By Alison Taylor
A just-introduced change to the provincial property tax system could cost Whistler up to $3 million annually.
Ironically, the new legislation comes just weeks after the province handed Whistler its long-sought after financial tools, which boost the municipal budget by roughly $6 million every year.
Whistler’s administrator slammed the proposed changes to the tax system.
But thousands of condo owners in Whistler and elsewhere welcomed the certainty that comes with the legislation — certainty that has been missing in the provincial tax system the past 15 years.
“I’m extremely disappointed,” said Whistler administrator Bill Barratt.
“Aside from the significant financial impact, this is not going to help the tourism industry. It’s detrimental.”
In the new legislation all Class 1 hotel units will continue to pay residential taxes, despite operating commercially, and all hotel units assessed as Class 6 will pay a blend of commercial and residential tax rates based on the amount of commercial use of the property. This will take effect in 2008.
Barratt could not mask his disappointment at the news and did not mince his words on the government’s solution to a long-standing problem.
“This is not fair, nor is it equitable.”
Rick Thorpe, minister of Small Business and Revenue, speaking from the legislature Wednesday, said the solution was designed to help the province move forward with its goal to double tourism.
Certainty in the tax system, which for so long has been in doubt and before the courts as condo-hotel units jumped from one class assessment to another, will entice investors to build and buy strata hotels.
“We think that’s going to assist in resort development,” said Thorpe. “We think it’s going to help in the doubling of tourism.”
The province estimates that this legislation and the certainty it brings will potentially result in the construction of 148,000 new units.
Whistler condo owner Jim Allard, who was part of an advisory group on the issue to Thorpe, admits it’s not a perfect solution.
However, the change means Allard’s property tax bill on his two-bedroom Tantalus Lodge unit, taxed at the Class 6 commercial rate, could be halved, down from $7,000 to roughly $3,500.
And while that’s still more than what his brother with a similar unit with a Class 1 assessment pays, his reaction to the solution was positive.
“We’ve got a solution and it may not be perfect but I’ll tell you what, considering what we’ve got, it’s very, very good,” he said.
“Whistler needs to understand that there’s a more important issue here than their being short a million dollars and that is equity and fairness in taxation, and that is a way more important principle on a go forward basis than the loss of a million bucks. They can tighten their spending belt and get a grip on life.”
Allard’s unit is one of 5,000 in B.C. that are taxed at a Class 6 commercial rate. That’s almost four times higher than a similar unit taxed at the Class 1 residential rate. He has been challenging that disparity and inequality for years.
Whistler too has been lobbying for a solution, also maintaining that it is looking for fairness and equality. It was on the frontlines of the issue in the 1990s as the resort most effected by the tax class system. And it saw first-hand the challenges of the provincial classification system.
A loophole in the system entices condo buildings to split into several different management companies with more than one front desk in order to classify for the lower residential tax class. Approximately 18,000 strata hotel units fall into that residential tax class.
The government’s new solution will see all those property owners grandfathered in that tax class.
Thorpe explained why those units would be grandfathered.
“The reason I have to take that into account is because those folks purchased, bought, whatever they all did to acquire their property, under a set of regulations,” he said. “For someone to arbitrarily change that now and put them in a difficult situation, I do not believe is fair to taxpayers.”
Barratt believes the solution offers no incentive to fix the long-standing service issues.
“They’ve grandfathered all of Class 1, including the multi-management model which just kills us from a customer service perspective,” he said.
“We get nothing but complaints about (it).”
Thorpe said he was willing to listen to Whistler’s suggestions on how to fix that without moving the units into a different tax class.
Barratt also questioned the fairness and equality of taxing commercial properties at a residential rate. For example, owners of Class 1 strata hotel rooms pay residential tax rates like every other homeowner in Whistler and yet they are able to rent their rooms and potentially make a profit.
Mike Duggan, president and founder of the Boutique Hotels and Resorts of B.C., also sat on Thorpe’s advisory board. He said this has been an outstanding issue looking for resolution these past 15 years and the uncertainty was hamstringing strata hotel development in the province.
“The most important thing is it provides certainty,” he said. “We can now actually say ‘this is what it will be taxed at.’”
And for current condo hotel owners, he said the solution works in their favour.
“For Whistler STOCAP (Short-term Overnight Commercial Accommodation Property) owners, this is great news,” said Duggan.
Both Duggan and Allard also highlighted the fact that the provincial government has committed to reviewing the solution in the years to come.
“The one thing that really got my vote for it was that the ministers agreed we’ll continue to review and continue to try to improve the system,” said Duggan.
Thorpe’s advisory committee did not include municipal representation, said Barratt.
“We’ve been having discussions but it’s always been at our request,” he said. “The government’s never come to us.”
Thorpe said he has listened to Whistler and is willing to keep the lines of communication open.
“I am more than prepared to sit down and talk to Whistler as our government has done since we’ve become government and that’s why they now have over the next five years, I believe it is, $35 million in resort tax, through the additional hotel tax. That’s why they’ve received extensive infrastructure as we all work to host the very best Olympics that the world has seen in 2010. So we’re going to continue to work with folks.
“For us to get focused on pure dollars and cents rather than fairness and equity… is wrong in my opinion.”
