REPORTING · 10th February 2016
The Kitimat City Council was discussing the options to change the Flat Tax for 2016 on Monday, January 25th. Councillor Mary Murphy asked the administration to run the Council through their options.
“We’ve been using the flat tax since 1990,” said Municipal Treasurer, Steve Christiansen. “In the early days, it was used to raise more revenue without raising taxes. What it did was it raised the minimum tax the people paid so that it was covered by the Provincial Home Owner Grant. In essence, it transferred more Provincial Revenue over to the District.”
He told the Council, without the flat tax, they would be shorter $35,000. In the 90s, when the demographics in Kitimat were different, it was around $100,000 due to the number of trailers in the trailer courts and the flat tax was bigger.
“After we used it for a couple of years, the Province tried to put a stop to it,” said Christiansen. “They saw the home owner grant funding was increasing quite quickly so they tried to put a stop to it.”
However, the Province made a rule that so long as it was being used and it was not stopped, you were grandfathered. The District has used it ever since, but once they stopped; they could not go back to it.
Councillor Larry Walker clarified, this money was not paying the money but it was coming from the Provincial Government. Christiansen also explained to Walker how a person with a house worth more than $310,000 would pay less because of the Flat Tax then they would pay without it while a person with a house worth less than $310,000 would pay more.
“I’m paying too much in the way of taxes,” said Walker.
Councillor Mario Feldhoff joked Walker was not paying enough. He said there was a limit on the flat tax, although this limit has changed over the years. Kitimat is currently set at the maximum allowable.
Councillor Mary Murphy clarified Council was being advised to set the Flat Tax rate to 40% for 2016. Christiansen stated it was his opinion that a mixture of the flat tax and the variable tax was the most fair, because some services are dependent on the number of people in a house, while others are dependent on the size of the lot.
The final aspect is the ability to pay, sometimes the bigger house can afford the taxes, but studies done comparing income to the size of the house do not correlate. He stated some people chose to have smaller homes so they can indulge in hobbies.
Feldhoff made a motion to continue the flat tax in Kitimat consistent with prior years.
“The treasurer is absolutely correct,” said Feldhoff, “a mixture is appropriate but he’s correct in saying it is a Council decision to what that percentage amount is. It’s not a staff decision, it is a value decision that we collectively make as a body and the motion is to continue to do this consistent to what we’ve done in prior years.”
He expressed the home is not the best indicator of wealth and there are variations in what people pay for their homes.
Walker disagreed. “We’re telling the citizens of Kitimat that if your home is assessed at 200-300 thousand dollars, you’re going to pay a bigger share then the guy that has the right and ability to live in a far nicer home,” said Walker.
He said most of the homes in the town were likely to fall into the 200-300 thousand dollar tax rate and they would be charged more. Christiansen stated the flat tax smooths out the tax effect. If the taxes were variable and the properties jumped 50% and the average increases 30%, the taxes will go up 20% and the budget increase. The flat tax knocks down those jumps.
Christiansen explained people do not need to worry about higher taxes when their house doubles in value because the flat tax dampens the impact.
Goffinet wanted to see a 40% change as it would dampen the increase on any home below $300,000. He felt this would spread the tax burden equally.
Feldhoff stated the people in larger homes are subsidizing the people in smaller homes for sidewalks and road cleaning. He was not opposed to people in large homes paying more but then they are subsidizing the people who put their money elsewhere which is not taxed by the District.
“Let’s not penalize people who put their value into making their community more palatable and into their homes. We’re not taxing bank accounts or anything else,” said Feldhoff.
The motion was called and carried with Goffinet, Walker and Rattee opposed.