1983 Legislative Session: 1st Session, 33rd Parliament

Hansard

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

( Hansard )

TUESDAY, AUGUST 30, 1983

Afternoon Sitting

[ Page

1137 ]

CONTENTS

Routine Proceedings

Oral Questions

Use of government aircraft. Mr. Passarell –– 1137

Logging of Sombrio Beach area. Mr. Skelly –– 1137

Mr. Mitchell

Social Credit Party booth at PNE. Mr. Reid –– 1138

Treasury Board directive 4-83. Mr. Howard –– 1138

Alteration of budget presentation. Mr. Stupich –– 1139

Property Tax Reform Act (No. 1), 1983 (Bill 7). Second reading.

Mr. Blencoe –– 1140

On the amendment

Mr. Skelly –– 1142

Mr. Lea –– 1147

Mr. Nicolson –– 1152

Ms. Brown –– 1156

TUESDAY, AUGUST 30, 1983

The House met at 2:05 p.m.

HON. MR. GARDOM: Mr. Speaker, I would very much like to ask

all members to bid a cordial welcome to an all-party committee of

legislators from the great province of Ontario who are visiting this

side of the Rockies.

MR. HOWARD: In the same vein, I would like to extend to our

guests a cordial welcome and a pleasant stay. While we are parochial

enough to think they might learn something from their visit to

Lotusland, the fact that this is a standing committee on members'

services should certainly let us learn something from them, and we look

forward to that.

HON. MRS. McCARTHY: I am very pleased to welcome today a

member of the board of directors of the Pacific National Exhibition. I

would ask the House to join me in welcoming Mr. John Hart.

HON. MR. RITCHIE: I am indeed proud today to introduce to the

House three young ladies, excellent ambassadresses for the Central

Fraser Valley. They are: Barie Ann Paterson, our Miss

Abbotsford-Matsqui queen, and her princesses, Torie Burrow and Patricia

Vanden Berg. Their chaperone is Charlotte Harris. Also in the gallery

today are Mr. and Mrs. Jack Cook, very good supporters from my home

ground, and Garry and Isa Holland. Would the House please welcome all

of these friends.

MRS. JOHNSTON: I would like to introduce two of my

constituents who are in the gallery this afternoon. These people are

very hard workers for the Social Credit Party, and I'm very pleased to

introduce Mr. and Mrs. Jim Howe from Surrey. Would you please welcome

them.

MR. STRACHAN: Mr. Speaker, in your gallery this afternoon are

three very close friends of mine: my wife Beverley, my son Dean and my

daughter Jody.

HON. MR. GARDOM: Visiting also, from West Vancouver, are Mr. and Mrs. Bruce Claridge and their family. I'd ask all members to welcome them.

Oral Questions

USE OF GOVERNMENT AIRCRAFT

MR. PASSARELL: A question to the Minister of

Intergovernmental Relations: did you fly home to Vancouver last night

on the executive government aircraft?

MR. SPEAKER: Hon. member, the question should be addressed to the Chair, not directly to the minister responsible.

HON. MR. GARDOM: I would respectfully suggest,

notwithstanding that the hon. member has a great interest in my

welfare, that what I may have done yesterday evening is hardly a

question that is either urgent or important.

MR. PASSARELL: Yesterday, in the newspaper, the Minister of Highways

and Transportation (Hon. A. Fraser), who is in charge of the government aircraft,

said that ministers who fly on the government aircraft must be doing so on official

government business. A question to the Minister of Intergovernment Affairs:

what official government business was the purpose of your flight to Vancouver

last night?

HON. MR. GARDOM: I would like to inform the hon. member that I'm not going to share my diary with him.

MR. PASSARELL: A question to the Minister of Health: did you fly home to Vancouver last night on the executive government aircraft?

MR. SPEAKER: Again, hon. members, the question should be addressed through the Chair, not directly to the minister.

HON. MR. NIELSEN: I think the government House Leader is

correct, but since the member asked the question and the answer may not

be what he expects or desires....

The answer to the question specifically is no, but maybe ask me

again tomorrow and I might have a different answer for today's trip.

MR. PASSARELL: Taxpayers' abuse, Mr. Speaker.

A question to the Minister of Human Resources: did that minister fly

home to Vancouver last night on the executive government aircraft?

HON. MRS. McCARTHY: The answer is no.

HON. MR. HEWITT: I have a question for the member for Atlin. Can he advise this House: when was the last time he flew home?

MR. SPEAKER: Order, please. The member for Alberni.

MR. SKELLY: Mr. Speaker, I have a question for the Minister of Forests.

HON. MR. HEWITT: On a point of order, Mr. Speaker, I am an

individual member of this House, and I have asked the member for Atlin

when he last flew home.

MR. SPEAKER: The question is out of order, hon. member.

HON. MR. HEWITT: Can you give me some indication as to why it's out of order, Mr. Speaker?

MR. SPEAKER: Hon. member, questions cannot be asked of a

member of the opposition. Those are the rules of the House. The member

should be familiar with that.

LOGGING OF SOMBRIO BEACH AREA

MR. SKELLY: I have a question for the Minister of Forests.

Section 4 of the Ministry of Forests Act requires the minister to

manage provincial forests with regard to outdoor recreation, water,

fisheries, wildlife and other values. In view of this legal

requirement, will the minister explain why his ministry has refused a

temporary moratorium on logging at Sombrio Beach to allow the Capital

Regional District to investigate the outdoor recreation values

associated with not logging Sombrio Beach?

HON. MR. WATERLAND: Certainly. If the member would read other sections of the Ministry of Forests Act and

[ Page

1138 ]

the Forest Act he would realize that it is also one

of my responsibilities to manage the timber for timber production, and

to try to do my best to ensure a world-competitive forest industry for

British Columbia.

MR. SKELLY: Present stumpage rates are at an absolute minimum

because of poor lumber markets. Logging Sombrio Beach timber now, for

example, would produce $51,000 less in stumpage than it would have had

it been logged last year at this time. In fact, after logging and road

costs are deducted, the province will probably receive no revenue at

all from the 40,000 cubic metres of Crown timber in the area. In view

of the questionable economics of logging this area at the present time,

especially when the minister says that markets will improve and that

stumpage rates will increase later this year, has the minister decided

to place a temporary moratorium on logging at Sombrio Beach until such

time as the capital region has completed a study of recreational values

in the area, to determine whether and by how much recreational value

exceeds harvest value?

HON. MR. WATERLAND: No, I certainly haven't, Mr. Speaker. The

member's numbers are very inaccurate. If I were to follow the

philosophy that he proposes, we would shut down all timber harvesting

in the province of British Columbia until markets increase and we can

receive more stumpage. Certainly the member isn't naive enough to think

that the major benefit from timber harvesting, manufacturing and forest

activity in this province is through stumpage revenue. Surely he

doesn't think that.

