The tax scheme in the City of Salmon Arm is designed to discourage the formation of businesses and industrial operations. This flies in the face of the City’s often expressed desire to attract industry and business to our community to provide economic activity and employment. The tax structure acts as a direct counteracting force to the many dollars that the City spends on encouraging economic development. This makes little sense.
The council of the City of Salmon Arm is currently considering the relationship among the tax rates for various classifications of property. Currently businesses pay a tax rate of about 2.5 times the residential rate and industry’s rate is much more.
There are historical reasons for the heavy tax rate for industry. If you, as the sole major employer, were operating a smelter in Trail, a paper mill in Powell River, or a mine in Tumbler Ridge, you needed to attract and retain skilled workers. You needed the paved roads and sidewalks, water and sewer, and recreation facilities. You were willing to pay.
Those days are gone. That level of infrastructure is now the norm and provided by almost all municipalities. And yet, the skewed rate structure remains.
There is no justification for it. A business doesn’t require 2.5 times the municipal services of a residence. An industry certainly doesn’t require four to 12 times the services of a residence. I haven’t seen a recent study, but those I have seen, which are more than 20 years old, certainly indicated that residents consume far more in municipal services than their taxes pay for.
It would be foolish hyperbole to suggest that the rate structure stops business and industry from coming to Salmon Arm. No business person would be seriously considering a scheme with so little potential for profit that the municipal taxes would make or break the deal. However, the higher rates could make the difference for a struggling business. It could make a new business or industry seek out a location that had a lower tax cost.
The point is that our tax structure should be nudging our community in the direction we want to see it move. Our city, threough its rhetoric and through the money it spends on economic development, wants more business and industry. Yet, the tax structure is nudging us in the opposite direction.
Council needs to take firm action to eliminate the premium tax rates paid by business and industry. A change of this magnitude shouldn’t happen overnight, but a commitment to reaching tax parity over time can be made, and a modest change in the right direction should happen now.
