By Gagandeep Ghuman
Published: May 18, 2013
Call it a double triple-whammy.
Firstly, fewer construction workers poured into the Shady Tree Pub since the buzz of Olympics died out.
Secondly, the new drinking and driving laws, and their aggressive enforcement, kept people away from the pub. Thirdly, liquor prices went up with the reordering of the HST.
Now, pub owner Eivind Tornes prepares for the next triple whammy: A 15 per cent increase in utilities, a 10.2 increase in residential taxes, and a 10.4 per cent in business taxes.
“In my 20 years of business here, I’ve never seen such tax increases,” he says.
It’s a story many businesses can relate to.
Shady Tree did steady business since it first opened its doors in 1987, but the year 2011 marked a downward turn.
Tornes has had to lay off staff, and watch his costs.
And now, the district wants him to step up and pay more.
“How are they going to attract business if they keep penalizing it with more taxes,” he says.
Similar questions and worries have coursed through the mind of Vickie Nickel, the owner of Glacier Interiors in the Industrial Park.
Nickel pays nearly $10,000 dollars in property taxes and close to $900 in utilities for her commercial business.
Increasing taxes by more than ten per cent is just plain bad for business and worse for business confidence when there is no extra amenity or service to show for it, she says.
“Business has been bad in this area since 2008, and by increasing the taxes, you are just going to hurt them more,” she says.
It also deters other businesses to come to Squamish, she adds.
Kicking the backbone
Small businesses are the backbone of B.C. economy.
They account for about 98 per cent of all business in B.C., and employ 56 per cent of private sector workforce. According to the Canadian Federation of Independent Businesses (CFIB), the tax share for small businesses is growing slowly across the province.
CFIB, an organization whose findings don’t find much favour with elected officials, says the average property tax ratio of business taxes to residential taxes has grown from 2.42-to-1 in 2003, to 2.97-to-1 this year.
The district is aiming to keep the gap low, but those noble intentions are nullified by the actual increase in business taxes.
Last year, the average business tax increase in Squamish was 4.6 per cent.
The year before that, the increase was 6.2 per cent. This year, it’s an unprecedented 10.4 per cent.
Compared to the BC average of 20 per cent, Squamish businesses also contribute 26 per cent from the tax base.
Former mayoral candidate and council watcher Auli Parviainen says the increase in business taxes is ‘counter-intuitive to economic development’.
“If they are paying more now, are we giving them value? How else are we helping them, what else are we doing for them?”
Glacier Interior owner, Vickie Nickel, has an answer.
“As far as I know, nothing…I’m not getting any additional amenities or services for paying more,” she says.
Industry is gone, with nothing to replace it
Councilors will eagerly tell you how policing and other core service changes have led to an increase in taxes. But what has really led to the tax increase is the fact that Squamish has lost much of its industrial tax base.
In the year 2000, residential taxes accounted for 48.6 per cent of the tax revenue, while major industry contributed 28.52 per cent of the tax revenue.
Fast forward ten years, and the equation has changed.
In 2010, residential property taxes brought in 59.2 per cent, while major industry (port), brought in 2.10 per cent.
If you remove the port, then contribution of major industry was zero per cent.
Even as Squamish devolves into a bedroom community, consecutive councils have done precious little to revive industry, or create the right environment for business investment.
While the previous council paid lip service to economic development by creating a clumsy strategy, this council has resisted the creation of a separate economic development commission with an adequate budget to go after business investors.
But as our story on Maple Ridge shows (see related link on main page), a committed economic development officer with support from council can turn things around.
Squamish has at least borrowed a part of its downtown revitalization plan from Maple Ridge.
Will it work?
Business owners like Tornes and Nickel would be watching.