[2:15]

MR. SKELLY: The Valhalla study, which the government

obviously accepted as valid, showed that 230 jobs could be expected

from the tourist industry if that area went unlogged compared to only

14 jobs from the logging industry. If the minister is that concerned

about jobs, surely the minister would change his mind and allow the

Capital Regional District to investigate the job potential of using

that area as park for its outdoor recreational values. What does the

minister have to fear from a study of the alternative values of using

Sombrio Beach as a recreational area?

HON. MR. WATERLAND: I really have nothing to fear. I'm not

frightened or concerned. I think we have practised good multi-use in

that area of the province, as we attempt to do in all areas. Timber and

recreation are not the only values. By doing what we are doing, we can

enhance job creation created by the forest industry in British

Columbia, and we can have a good recreational area as well. In fact, we

can practise multi-use and get the best benefits of all the resources

which happen to occupy this land amounting to 130-some acres.

MR. MITCHELL: I have a question to the Minister of Forests.

We all realize that Sombrio Beach is one of the last stands of natural

virgin timber left in the Western Community. Has the minister been

advised that Western Forest Products have had discussion on a proposed

trade of Crown land within their TFL for the protection of Sombrio

Beach?

HON. MR. WATERLAND: I'm aware of all of the discussions that have

taken place in arriving at the decision we arrived at. Certainly land owned

by WFP at Sombrio Beach.... They would like to avoid the apparent hassle that

we have to go through in order to practise multi-use and recognize other resource

values as well. The simplest thing for them would be to trade for another area

where there is no conflict. Nevertheless, we are removing some area from productive

forest land in British Columbia. Quite frankly, we cannot afford to alienate

for single uses acreages of forest land in British Columbia which are needed

to maintain both the forest industry in this province and jobs for those many

people who work in the forest industry.

I think perhaps the members who are asking these questions should

have a discussion with Jack Munro and see what his position might be on

the subject.

MR. MITCHELL: If the minister can give me an assurance that

if I can get Jack Munro's okay to protect Sombrio Beach he will protect

it, I can give you that assurance.

Supplementary to the question from my colleague the member for

Alberni, I know the government would prefer to centralize everything in

Victoria, but does he feel that the government has insulted the CRD

when they ask for a moratorium only to make an effective study on the

economics of preserving this last natural stand in the western

community for a park and to give them that opportunity at the present

time? By okaying it.... The logging is an insult to the CRD. Will the

minister confirm that they are trying to centralize it and they really

don't care what the local elected people have to say?

HON. MR. WATERLAND: In response to the first part of the

question, if the member can get the sanction of Jack Munro to give up

jobs for his members in the forest industry by tying up that acre of

forest land, yes, I will take it out of the forest. But he has to get a

commitment from Mr. Munro to do that. The answer to the second part of

the question is no.

SOCIAL CREDIT PARTY BOOTH AT PNE

MR. REID: Is it opportune at this time to raise a question

relative to information asked for yesterday about the Social Credit

booth at the PNE grounds? The Conservative Party that won last night

didn't appear to need the space, but I have been led to get information

today that the NDP are the ones that are spending the money for the

$9,000 space. The Social Credit Party, under the restraint program,

decided not to.

TREASURY BOARD DIRECTIVE 4-83

MR. HOWARD: Mr. Speaker, I'd like to direct a question to the

Minister of Finance. On August 17 I asked the minister whether a

certain Treasury Board directive, namely 4-83, which relates to the

restriction of out-of-province delegations to one representative from

British Columbia, was still in force or whether any alterations had

been made to it. I wonder if the minister has an answer to that

question.

HON. MR. CURTIS: Mr. Speaker, it is correct that the member

asked the question. I accept his word that it was on August 17. I'm

afraid that in the interval I've not had an opportunity, and I again

take it as notice.

MR. HOWARD: Just as a supplementary, Mr. Speaker, August 17 was quite

a number of days ago. Is this a reflection

[ Page

1139 ]

of the gross inefficiency in the Ministry of Finance to find a simple document?

MR. SPEAKER: Order, please. Hon. member, that is not a question.

ALTERATION OF BUDGET PRESENTATION

MR. STUPICH: Will the Minister of Finance explain why the

government altered the budget estimate presentation — the manner of

presenting estimates — as compared to previous years? Was it in order

to conceal information about staffing levels in the public service or

in order to withhold or not present information about staffing levels

in the public service?

HON. MR. CURTIS: Mr. Speaker, I think that that could be

dealt with more effectively at the time of estimates. I would be happy

to deal with it then at great length — to the extent that the member

for Nanaimo wishes. But I would refer him to statements which I made at

the time of the presentation of the budget, and also since then in this

House and outside, indicating the change with respect to full-time

equivalents in terms of giving not less but rather more information to

this House in terms of staff salary costs.

In his

preamble to his question, the member used the word "conceal."

I find that kind of word in that particular context to be somewhat

offensive. Quite the contrary to concealing, it is this government's

determination, and it is my determination as long as I hold this

portfolio, to share information with members of this House. That was

what was done in this instance.

MR. STUPICH: Well, Mr. Speaker, I think that is a subject we

will pursue under estimates. But the government has tabled Bill 17, and

it's one of those in the process to implement the so-called "footie" or

FTE system. We did discuss this the other day in discussing second

reading of that. In the meantime the information being presented to us

well in advance of that bill being discussed, let alone implemented, is

not available in estimates, so it makes it difficult for us to compare

one year with the next. Again I have to ask: why did the government

make this change in advance of presenting the legislation, let alone

passing it?

HON. MR. CURTIS: I have no difficulty in both steps having

been taken: one to utilize that format, if I may use the term, for the

1983-84 budget, and the other dealing with it in legislation at the

same time. There is no conflict in those two actions, which are

actually parallel with respect to the same policy.

HON. MR. HEWITT: On a point of order, Mr. Speaker, I'd refer

you to standing order 47(1). If you'd give me a moment for explanation,

I'd like to elaborate on the reason for my question. It does state in

that first

section that questions may be asked by "other members

relating to any bill, motion or other public matter connected with the

business of the House...."

The purpose of the question is that out of public funds comes expenditure for

travel to and from constituencies. I believe there are 36 travel expenditures

per year allowed a member. I asked the member for Atlin (Mr. Passarell) whether

or not he had been home. My supplementary question would have been whether or

not the public funds of this province paid for it. I would like your ruling,

Mr. Speaker.

MR. SPEAKER: I would refer the minister to the fifth edition

of Beauchesne and the nineteenth edition of May, where it is clearly

suggested that questions to private members would only be possible if

they held the position of chairman of certain committees. Other

questions directed to private members are out of order.

HON. MR. HEWITT: Mr. Speaker, I was asking for your ruling.

