How B.C.'s small businesses could be champions for $15 minimum wage
Commercial real estate in Vancouver increased by 34% in one single quarter alone last year leading investment analysts to ask if property taxes are killing small businesses.
I prefer to re-frame this problem statement though.
It's not that the tax rate is too high, it's what small businesses are paying taxes on and for
Much like labour is exploited to create surplus value (i.e. profit) I believe small business owners themselves are currently being exploited within a speculative real estate market by covering the tax portion of increased assessments without reaping any of the reward of re-sale or development.
Richard Truscott of the Canadian Federation of Independent Businesses stated recently “That extra money doesn’t magically appear for small business owners” when pushing back on the idea of a $15 minimum wage. I wholeheartedly agree! But yet every July extra money does suddenly appear for those property owners who pass on their portion of the tax bill for their newly-doubled-in-value-property to small business tenants. It's there in that triple-net lease, and the money magically seems to appear until the business closes or moves.
You ever wonder why it’s so common to see the same corporate drug-store chains or bank in the new buildings going up in communities? These are some of the only types of businesses that can afford to pay the triple-net leases in them.
You wonder why decades old businesses that have loyal, devout customers, are shuttering their windows? Because yes, every year BC Assessment is actually in effect asking for money to magically appear from small businesses.
Perhaps the issue isn't with BC Assessment or the methodologies it applies though, but rather how we tax businesses to begin with? We didn't always do it this way. Vancouver actually had a Land Value Tax in the early 20th century under Mayor Louis D. Taylor. This model of taxation has been increasingly examined by many today as a potential solution to the affordability challenges cities across the world are facing. These voices include my East Van neighbour and SFU Porfessor Matt Hern, and past Obama advisor and SFU CED Program Instructor Michael Shuman.
I use this example simply as a tool to open our imaginations to the possibility of change. A $15 minimum wage is a change. If that's possible, what else can we change?
Because if it came down to it, I bet if you asked most business owners whether they would rather pay their employees enough to cover childcare, live closer to work, and reduce turnover at the workplace, versus footing the tax bill for the valuable air above them that could theoretically be condos one day, they’d choose employees every time.
If the provincial government is going to phase in higher wages, a $15 minimum wage or an even higher Living Wage, something I feel strongly is needed to combat poverty and inequality in BC, I sincerely hope that they won’t dismiss the arguments of small business affordability as simply flippant some anti-tax rhetoric. It's part of the same global economic trends at the heart of our housing affordability crisis, lack of affordable child care space, loss of arts and culture spaces and other stressors in communities.
Until the current policy environment changes, until small businesses are sheltered somehow from globalized real estate mania, like these other things, don’t expect them to get excited about paying higher wages, but as Michael Shuman detailed at the Hopeful Economics Summit, this doesn't have to mean shutting off BC to foreign investment either.
If, just if, the province takes seriously the financial strain that small businesses face as 98% of all businesses in our province, and considers options to change the current situation, I have no doubt they would find a willing ally in the fight for higher minimum wage in the small business community. Just look to Hamilton for some inspiration.
Wes Regan is the Director of Simon Fraser University’s Community Economic Development Programs. He has worked in community economic development since 2009, and was previously the Executive Director of the Hastings Crossing Business Improvement Association.