Farm building exemptions cause tax revenue shortfall in Chilliwack

A $400,000 tax shortfall for Chilliwack is being estimated as a result of tax exemption changes for farms, according to a city staff report.

Changes to the way farm buildings can be taxed by municipalities across B.C. will have “huge implications” for Chilliwack, said Chilliwack Mayor Sharon Gaetz.

About 87.5 per cent of the assessed value of outbuilding improvements on farms will now be exempt from taxation.

As a result, a $400,000 tax shortfall for Chilliwack is being predicted for 2013, according to a city staff report from the City of Chilliwack finance department.

It means taxes could go up for some or all rate classes, or municipal services could be cut, which are among the options being studied at city hall to deal with the expected shortfall.

Chilliwack MLA John Les said flat out he was surprised to hear the dollar figure pegged so high.

“First of all I’m a little surprised to hear the estimate (for Chilliwack) is as high as $400,000,” said.

The tax changes in question arose from a provincial review of taxation in the agricultural sector.

Starting next year, the exemption will be the greater of 87.5 per cent, or $50,000 of assessed value, whichever is higher. It used to be capped at $50,000.

In Abbotsford, the tax shortfall is estimated at $900,000.

A government committee, the Farm Assessment Review Panel, studied the issues in recent years, and recommended the changes that are now being implemented.

“Quite a number of farm folks felt that having all their farm buildings subject to residential assessment was unfair,” said Les.

It was conducted in consultation with groups like the Union of B.C. Municipalities, the MLA said, so it couldn’t have been a complete surprise to city officials.

“The good news is this provides us with an opportunity to talk to the province about the future of farming, and farmers,” Mayor Gaetz told The Progress.

“It may provoke a more thorough discussion about agricultural land, who pays for it, and who supports the taxation of it.”

But that’s an old argument dating back 40 years or so, said the MLA, and it’s one that’s been espoused by Chilliwack and other agricultural communities to suggest the cost of preserving agricultural land should be borne by urban centres as well.

“That argument has never gained any traction,” Les said. “At the same time, it’s clear farming is one of the important economic pillars of our community but I have yet to hear anyone come up with anything that’s more equitable.”

Chilliwack has somewhere between 800 and 900 farm operations.

The province should be sharing the load to some extent, Mayor Gaetz said.

“In my view I don’t think the people of Chilliwack should have to bear the full brunt of taxation for farms. There should be some sort of subsidy from the province, to help them preserve and maintain agriculture.”

City officials are still seeking clarification on the implications of the changes, and are studying the options to deal with the tax shortfall.

“This year we were very proud to have kept the tax rate increase at 3.44 per cent,” said Gaetz.

Every $600,000 cost increase represents a one per cent tax rate increase.

“So if these changes had been implemented for this year, the tax increase would have been at 4 per cent, without the addition of any services,” she said.

“At this point we’re looking at all of our options. There’s a limit to what people can pay for taxation. There has to be a way to talk about farming in a more sustainable way.”

jfeinberg@theprogress.com

twitter.com/CHWKjourno

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