However, could I request the Speaker...? So that this confusion might

not happen in the future, could such an item be included in the rules

of order of this House, rather than referring to Beauchesne or May,

which I don't have in front of me for easy access?

MR. SPEAKER: Hon. member, as a member of the government you are in a position to introduce such changes far better than I am.

MR. BARRETT: Mr. Speaker, I'd like to bring to your attention

standing order 47(1), which deals with placing questions on the order

paper. If the minister had read the

section openly to the House, it

would have been clear that his stand was out of order. The member can

get up and place a question on the order paper at any time. He was

using standing order 47 to delay the important work of this House.

MR. REYNOLDS: I ask leave to make an introduction.

Leave granted.

MR. REYNOLDS: Mr. Speaker, I would like to welcome to the the

House and introduce a very brave soldier, a man who has been out

fighting the wars for the last few days and whom we've missed very

dearly in this House. I would like to ask the House to welcome back to

this chamber a very brave soldier fighting for his cause, the hon.

member for Coquitlam-Moody.

MR. ROSE: Mr. Speaker, in acknowledging the House's great

welcome on my somewhat less than triumphant return, I would like to say

it's always important to fight the good fight, and also to return

bloodied but unbowed.

HON. MR. SCHROEDER: On a point of order, I believe that, in

order for an hon. member to gain the floor, leave is required. Of

course, we would be happy to grant leave.

MR. SPEAKER: The matter, hon. members, having been concluded, can we possibly proceed to the next point of business?

Orders of the Day

HON. MR. GARDOM: I ask leave to proceed to public bills and orders.

Leave granted.

HON. MR. GARDOM: Adjourned debate on second reading of Bill 7.

[ Page 1140 ]

PROPERTY TAX REFORM ACT (NO. 1), 1983

(continued)

MR. BLENCOE: I thank the government for giving me the

opportunity to pursue an interesting and learned debate about property

tax and tax reform in the province of British Columbia.

Mr. Speaker, I have in the last few hours been trying to give this

government the opportunity to review this piece of legislation in terms

of some particular sections that we find unacceptable, not only to the

people of British Columbia, but also to the municipalities in this

province — sections that are offensive in terms of municipal autonomy

and further centralization of power into the hands of cabinet.

[Mr. Strachan in the chair.]

[2:30]

I have also tried to give this government a rundown on some of the

alternatives that are available for a special select committee to

review tax problems at the local level, and to perhaps decide once and

for all that what we need in the province of British Columbia is an

intelligent, sensible analysis of the many problems that are faced by

local municipalities and their taxpayers, in terms of trying to deal

with real property tax in the province of British Columbia. This

morning I went through a number of alternative tax structures on behalf

of our party, trying to let the government know that we believe there

are alternatives worth considering. We've been trying to be a

constructive opposition in terms of providing some viable alternatives,

meaningful dialogue and possible solutions and courses of action. It is

my belief, and also that of our party, that there is room for a

non-partisan discussion of this particular issue. We would like the

government to take the opportunity and time to take a look at some of

the alternatives that I have been putting forward, to consider that

they might be making a mistake in centralizing power and taking over

some of the traditional areas of responsibility municipalities have

enjoyed for many years.

This morning I went through the net income taxation concept and the

gross rental tax concept. I discussed the British rates taxation

concept, the user charges concept and the land value increment taxation

concept, and touched upon the site value tax concept. These are all

ideas that could be looked at and analyzed in an atmosphere of trying

to find some consensus on this particular issue in the province of

British Columbia. I would remind the members of the government that

local taxpayers have been waiting for a long time for some major and, I

would say, revolutionary changes in the nature of how municipalities

generate revenue for their use. Yet we have Bill 7 before us which

really is only a tinkering, a band-aid. Indeed, certain sections of it

are quite abhorrent to our belief in the power of a local municipality

to set its own policies and principles, to collect its own taxes and

set its own spending priorities. Local autonomy must be maintained, and

as a party we will continue to support that forever.

I would like to take a few minutes to give the government the

opportunity to consider the concept of a municipal income tax system.

This is the final alternative that I would like to give today; a final

alternative in terms of fiscal structure that could be considered a

municipal income tax proposal.

Two types of income tax have been used by municipalities in the past: tax on

personal income and tax on corporate profits. This form of local taxation is

not uncommon in North America, and it's becoming increasingly more popular.

Today this tax is levied by one-quarter of the largest cities in the United

States. In these cities the tax generally falls only on earned income rather

than on interest, dividends or capital gains. However, there are many noteworthy

exceptions to this general rule. Some municipalities levy a flat rate on all

forms of income.

HON. MR. RITCHIE: On a point of order, Mr. Speaker, I'm at a

loss to know the relevance of income tax to Bill 7. It seems that again

this member does not understand the principle of this bill. It has

absolutely nothing to do with income tax; it has to do with property

tax.

DEPUTY SPEAKER: The second member for Victoria will continue,

but the member is reminded that we are dealing with a property tax

bill. If the member can relate his remarks to that principle the House

will be well served.

MR. BLENCOE: The point is well taken, Mr. Speaker, but I am

endeavouring to indicate to the provincial government that the bill

before us does nothing in terms of trying to resolve the deep-seated

problems of the real estate property tax. I'm trying to indicate to the

government that there are alternatives they could look at, analyze and

introduce as real changes to the problems of collecting taxes at the

local level. The principle of this bill is way off the mark in trying

to come to terms with the inequalities, the unfairness, of real

property tax in British Columbia. I'm trying to tell particularly the

Minister of Municipal Affairs that there are other areas to look at.

Other jurisdictions all over the world have taken the time and effort

to analyze and administer tax structures for municipal purposes that

are far fairer, and that reflect the ability to pay far more than does

the real property taxation system.

I think it's useful to have in this House this constructive

discussion of alternatives. I don't want to say something is

particularly bad because we oppose it, because there are some obnoxious

sections in the act. Rather, I think it's up to us in the opposition to

give the government some opportunity to look at alternatives, and to

provide some of those constructive alternatives for their

consideration. Our party has always done that, and we will continue to

do that.

If I may, I will get back to talking about municipal income tax as a

viable alternative to real property tax in British Columbia.

As I was saying, this tax is levied by about one-quarter of the

cities in the United States. In these cities the tax generally falls

only on earned income rather than on interest, dividends or capital

gains. However, there are many noteworthy exceptions to this general

rule. Some municipalities levy a flat rate on all forms of income;

others impose a progressive rate. New York City, for example, imposes a

graduated rate which ranges from 0.4 percent on the first $1,000 of

taxable income, to 2 percent on taxable income over $30,000. In other

cases the tax is calculated as a percentage of the tax payable to the

federal government. Nevertheless, 80 percent of these cities taxing

income have adopted a flat-rate tax for administrative ease. The tax

rates imposed in these municipalities vary from one-eighth of 1 percent

in Williamsport, Pennsylvania, to 2 percent in Newport, Kentucky. The

majority of cities have found a tax rate between 0.5 percent and 1

percent to be sufficient for their needs.

