is nearly 155,000. That represents a 20 percent increase in population just since the annexation, let alone the 323 percent increase since the decision was made to eliminate the B&O tax in the city.
In September of 2005, the city estimated the number of businesses at 8,000, over half of which consisted of three or fewer people.
The taxable retail sales numbers for the first quarter of 2006 were just released. The City of Vancouver retail sales topped $605 million, an 11.5 percent increase in just the first quarter when compared to the same period last year.
Businesses in Vancouver have never shirked their responsibility to carry their fair share. But it seems the current proposal shifts a disproportionate share to small business owners who are already dealing with high interest rates, escalating energy and fuel costs, not to mention one of the highest state B&O taxes in the country.
We believe as we did in March that businesses in Vancouver should pay their fair share of ensuring we have a viable transportation system. Vancouver businesses, however, shouldn’t be expected to carry the load for an ever-increasing residential population. If wide support for the solution is what the council has been hoping for, moving ahead with a B&O tax is clearly not the answer.
The funding tool the council is looking for was much sturdier with three legs. The two remaining legs simply won’t support it.
