Business owners in Coquitlam pay nearly five times as much property tax as residential owners for the same value property, the largest tax gap among the province's 30 largest municipalities, says a business organization.
A report from the Canadian Federation of Independent Business (CFIB), recommends the B.C. government "Cap the Gap" and levels the playing field across the province.
And it has the support of a small group of Coquitlam business owners - and, apparently, the mayor.
Peyman Majidi, owner of the Urban Gate restaurant, grocery and deli - three businesses under the same banner at 1158 The High St. - said the city of Coquitlam has been putting far too much of the city's tax burden on small businesses, forcing some businesses to leave.
Majidi owns the three Urban Gate businesses and the storefronts they occupy, meaning his property taxes have been skyrocketing. But so have his property values as developers continue to densify the neighbourhood in preparation for the Evergreen Line.
In fact, last year each of Majidi's three commercial properties were valued at about $650,000. This year, they're each valued at just over a million dollars, according to BC Assessment.
That jump in assessed value boosted Majidi's total property tax bill from $48,000 last year to $71,000 this year - a 48% increase but still in line with the jump in his assessed value.
Majidi said there's no way his properties could fetch a million apiece on the real estate market and any increase in neighbourhood property values doesn't translate into more customers in his stores.
"I've had to raise all my prices by 15% just two weeks ago and I may have to go up again over 20%," Majidi told The Tri-City News Wednesday. "I'm looking at laying off six people because of this. We're getting pushed out."
Coquitlam's commercial property tax is currently 4.69 times the residential equivalent. That's down from a 4.98-fold gap last year but is still unjustifiable, according to Majidi and other small business owners.
Vancouver has the second highest tax gap at 4.55 times the residential rate while Penticton has the lowest disparity of B.C.'s 30 largest centres with a commercial property tax of 1.9 times the residential rate.
In its report released last month, the CFIB recommended a tax-gap cap of two-to-one business-to-residential.
Sasha Milovic owns Rush Coffee Bar a few doors down from Urban Gate and said he can't afford to keep his doors open any longer.
"I've decided to move the business somewhere else because I just don't have time for this from the city," he said, adding he will likely return to Toronto, where he says the city is far more accommodating to new businesses. "Why would I stay here after all this? Why would I encourage my friends to come?"
Coquitlam Mayor Richard Stewart told The Tri-City News Wednesday that Coquitlam does rely unfairly on its businesses to foot the bill for much of the city's budget. But he said, the gap has been closing by three-quarters of a per cent each year since the height of its disparity, when the commercial property tax reached six times the residential rate.
"We've been closing the gap successfully for 13 years but you've got to do it with a small shift," Stewart said, adding that the .75% shift is a combination of raising residential property taxes and dropping business taxes. "You could [reduce the gap] all at once but I don't know any residential voters who'd be happy to raise residential rates by 20% in order to give businesses a break," he said.
Stewart said the goal is to eventually return the commercial property tax to three times that of residential, where it was in 1983.
Stewart proposed a "more sustainable" tax plan would be to set a cap on the taxable value of a newly purchased property for the first few years of ownership to protect new business owners from the fluctuations of the market.
"In the case of Urban Gate," Stewart said, "he will benefit massively from the arrival of Evergreen Line in four years but, of course, we don't want to see him have to go out of business because of this before then."