[ Page 1141 ]

Various municipalities have also levied a tax on corporate net

profits attributed to activities within the taxing jurisdiction. A flat

rate of between 1 and 2 percent is usually levied, except in New York

City, where the tax rate is 5 1/2 percent of net income. Of course, we

know what's happened in New York City in terms of not maintaining their

infrastructure and allowing their basic ingredients that keep that city

alive and well. Today, of course, they face a major financial crisis.

In my estimation, because of the shift by this government to say that

municipalities now must pay 75 percent of their storm drains, their

sewer systems and their underground services, this province and its

municipalities, towns and villages may be faced with that particular

crisis as well. They may have to put off maintaining that

infrastructure properly, because they just won't have the money to do

it. That's a serious issue that we have to face in this House.

Typically the determination of taxable profits follows the federal

tax legislation, with some minor adjustments. The major difficulty in

administering a municipal corporate income tax is fairly allocating

corporate net income where a business is operated in more than one

taxing jurisdiction. Most municipalities use the Massachusetts formula

to perform the necessary separation of net income. This method is based

on a simple average of the three ratios. They are as follows: (

a) real

and personal property within the tax unit as a percentage of the total

property holdings of the corporation; (

b) gross receipts in the tax

unit as a percentage of the gross receipts of the corporation; and (

c) total wages, salaries and compensations for personal services paid

within the tax unit as a percentage of the total of each compensation

paid by the corporation. The resulting average percentage is then

applied to the net income of the corporation to obtain the total

taxable income attributable to the taxing jurisdiction.

Other ratios are sometimes used to make this computation. For

instance, the city of Dayton, Ohio, I believe, substitutes the cost of

production for total payroll figures. These variations in

definitions

and ratios can lead to undertaxation or double taxation for the

corporation in different municipalities. The Massachusetts formula,

however, is quickly becoming the uniform method of allocation. I would

suggest that the Massachusetts formula is one that this House could

consider, along with about seven or eight others that I have suggested

over the last day or so, as a way to relieve the local taxpayer and to

try and introduce a fair taxation policy and formula for local

taxpayers.

A municipal tax on either corporate or individual income recognizes

that ability to pay is not today dependent upon property holdings, but

rather on income flows. If I have said it once, I've said it ten times:

ability to pay has to be introduced to the municipal level. We have

accepted that premise at senior levels of government. No one likes to

pay income tax, but I think most Canadians accept that some tax has to

be collected for the collective interest, to maintain health and things

like that. But we try in our taxation policies to introduce the

principle of equity. The principle of equity is non-existent in real

property taxation formulas. That is what we have to work on.

Municipal tax on either corporate or individual income recognizes

that ability to pay is not today dependent upon property holdings, but

rather on income flows. To that extent a degree of equity is achieved.

However, where a flat rate is used, or where only earned income is

included in the tax base, the tax becomes regressive and

discriminatory. One means of balancing the tax equities is to permit

the taxpayer to claim exemptions and deductions. Despite this, those

cities in the United States which use a local income tax are of a split

opinion as to the extent to which exemptions and deductions should be

allowed.

I reiterate that as a party we are not saying that one or the other

of these particular concepts I'm putting forward is the answer. But,

indeed, there are viable alternatives that are being utilized in other

jurisdictions. I think if we put our collective heads together, along

with the interested parties in the province of British Columbia, we can

come up with a real alternative to real property taxation.

Some of the smaller municipalities contend that the use of

deductions would seriously diminish their revenues by restricting the

tax base and increasing administrative costs. On the other hand, most

larger cities follow Detroit's example of allowing a personal exemption

of $600 for the taxpayer and each dependent, but requiring the tax be

paid on all forms of income. These jurisdictions take the view that the

use of exemptions is more equitable, that it introduces an element of

progressivity even to a flat-rate tax structure. In addition, since the

number of individuals with taxable income is thereby reduced, there is

an administrative benefit in the reduction of the number of

applications filed. Only in New York and Baltimore, which follow the

federal tax scheme, are personal expenses also deductible.

[2:45]

One of the problems facing a jurisdiction — I'm trying to go through

the pros and cons of each side — that levies local taxes is the

determination of who should be taxed. Clearly residents of the tax unit

should bear a fair proportion of the tax load. In addition, however,

there is considerable justification for taxing non-residents who are

employed in the city. These commuters increase the city's congestion

costs and exploit its services. In terms of benefits received and

ability to pay, the non-resident employee should be subject to local

taxation. Since the commuter does not enjoy as many services as does

the resident, a fair allowance has to be made. One alternative is to

tax the non-resident only on that portion of income actually earned in

the jurisdiction. To avoid the difficulties of separating and

allocating income, many jurisdictions have simply adopted a lower

non-resident rate. For example, in all those cities in Michigan which

impose a municipal income tax, the non-resident rate is one-half of the

rate levied on residents. In New York City, where residents are taxed

according to a graduated rate on income minus deductions and

exemptions, non-residents are taxed at a flat-rate of income which is

reduced by a sliding-scale of exclusion.

The taxation of non-residents raised the spectre of double taxation.

I and my party recognize that it is something that would indeed have to

be looked at very closely, particularly where a person works and

resides in different jurisdictions, each of which claim taxation power.

One solution would be the expansion of the tax jurisdiction to a

regional or even a provincial level. However, due to local diversity

and to a passion for local autonomy, which of course our party

supports, other approaches seem preferable. As a result, most American

cities have adopted one of the four alternatives I have suggested.

A third approach has been tried in another city in Pennsylvania.

Except for Philadelphia, the jurisdiction of a domicile has a prima

facie tax priority, but half of this unit does not impose a tax at a

rate of less than 1 percent. The jurisdiction of employment may levy a

tax rate differential. As a result, residents of communities

surrounding a central city which

[ Page 1142 ]

imposes a tax would pay a tax, unless their

jurisdiction of domicile levied at least a rate of tax of a full 1

percent. In practice, tax competition is encouraged, and all

surrounding suburbs have levied a full 1 percent tax on their

residents, thus the primary objective of a local income tax to

compensate the central city for the use of its services has been

somewhat eradicated.

I believe that the income tax is a viable alternative to the present

system of municipal taxation in British Columbia. As a source of

revenue the tax is relatively simple and economical to administer

without unfair results. The investigation by the Bureau of Municipal

Research in Ontario has uncovered no jurisdiction that has completely

abandoned the property tax. That goes along with what our party is

suggesting: that we need a two-tiered system. There may indeed be a

retention of the property tax for services that directly benefit

property; and I can think of a number of those, one of which I have

talked about: the service by the police to protect property. To do so,

i.e. to totally remove property tax, would strain the income of the

taxpayer, while wholly overlooking his property holdings as a taxable

asset. But where the two tax systems have operated in tandem, at least

some of the tax burden has been shifted from real property to personal

and corporate income. Even in this supplementary role an income tax

would serve to relieve many of the unintended but very real pressures

and inequities of the present property tax system.

