In a recent report to the Vancouver City Council, municipal staff indicated that an average annual property tax increase of 7% would be necessary to balance the budget. This figure is lower than this year’s 7.28% increase and significantly less than the 10.7% increase seen in 2023. However, the majority party in the council, ABC, believes that this increase is too high.
City Council’s Directive
Mayor Ken Sim successfully introduced an amendment, supported by the ABC majority, requesting the city’s financial team to submit a draft budget by December that aligns with a 5.5% tax increase target. During the council debate, Mayor Sim emphasized the importance of providing clear direction to the staff team and signaling to current and future residents and businesses that the city is committed to manageable tax increases.
Challenges Highlighted
Despite the council’s directive, staff projections indicate that maintaining existing services might necessitate an annual tax increase of around 7% from 2025 to 2029. Financial pressures from collective agreements, a $500 million infrastructure deficit, inflation, and costs passed down from higher levels of government contribute to this challenge.
Colin Knight, the city’s financial manager, stated that the city faces significant fiscal pressures and, without further measures to reduce expenditures and increase revenues, next year’s budget might require a 7% property tax increase.
Impact on Residents
Councillor Sarah Kirby-Yung noted that residents are currently facing “extreme” financial pressures and need relief.
Alternative Revenue Sources
Mayor Sim did not detail how the 5.5% target was calculated or suggest specific measures to achieve it. However, he did mention the potential for increased revenue through sponsorships and naming rights for parks and other city-owned assets.
Earlier this year, Mayor Sim addressed the Greater Vancouver Board of Trade, highlighting that up to $100 million could be raised from wealthy individuals and organizations through such initiatives. He cited examples like the Sauder family’s $20 million donation to UBC’s business school and Telus’s $40 million offer to rename BC Place.
Knight clarified that the 7% tax increase scenario does not account for potential revenue from future sponsorships or naming rights. A separate report on this potential revenue source will be presented to the council.
Historical Context of Property Tax Increases
Vancouver’s property tax increases over the past decade show significant hikes, particularly during the pandemic:
- 2024: 7.5%
- 2023: 10.7%
- 2022: 6.35%
- 2021: 5.0%
- 2020: 7.0%
- 2019: 4.9%
- 2018: 4.2%
- 2017: 3.9%
- 2016: 2.3%
- 2015: 2.4%
- 2014: 1.9%
- 2013: 1.5%
- 2012: 2.8%
- 2011: 2.2%
- 2010: 2.3%
City Manager Paul Mochrie described the past two years as “extraordinary” due to the costs borne by the city, including infrastructure upgrades. He noted that the current tax increase trajectory is unsustainable.
Councillor Kirby-Yung pointed out that while Vancouver’s property tax rates might seem low compared to other cities, the city’s high property values make it difficult for residents to afford housing.
Council’s Next Steps
The council’s motion requires staff to propose ways to keep the property tax increase at or below 5.5% and to explore new revenue generation methods. Councillors Adrienne Carr and Christine Boyle abstained from the vote, expressing concerns that capping tax increases might underfund essential city projects.
According to city staff, a 7% tax increase would amount to an additional $98 annually for a median strata property.
The council’s decision underscores the balancing act between fiscal responsibility and the need to support residents and maintain city services.
(Source: The House Club)
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