but councils go after them at its peril
Local mayors and councillors would do well to think twice before opening the Pandora’s box that is the foregone tax revenue on the list of permissive property tax exemptions.
Osoyoos is the most recent jurisdiction to eye the big shiny pile of uncollected tax revenue, with Councillor CJ Rhodes casting himself as the champion of at least looking at the potential income source for the town.
The almost quarter-million-dollar total must be tempting sight for a town constantly looking for ways to pay for the things demanded by a citizenry that, at the same time, gets grumpy if taxes go up by more than the cost of living.
Experience elsewhere suggests that attempting to squeeze revenue out of things like churches, charities and not-for-profits leads to angry pushbacks, political peril and ultimate failure.
Said Rhodes recently: “For 11 years I’ve been on council we have never reviewed the permissive tax exemptions and those who benefit from it. I’m pretty keen on councillors doing due diligence and I’ve always thought we should review those things to make sure there are no other … opportunities for taxation.
“At UBCM I asked about a half a dozen councillors from around, and they said they didn’t want to touch it. Maybe it would time for a municipality like Osoyoos step up to the plate and maybe review the whole process.”
According to the Statement of Property Tax Exemptions, which is part of the current Osoyoos annual report, there were $242,496.84 in permissive and legislated tax exemptions for 2018.
About $38,000 of that is for churches and is mostly untouchable under the Community Charter, the provincial legislation that governs municipalities. There may be some peripheral aspects – like church halls that are rented out or land held for future development – but the amounts involved would be comparatively trivial.
The bulk of the exemptions are for community organizations and not-for-profits like the Senior Centre, the museum, golf club, curling club, sailing club, nursery school, Desert Park, Portuguese Canadian Society, and others.
In other words, they are the backbone of life that provide the cohesion, the context and the experiences that make the town a community. They are the places where citizens gather and interact to get to know, to engage with and to help each other.
In a recent interview, Osoyoos chief administrative officer Allan Chabot pointed out the danger of imposing property taxes on these organizations and possibly threatening their ability to exist at all.
“If you stop these not-for-profit, philanthropic, charitable organizations from doing good works in your community, the cost to off-set the loss of those services may be greater than the taxes you would collect,” he said.
Chabot mentioned the experience of Penticton, which may be instructive.
Twice in 10 years that city has approached the idea of going after some of the exempted tax revenue and both times it has retreated after loud outcry from churches and other organizations.
The first attempt was in 2009, when angry congregations confronted council, making it clear the move simply wasn’t worth the political trouble.
Then earlier this year, Penticton proposed going after a small portion of the foregone property taxes. Again, the idea was abandoned.
Said Councillor Campbell Watt: “(The feedback) was all negative, which is not a shock. … They’ve become accustomed to the exemptions. To all of a sudden just that little bit of an increase, it was pretty overwhelming.”
Watt pointed out that the city was seeking a mere five per cent or so of the value of the property taxes. But a discerning not-for-profit director might reasonably assume that once a cash-strapped city budget office got its fingers into that cookie jar, the appetite would be more likely to increase than to wane.
In Osoyoos, even this brief mention of wanting to look at the issue in more detail has already led to “a lot of people approaching me about it,” said Rhodes.
The councillor insists that even though he specified churches in his remarks, he is interested in the entirety of the permissive tax exemptions list.
“There have been a lot of people who have challenged me on that. This is not a religious thing at all. Never was intended,” he said. “I even had the International Association of Atheists wanting to interview me so they could put the interview on their website in New York.”
At Rhodes’ urging, Osoyoos council will get an early chance to examine and review the proposed exemptions next year, likely in early summer, so they won’t need to simply rubber stamp the list just ahead of the Oct. 31 provincial deadline.
But Chabot has a caution: “(A review) needs to be gone about very thoughtfully. … If you want to explore that, great. But engage the people who would be affected. Give them the opportunity to know the potential outcome and participate in the process.
“We’re more and more challenged with having enough money to do all the things that people want us to do. So, I don’t think it’s a bad thing for someone to say, ‘I think we should take a look at this.’”
At the end of the day, it may make sense for any council to examine the regulations and criteria around the permissive property tax exemptions to develop, as CAO Chabot suggests, “a policy framework.”
But, to look at the total of such exemptions as a potential honey pot of easy revenue would be short-sighted, politically fraught and ultimately harmful to the essential fabric of the town.
(In the interest of full disclosure: the writer is a member of the board of the Osoyoos Golf Club.)