It is our belief as a party that we do have the collective wisdom in

this province to once and for all take on the difficult job of

introducing a new taxation formula and process for generating revenues

for municipal purposes. I believe nearly all British Columbians want

this Legislature to take that on. I have suggested that this House —

under the direction, I presume, of the government — could establish a

select committee or a task force to come in with serious

recommendations that will promise the people of British Columbia that

they will be relieved of the heavy burden of the property tax system.

It is a formula that has outlived its time, and it's one indeed that we

believe should be altered.

The bill as presented is unacceptable to the New Democratic Party.

The variable mill rate on its own, in isolation — if that were all this

bill did, we would seriously consider our position. But the bill in its

present form has some very obnoxious components. We cannot support a

number of the sections in his bill. We believe it's a removal of the

rights and the privileges and the autonomy of local government that

have been established over a long period of time. We believe that those

elected officials do a good job. They are accountable; they are fine

people who know the business of their jurisdictions and how to levy the

taxes and where the priorities should be for their municipalities, and

how much they should tax their electorate.

Municipal government and elected officials have a right to retain

their local autonomy in taxation policies. Certain sections in this act

we cannot support, and if the government persists in pursuing this

piece of legislation in its present form we will not be able to endorse

or accept it.

I have tried to offer the government some viable alternatives for

investigation. I have said that our party is quite prepared to enter

into negotiations and discussions with the government on alternatives.

I believe the people of British Columbia want the government to take up

the challenge of ending over 100 years of complaints that the

real-property taxation is unfair, archaic and not based on the ability

to pay.

I believe the government should reconsider its position, should take

time out to consider certain sections of this bill that are abhorrent

and are not supported by local government. To allow the government to

take the opportunity, a few months of consideration, I would like to

move an amendment. The amendment is that the motion be amended by

leaving out the word "now" and adding the words: "on this day six

months hence." That motion is seconded by the hon. member from Alberni

(Mr. Skelly).

DEPUTY SPEAKER: The motion is in order.

On the amendment.

MR. SKELLY: I would like to congratulate the mover of the

motion for the fine presentation he has made in the Legislature over

the past few days. I can recall some long speeches in the House when

the wrecking-crew that is now in government was in opposition back

between 1972 and 1975, especially the presentation from the member from

South Peace River (Hon. Mr. Phillips) at that time. That presentation

was characterized more by its time than by its content. I would

certainly like to congratulate the new second member for Victoria for

presenting the numbers of alternatives that he presented for the

government to consider, for being so very positive in the way that

those suggestions were presented and for giving the government such a

tremendous amount of food for thought. I am sure that the government

will require at least six months to take a look at all the suggestions

that were presented by the second member for Victoria (Mr. Blencoe) and

consult with local government and various groups of property owners to

find out just what they feel about this bill presented in the House

this summer. Possibly they will come back with some of those positive

changes that the second member for Victoria presented. I'm sure Mr.

Speaker will agree that it was a very positive proposal and that the

time spent in this House by all members listening to those proposals

was worthwhile. I'd like to congratulate the member for that.

One of the reasons I'm standing to support and second the motion to

hoist this bill for six months is that it's full of errors. In the

first place it's erroneously entitled Property Tax Reform Act. Mr.

Speaker and other members in the House will be aware that over the past

decades — in fact, over the past century — many efforts and suggestions

have been made to reform the property tax system in this province.

Unfortunately very few have been done on a comprehensive and

consultative basis which takes the reasons and the proposals out to the

people of this province to find out what they would like to see

accomplished by the property tax and how they would like to see the

property tax system reformed. In fact, few governments have been less

effective than this government in presenting legislation to reform the

property tax system.

During this session the government has been less effective than it

usually is in the type of legislation that it has presented. Property

taxes will be increased during a period of economic decline as a result

of some of the so-called reform measures that are presented in this and

in the Miscellaneous Statutes Amendment Act. I think this bill deserves

the careful analysis that's been given by the finance critic and by the

second member for Victoria over the last few hours of debate on this

bill. In fact I feel it's unfortunate that members on the government

side have felt content to sit on their assets and not

[ Page 1143 ]

participate in the debate and provide comments and

proposals for change along the lines of the positive comments and

proposals for change that were presented by the second member for

Victoria. We are concerned that property taxation could be changed so

that it strikes harder on the poor than it does against the wealthy

under the so-called tax reform act we're currently dealing with. It's a

major concern we have.

During the throne speech and budget speech, the government appeared

to talk about fairness; in fact, they used fairness on a number of

occasions in talking about their legislation. Of course, that was

before the legislation was permitted and the government had clearly

tossed any notion of fairness right out the window. We find this

legislation, in terms of human rights, loaded against minorities such

as landlord and tenants. It's loaded against those who rent in favour

of those who own property. This legislation appears to be loaded

against those who have a tremendous amount of wealth compared to those

who have very little wealth. This bill also gives the

Lieutenant-Governor powers that we feel should be feared by all people

in the province who respect democratic institutions. This bill allows

the Lieutenant-Governor-in-Council behind the closed doors of cabinet —

in secret, Mr. Speaker — to decide which classes of properties will be

taxed and to decide at which rate those properties will be taxed. We

feel this is a dangerous precedent. It's not really a precedent with

this government, which has established many dangerous and questionable

precedents in terms of democracy before this particular one. We feel

that allowing the government to establish among private property owners

different categories of property subjected to different rates of

taxation is extremely dangerous to the democratic principle and the

principle of fairness.

[3:00]

Over the last 100 years in this Legislature we've seen legislation

passed where certain categories of property are exempted from tax or

subject to reduced taxation because of the type of service they provide

to the public. It would be unwarranted, uneconomical or in some other

way unwise to tax that property at the same rate as other properties.

For example, as a former member of a school board, as I was some years

ago, I notice that school buildings aren't taxed because they provide a

service to the community that is so valuable that it would not make

sense to raise the cost of education to the community by taxing them.

All of us accept those types of exemptions because we all know that the

benefits flow to the people from the exemption of taxation on school

property. Another reason why we accept those exemptions....

Interjections.

MR. SKELLY: Did I hear somebody call for a quorum?

DEPUTY SPEAKER: Now that it's been brought to my attention

officially, the Chair recognizes that there is not a quorum. I'll ask

that time be stopped, and we'll see if we can summon members.

Standing order 6 is now satisfied. The hon. member for Alberni continues.

MR. SKELLY: I'm reminded by the member for Comox (Ms.

