Municipalities need business friendly budgets

VICTORIA, BC – After 161 years as western Canada’s first chamber of commerce, we know the mere mention of the word “taxes” is a good way to get a reaction. We also know that businesses recognize the value of the public service and what rankles them is wasteful spending of taxpayers’ money.

This is why our work never ends helping elected officials understand how their decisions affect businesses and the economic vibrancy of their community. This year, Chamber Chair Kris Wirk and I have reached out to all of our member municipalities offering to engage with them on their ongoing financial planning.

Local governments have a long list of traditional services they are responsible for delivering to their citizens, and any additional programs promised by politicians must be costed out and added to their budgets. Often these early proposals read like a holiday wish list that would require large tax increases to fund. The final budgets are almost always much leaner, and less politically risky, because councils and their committees work with city staff to whittle down the promises.

Eventually they arrive at a budget that covers the basics with a few new expenses that were promised to the electorate. At that point, after accounting for revenue from sources such as user fees and grants from higher governments, municipalities use property taxes to ensure they can balance their budgets.

This is a very high-level explanation, of course, but I think it’s important for business people to understand the process so we can offer our experience and expertise in budgeting discussions.

Over the years we’ve seen some councils play favourites by increasing taxes on business in an attempt to reduce the burden on residents. Typically, this happens because residents can vote while businesses can’t — or at least have a very narrow opportunity to do so. The obvious problem with this is it’s short-sighted. Businesses vote with their feet and will eventually relocate to jurisdictions where they can thrive. And once they leave, it’s hard to get them back or to convince other businesses to set up shop. This affects the quality of life in a community in many ways — fewer nearby jobs and a loss of goods and services that residents had come to expect. Of course, this leads to residents voting for politicians with a longer-term view of their community.

Fortunately, in my experience, it’s rare to meet a municipal councillor or mayor who doesn’t appreciate the value that good business brings to their constituents. Getting elected and being an effective member of a local government is not easy, and the people who choose this service do so because they genuinely have the best interests of their community at heart. As the region’s chamber, we work closely with the other community chambers to help local councils understand the tools they have available. For example, we make sure they are conscientious of the gap between residential and commercial tax rates, as well as the percentage of revenue they are asking businesses to contribute to the municipal budget.

Fair rules and a chance to thrive is not too much to ask, but it’s important for business that we make that point with government

The province mandates that municipalities adopt their annual tax rate before May 15 each year.