COLUMN: Do New Westminster residents pay more property tax? You bet
Many homeowners in New Westminster complain that their property taxes are higher than other cities.
Why? Because it’s true.
In fact, most pay a lot more.
The owner of an average home in New West pays more property tax than their counterparts in Burnaby, Surrey, Richmond, Coquitlam, North Vancouver and all those cities in the valley.
In 2010, for all municipal, school and regional taxes, the average homeowner paid $3,500. In Surrey, for the same-priced home, that resident would have paid about $2,800.
So is it time to bring out the pitchforks, or start a New West branch of the Tea Party?
As simple as it would be to blame city hall, that may be unfair.
The reason we pay more has more to do with the nature and makeup of our city and I’ll try to explain it in a way that won’t make you want to read the dictionary instead.
First, New West has a ton of low-value property. Unlike most cities in the region, more than 50 per cent of homes in this city are multi-family, be it a townhome, condo or apartment. And many of those are old.
Those properties are worth less, and hence are taxed less in actual dollars.
Yet at the same time, the city needs a certain amount of money to function.
All cities have similar fixed costs. They need a fire service, police, libraries, community centres. And whether a person lives in a $150,000 apartment or a $1.2 million mansion, they demand the same service.
So the tax rate must be higher, in order to get the revenue the city needs. Two per cent of $1 million will give you $20,000, but two per cent of $100,000 will only give you $2,000.
So the kicker for the Royal City is, because the value of property in New Westminster is, on average, relatively low, there’s a higher tax rate and it hits the higher-valued properties—generally single-family homes—with paying a larger proportion of the tax load than they would in other cities.
Consider this analogy:
A retiree has offered to mow the boulevard on your street and everyone is being asked to pitch in based on income. His cost to do the work is $10 a month.
In scenario one, there are six homeowners and four make $100, and two make $50. In total, that’s $500, so he taxes everyone 2% to get his $10.
In scenario two, there are the same amount of homes, but more low-income homeowners. Four make $50 and only two make $100. That’s just $300 in total, so he must tax them 3.33% to get that same $10.
In scenario two, because the total income is lower, everyone pays a greater proportion than their peers in scenario one. The high rollers pay $3.33 each, compared to $2, and the lower income folks pay $1.67, compared to $1.
And that, in a huge simplification, is what’s happening in New Westminster.
So what’s the solution?
We can cut costs.
Police and fire services rank first and fourth among cost drivers, respectively, in the city. Deep cuts, or a merger with other cities’ services could make a big dent in the bottom line. Or we could cut some of the city’s great parks and recreation programs.
Painful, and not attractive. That’s not to say there isn’t other waste to be trimmed at 511 Royal Avenue. Any organization can find it. But short of a massive re-think to what the city delivers and what residents expect, the impact would be minimal.
Meantime, it appears the city is pursuing new growth as its main approach to reducing taxes.
How so? Consider that lawn-mowing retiree analogy again. In scenario two, if there were two more residents, low-income folks making $50, the taxation would be reduced to the level of scenario one. So we don’t need to create new land for mansions—just keep building skyscrapers Downtown.
And then cross our fingers, and hope the newcomers don’t expect new pipes, community centres and parks.