Sanford) that up to this point there wasn't one cabinet minister in the

House, and now there are only three cabinet ministers in the House.

During this period of debate, we've been talking about productivity,

and it seems, in terms in productivity in this Legislature, that

cabinet ministers have been the weakest of all members of the

Legislature. That's unfortunate, in terms of the emphasis that that

group seems to place on productivity.

DEPUTY SPEAKER: The member for Kootenay rises on a point of order.

MR. SEGARTY: The member can't blame us for not coming in when his own members won't show up to support him in debates.

DEPUTY SPEAKER: That's not a point of order. Could the member relate his remarks to the bill before us.

MR. SKELLY: I was talking about certain classes of property

that were exempt from taxation or that received partial exemptions from

taxation because of the service that those properties give to the

community. Those properties, as you are aware, include schools,

universities and public buildings. The reason they are granted reduced

status or tax-exempt status is because it would result in an imposition

of increased costs upon the community if those buildings were taxed.

What this legislation gives to the Lieutenant-Governor-in-Council,

behind the closed doors of cabinet, is the right between private

properties to decide on tax exemptions for those private properties, or

to decide that only a percentage of the property will be taxed, or that

they will be taxed at a lower rate than other classes of property.

That's why we're concerned, particularly about this government that

has shown, especially with the legislation recently presented in the

House, that it has a certain bias against certain classes of people in

the province: against those who rent, as I said earlier, as against

those who are landlords; or against those who are minority groups, as

against those who in their own minds designate the majority. This

government seems to have developed certain prejudices against certain

classes of people in the province and also seems to have taken it upon

themselves to support the rich and the powerful in the province,

especially those wealthy corporations and large property holders who,

they feel, should be protected from the brunt of this economic

depression and the burden of the depression placed on the poor and on

those who receive salaried incomes or hourly paid incomes.

It appears that this government favours high-income earners over

low-income earners, and the rich over the less wealthy in this

province. That's why we're concerned that when cabinet makes its

decisions behind closed doors it is going to make decisions in favour

of those property owners whom it has already favoured in other

legislation. That gives us a reason to be concerned and to fear what

the government is going to do when it determines to vary the tax base

of certain municipalities in order to favour certain properties against

certain other properties.

There are other problems in the community which this legislation

does not directly deal with, but which, of course, have been the

subject of lobbying effort against the government. For example, it is

interesting that large corporations have been complaining recently

about the amount of taxes they're paying to local governments. They

complain that this tax level has caused them to be uncompetitive in

world markets. There are many reasons why a large resource industry, or

a forestry, mining, energy or pipeline company would

[ Page 1144 ]

be uncompetitive in world markets, everything from

bad management to currency problems, but not necessarily the problem of

taxes paid to local governments. Here's an

article from the Crown Zellerbach News

of June 1983, where the corporation is complaining about the $19

million bite that the local tax man is taking out of Crown Zellerbach

even though that company is losing money during the 1983 year. For

example, Elk Falls pays to the municipality of Campbell River $10

million, and Crown Zellerbach's headquarters properties pay $11,000 to

the community in which those properties are located.

[Mr. Pelton in the chair.]

The interesting thing about Crown Zellerbach's complaint, as it

relates to the proposals made by the second member for Victoria (Mr.

Blencoe), is that they are attempting to relate the company's income to

the large amount of tax they're paying to the local municipalities and

school districts through the property tax requirement. The company

itself is attempting to relate its tax problems with reference to

property tax to its income problems with reference to world markets.

This relates to what the member for Victoria said in this way: if the

property tax were switched from one which was based strictly on the

value of property owned to one which is based on income as well, then

it would probably be fairer to those forest companies operating in our

province to have their income considered and their taxes partially

forgiven during the low-earning years when they're suffering as a

result of market conditions, and have them pay more during the

high-income years, when their profits are a little better and they can

afford to pay those taxes. This is, I believe, what the second member

for Victoria meant when he was attempting to relate property taxes to

the income of corporations.

The largest corporation operating in Port Alberni is MacMillan

Bloedel Ltd., a large integrated forest products company that operates

in many places in the world. Occasionally MacMillan Bloedel publishes a

booklet called "MB in B.C.," in which they give their financial results

and talk about the amount of local taxes they pay in British Columbia.

Using 1978 figures, municipal property taxes paid in B.C. by MacMillan

Bloedel were $19.7 million. Compared to 1983, 1978 was a relatively

good year for MacMillan Bloedel, and during that year MacMillan Bloedel

wasn't complaining about the amount of tax it had to pay. But the last

two years have been poor ones for MacMillan Bloedel. Income and

earnings have dropped and profits have been eliminated, and MacMillan

Bloedel has been in a loss position right up until the last quarter.

This year local property taxes against MacMillan Bloedel are estimated

to be somewhere around $21.5 million, even larger than they were in

You can see what improvements would result, Mr. Speaker, if the

property taxes against large property holders and resource companies

such as MacMillan Bloedel, who are subject to the vagaries of

international markets, were partially based on property owned as well

as on income; then during their high-earning years MacMillan Bloedel

would have paid a little more in property taxes and in their

low-earning years they would have paid a little less, and as a result

our major forest company operating in Port Alberni would have been a

little more competitive in international markets and able to employ

more people, and would have been a lot better off financially in terms

of its ability to recover from the current recession than they are

under the current property tax scheme, which is based on a very

arbitrary value attached to the values of pulp and saw mills and other

forest industry properties in Port Alberni and in British Columbia.

[3:15]

Each year the Council of Forest Industries publishes a fact book

called "The Forest Industry Fact Book." It is an excellent overview of

the forest industry and the contribution it makes to British Columbia,

and gives a breakdown of the employment, jobs created and profitability

of companies. It also covers, on page 30 of this year's booklet, the

property tax burden incurred by forest companies operating in British

Columbia. This is based on a survey of 14 integrated companies that did

business in British Columbia in 1982. As you can see from the diagram,

Mr. Speaker, the 1981 net property tax paid by those 14 integrated

forest companies either to municipalities or to the provincial

government was $97.6 million. In 1982, in spite of the fact those

companies were in the middle of an economic recession, the property tax

had increased by 24.5 percent. So in the worst possible year, when

companies' earnings figures were at their lowest, property taxes

increased and were an even further inhibition to the profitability of

those companies and made them even less competitive in international

markets than they already were as a result of the drying up of those

markets during the international recession.

So this is a problem we should examine. If we're going to be

examining the principle of tax reform or calling what we're doing in

this Legislature tax reform, then we should be looking, as the second

member for Victoria said, at the relationship between the incomes of

corporations and the value of the property that those corporations own.

If we only take into consideration the value of the property, then

during the worst possible market years, when earnings are lowest and

profits are non-existent, we're going to see those companies either

shut down, cut back on employment or lose their competitive position in

international markets. I know that none of us in the House would like

to see that happening.

