Re: “Smithers property values jump by 15 per cent,” Interior News, Jan.14, 2021.
Property value has two distinct parts, namely the site/land and improvement/house values. The site, provided free by nature gets value from the presence and activity of the community (transit, business, airports, etc).
Private and public improvements on the site exist because of jobs and investment (labour and capital).
The property tax on community created site value captures only about 30 per cent of the unique location value (lake front properties, gold deposits, best farmland, etc.) while 70 per cent on the buildings only inflates price.
As Paul Samuelson says, “The whole of the tax falls onto the owners of the factor in inelastic supply! A tax on fixed and (unique locations) leaves rentals paid by users unchanged… but reduces rent retained by land owners…”
The overtaxed house discourages building which then curtails job opportunities and competition for lower rents.
The undertaxed site encourages land speculation and inflated land values as in that 15 per cent assessment increase.
BC’s history includes a total house tax exemption in the early 1900s under Vancouver’s Mayor, L.D. Taylor to assessment reform which captured more site value under the Dave Barrett government.
Why do we continue to tax the things we need and reward unearned income from our natural resource heritage?
John Fisher
Smithers