Derek Holloway former B.C. Assessment auditor January 20, 2020
BC Assessment’s 2020 stats show lower-value residential assessments decreased much less than high-value assessments. In addition, in many areas of B.C., small commercial and industrial assessments continued to increase. This, combined with local governments’ expectations to keep up with inflation, creates a perfect storm.
The net effect: small property owners, especially small commercial owners and tenants, will be experiencing the biggest July percentage tax jumps in most communities.
But there’s even more bad news.
Every year, very large industrial, commercial and institutional (ICI) properties shift some of their taxes to smaller taxpayers as well. Professional assessment appeal agents reap the vast majority of reduced taxes for their moneyed clients. They annually flood the appeal system and then skillfully work it over time.
So, why shouldn’t small property owners join them? There’s no reason not to, and it could result in a tax reduction.
You can’t appeal your taxes in July, so don’t miss the opportunity to appeal your assessment by January 31. You don’t need an agent, it’s just $30, and there’s no risk.
‘Really, I should I appeal?’
Unlike smaller properties, big ICI properties are often dramatically under-assessed to begin with, which means the property taxes they should have paid are shifted to smaller taxpayers. Regardless, every year, many of the big ICI property assessments are appealed early, often, and with the best help money can buy.
Like them, whether your assessment appears reasonable or not, it’s better to be sure by launching a “holding” appeal.
‘Won’t I get in trouble, needlessly drawing attention to my property?’
Absolutely not, but the system relies upon this misguided perception. The Assessment Act doesn’t allow your property to be treated unfairly when compared to similar commercial or residential properties in your neighbourhood. By law, “like” properties must be assessed equitably, which incidentally, is often grounds for an appeal.
Through no fault of the little guy, the appeal system is already severely dominated by the heavy appeal volume of bigger players (here’s more on how the big ICI property owners manipulate the process). They don’t fear repercussions when they annually appeal, in bulk, and then withdraw up to 60 per cent of their appeals.
Industry insiders keep sacred everyone’s right to appeal, so why are they the only ones to benefit? If, late in the process you don’t want to pursue an appeal, simply withdraw it. There’s no penalty or consequences – for anyone.
‘Is this action necessary?’
The province needs to be pushed toward a reasonable appeal process for all taxpayers. If all smaller property owners appealed, as large ICI owners do, it would force the government’s hand.
Commercial appeal agents launch thousands of appeals each appeal year. But ask yourself, is it likely an agent will spend more time on a $1 million property, or on a $100 million property? Unfortunately, small players have to look out for themselves.
What most local governments and taxpayers don’t realize is that the appeal system doesn’t have a fraction of the resources necessary to ensure proper valuation vetting for thousands of annual appeals.
In 2018, 92 per cent of board appeals didn’t go to written submissions or hearings. They were resolved quietly, behind closed doors, mostly by agents – often based on scant “evidence.” BC Assessment is under tremendous duress and just want appeals to go away, satisfying their “productivity” measurement – most taxpayers none the wiser.
Individual, non-agent, appeals are the most time consuming for the appeal system. They act like sand in the gears, often providing small individual appellants greater leverage than that of agent appeals.
Of course, all these appeals flooding the system is bad, but this is what the system allows.
‘Will this be bad for my local community?’
In the long run, no. If change is forthcoming, small commercial and residential properties will eventually be treated more fairly, relative to the big guys.
B.C.’s 200-plus local tax departments find it very challenging to budget year-to-year, when large commercial assessments change throughout the annual appeal process – sometimes taking many years to resolve. They cautiously walk a tightrope between holding the powerful provincial government accountable and maintaining a good working relationship.
‘Why isn’t the B.C. government concerned with this Issue?’
BC Assessment does a remarkable job within their many constraints. Unfortunately, one of their biggest constraints is powerful political influence from big players, which strains the budgets for both BC Assessment and the Appeal Board.
For example, a B.C. Supreme Court decision provided guidance to the appeal system, regarding a large company’s massive property. The Court directed the Appeal Board to remove unnecessary procedural obstacles for “the just and timely resolution of matters before it.”
If this path had been embraced by BC Assessment for future appeals, it would have saved significant resources and greatly streamlined the appeal process. Most importantly, it would’ve leveled the playing field between large and small property owners.
Unfortunately, BC Assessment’s priority was pacifying a few industry insiders, deliberately ignoring a practical solution that could have helped stabilize local tax bases.
So, after appealing by January 31, you can ignore the local Review Panel, and then by April 30 appeal to the Appeal Board. When there, do as the agents do, and take your time to complete your analysis of the best evidence shared between you and BC Assessment.
Derek Holloway is retired after 28 years as auditor at B.C. Assessment