What applies to large businesses applies even more to small

businesses. We're even more concerned about those small businesses,

because there are roughly 121,000 of them in the province. Most of them

are small, kind of mom-and-pop operations which are living virtually on

a shoestring. We think of the small corner store; we think of small

retail outlets and restaurants, maybe employing six, seven, eight, nine

or ten people — in any case, less than 100 people. Those people are

living even more on the margin than the large integrated multinational

industrial concerns who, when recovery does take place, will see their

profits returned. These people may go out of business in the recession

and never be heard from again. They'll be a burden on local creditors

and local taxpayers. These are the people whom we should consider when

we are considering reforms in property tax legislation.

Let me give you another example from Port Alberni....

AN HON. MEMBER: There is no quorum.

DEPUTY SPEAKER: Thank you, hon. member. In accordance with standing order 6, I'll ring the division bells to get a quorum.

Interjection.

MR. SKELLY: Listen. Read Hansard .

[ Page 1145 ]

DEPUTY SPEAKER: We now have a quorum in the House. Would the hon. member for Alberni continue, please.

MR. SKELLY: Thank you very much, Mr. Speaker. Gee, I lost my

place so maybe I should go back to the beginning. I think what I was

talking about, though, was the fact that we can see that levying taxes

exclusively on property causes problems for large integrated business

enterprises. What can be said for those large integrated enterprises is

even more true for the small enterprises.

I wanted to use the example of two retail stores which operate in

Port Alberni. One is Woodward Stores Ltd., which employs a large staff

in retail sales, has a large area of floor space and performs a good

service for the citizens of Port Alberni. In fact, during economic

slowdowns, strikes and other problems that we experience in the forest

industry, stores like Woodward's that have a local commitment have even

allowed striking or unemployed workers to buy food on credit, and have

been very generous in their credit terms and in allowing those people

to pay back for food which they've purchased on their credit cards. So

the store has demonstrated its commitment to the community, and it runs

a large store with a large staff and employs a lot of people from Port

Alberni.

On the other hand we have Sears, which, again, is a large,

integrated retail company. But it has now expanded into such services

as insurance, financial services, and selling stocks and bonds, as well

as the regular lines of business it ordinarily conducted, which were

catalogue sales. As a result, Sears has a very small floor area in Port

Alberni, a very small staff. I'm not saying that the commitment of its

management or its employees to the citizens of Port Alberni is any less

than Woodward's; however, because of its small floor area, because most

of its business is done through catalogue sales, it may do the same

volume of business in Port Alberni as Woodward's but in fact its

property tax is a lot less. So the commitment of Sears to employing

people in Port Alberni, or to building a large retail store in Port

Alberni is much lower than Woodward's and yet Woodward's is taxed more

because of its greater commitment. From that point of view the property

tax makes no sense at all.

The second member for Victoria was saying that maybe we should

reconsider property tax, which is basically unfair when I compare these

two stores in Port Alberni, in favour of a tax based partly on

property, partly on income. Sears and Woodward's will then be subject

to the same level of taxation, and competition between the two stores

will be much fairer than it is currently, when Woodward's is vulnerable

to a larger property tax even though Sears may have the same volume of

business, or be greater in dollar terms. That's just another way in

which the property tax, taken alone....

AN HON. MEMBER: Another way to raise prices.

MR. SKELLY: Yes, it does raise prices. Woodward's, because

they pay a higher property tax, has to charge higher prices in Port

Alberni, or else has to subsidize the prices in Port Alberni through

other stores. That's one of our problems. We shouldn't have that kind

of subsidy. Every store should be able to stand on its own. What

happens is that a Sears catalogue division is probably paying huge

property taxes in Winnipeg and Toronto and very little in Port Alberni,

and yet Sears is doing more business in Port Alberni. We're saying here

that the way it's applied now is unfair. The second member for Victoria

made an excellent point when he said that tax on small business should

not be based entirely on property, that it should be based on property

and income, which would improve the fairness of competition between

those two stores.

What applies to large retail organizations like Woodward's, Sears,

Safeway and other stores that generally operate in large areas and do a

large volume of business also applies to the smaller businesses

operating in a particular community. This is one area where, if the

government were seriously concerned about tax reform, I think they

would remove the property taxes from those small businesses altogether,

except for a nominal property tax. It is in the area of small business

that most jobs are created. They are created in those 121,000 small

businesses — restaurants, motels, retail sales — and these are the

people who are in the worst financial crunch, because every time their

taxes go up they have to cut staff. Every time their property taxes go

up the operators have to work longer. It becomes more and more of a

problem. Every time the property taxes go up they have to cut corners

in some way; they become less profitable, become less in terms of being

potential employers in the community.

Property tax discriminates much more heavily against the

small-business sector than against the large-business sector. It does

that in another way as well. The large integrated natural resource

firms that operate in places like Port Alberni, the large mining

companies, generally have markets that are overseas. Very little of

their product is sold on the domestic market. As a result, they can to

a limited extent pass the cost of their property tax into export

markets where prices are determined very differently from the way they

are determined locally. The Carter commission that looked into taxes

federally back in 1966, I think it was, indicated that taxes against

corporations was one of the most regressive forms of taxation levied in

Canada. That would also apply to property taxes against small

businesses, because these small businesses, these retail concerns,

restaurants, motels, deal at arm's length with people in their own

communities. When property taxes are passed on to them they increase

their prices, and that price increase is immediately passed on to

people in the community, causing a localized inflation, causing an

increase in prices and causing a decline in the general economy of that

community. The taxes that are levied against small businesses in this

province are the most regressive taxes that most of us will feel —

aside from user fees in hospitals, because most of us at one time or

another end up going to hospital, but they strike harder at the sick.

Aside from the other user fees of the type that have been imposed by

this government, some of the most regressive taxes are taxes applied

against small businesses such as property taxes and corporation taxes,

which must be immediately passed on within the region to the customers

of those local small businesses.

If I had my way, I would eliminate property taxes from small

business altogether, except for a nominal tax on the value of the

property. I am talking about a very nominal tax on the value of the

property because these are the people that create the most jobs; they

create the real price impact in the communities which they serve, and

we should do all that we can in terms of tax reform to lower the burden

of taxation on those small businesses. Whatever we do with the larger

businesses that have their price impact far beyond our borders and in

international markets, where in many cases they are

[ Page 1146 ]

very small participants and don't really have the

power to establish prices, which are established by larger forces

outside their control, that would be my preference if we were talking

about tax reform. We would virtually eliminate property taxes on those

small businesses that do small business within local communities and

have to pass the cost of those taxes directly on to consumers, thereby

increasing the price of goods and services in the economy and creating

serious problems for all of us in terms of what we have to pay for

goods and services on a daily basis.

One of the problems I see with this legislation is that it was

really developed without adequate consultation with municipal

governments. Now the minister is going to say that before bringing in

legislation to establish a variable mill rate he did go around and meet

with a number of municipal representatives, possibly even with the

Speaker, that he met with a number of representatives from a number of

communities from around the province and that many of those communities

did express an interest in establishing the variable mill rate. I think

there are legitimate grounds for concern by those municipalities about

this bill, because once the bill comes in, then the provision for

consultation ends. In this bill the only provision for establishing the

various classes of properties that will be taxed is the power of the

Lieutenant-Governor-in-Council behind closed doors — it is done in

secret. The Lieutenant-Governor-in-Council may establish favourable

rates of tax on a lower tax base for property held by its friends. It

may establish different classes of property based on the value of those

classes of property, and tax the wealthy much more easily than it taxes

the poor.

MRS. JOHNSTON: Rubbish!

[3:30]

MR. SKELLY: I am not talking about this bill doing that, of

course; I am talking about the mechanism in the legislation that allows

the government to do that. In a democratic society democracy doesn't

happen on one day every five years; democracy is a continuing procedure

whereby the citizens' demands to be consulted by their government are

satisfied on every possible account. This is why in municipalities we

have public hearings on zoning changes. We have public hearings on a

number of issues, including waste management plans. Many issues have to

go to public hearings in municipalities. Municipalities must conduct

their business in open public meetings. Even though committee meetings

can make resolutions, those resolutions have to be reported back to

public meetings. The same applies to school boards and school trustees.

All of the business of those local governments must be transacted in

public, and reasons can be asked in public as to why those decisions

were made. This provincial government seems to feel that democracy is

something that is allowed to happen once every five years on election

day. After that the doors close, the people are ignored, consultation

is eliminated and we have no opportunity for that continuous exercise

of democracy that is based on consultation.

[Mr. Strachan in the chair.]

That is a very dangerous part of this legislation. I am not saying

that cabinet will not consult with the public. I am not saying that

under this legislation cabinet will not consult with municipal

governments or with the Union of B.C. Municipalities. I am saying that

there is no provision in this legislation that requires cabinet to

consult with municipalities, property owners and with the general

public in order to determine which classes of property are going to be

recognized for tax purposes and which tax classes of property are going

to have which tax rates levied against them. That is something that

should be done in every piece of legislation.

During the 11 or 12 years that I've been a member of this

Legislature, I've examined most of the legislation that's on the

statute books in this province. A lot of it has gone through since I

was first elected to this House in 1972. In comparing legislation in

this province with legislation in other provinces, I find that this

legislation is far more authoritarian than legislation, for example, in

Manitoba or in Ontario. And I'm not saying that it's because Manitoba

has a recent history of having NDP governments. It's simply that the

legislative tradition that has developed here in British Columbia has

been a very authoritarian tradition.

We have a Ministry of Transportation and Highways Act, as I've said

before in this Legislature, which starts off under

section 5 saying:

"The minister, in his absolute discretion, may...." Mr. Speaker, this

piece of legislation that we're dealing with now follows along that

authoritarian tradition of centralizing all power in cabinet. For that

reason it is anti-democratic legislation, and that's why we're

concerned about it. It allows the government to treat its friends

favourably. It allows the government to treat certain classes of

property or certain classes of property owners favourably in terms of

the rates of taxes that are levied against them.

Just the mechanism that allows the government to do that is

undemocratic and unfair to the people of British Columbia, because it

does not give the people the opportunity to influence the government in

public to consider their case. The government, in every piece of

legislation that it presents, should have a provision which allows the

public to become involved in the discussions around that legislation

and also allow the public to become involved after the legislation has

passed in changing government policy and in influencing government

policy in public. Right now people can influence government policy.

We've seen the people who have visited cabinet. We've seen the people

who are friends of this government, and who have been able to influence

this government. They are the wealthy and powerful. They are the large

corporations rather than the small. And this is why we are concerned.

This is why we are concerned that these issues can be decided behind

the closed doors of cabinet rather than in the public arena.

Mr. Speaker, during the last seven years at least, this government

has never made a practice of calling the select standing committees of

the Legislature or referring legislation or critical issues of the time

to those select standing committees of the Legislature. And that is a

defect in this government. What we should be doing is providing

opportunities at every possible occasion to go out and meet with the

people, to go out and find out what the people's concerns are about

legislation such as this and to bring recommendations from the people

back into the Legislature so that we can be better informed and so that

the people can be better informed as to what the legislative process is

all about. This Legislature, more than most, is like an ivory tower.

If you'll grant me a few seconds to wind up, I would hope that the

government, in a spirit of cooperation, will consider the proposals

we've made and the very positive proposals

[ Page 1147 ]

made by the second member for Victoria (Mr.

Blencoe) to examine income related taxes on property, other tax

procedures Mr. Speaker, I would like to move adjournment of this debate

until the next sitting of the House.

[Mr. Speaker in the chair.]

Motion negatived on the following division:

YEAS — 19

Macdonald

Barrett

Howard

Cocke

Dailly

Stupich

Lea

Lauk

Nicolson

Sanford

Gabelmann

Skelly

Brown

Hanson

Lockstead

Barnes

Wallace

Passarell

Blencoe

NAYS — 29

Waterland

Brummet

Rogers

Schroeder

Hewitt

Ritchie

Michael

Pelton

Johnston

R. Fraser

Strachan

Chabot

McCarthy

Nielsen

Gardom

Bennett

Curtis

Phillips

McGeer

A. Fraser

Davis

Kempf

Mowat

Veitch

Segarty

Ree

Parks

Reid

Reynolds

Division ordered to be recorded in the Journals of the House.

MR. SEGARTY: Mr. Speaker, I ask leave to make an introduction.

[3:45]

Leave granted.

MR. SEGARTY: Mr. Speaker, it's a pleasure for me to introduce

to the House Leta Salanski, her son Daryl and daughter Shelley, who are

from Grasmere, British Columbia. Also visiting the precinct today is

Mr. Grundy and his family from Cranbrook. I'd like the House to give

them a warm welcome.

MR. LEA: Mr. Speaker, for just a brief moment I thought the member for Kootenay was going to speak in the debate.

AN HON. MEMBER: No!

MR. LEA: He'll go back to his riding and tell them that his

own colleagues won't let him speak because he's really too liberal and

they don't really like him. That's what some of them down there told me.

Mr. Speaker, I don't suppose there are more than two or three people

in this Legislature who understand all the intricacies of property

taxation; I'm one who doesn't. Those who understand it must have made a

concerted effort; it must have been their only endeavour for some time.

It is complex and very difficult to understand. But we are now in

second reading, in which we are discussing the broad principles of

property taxation and taxation generally.

Within our community there are those who believe that any taxation

is bad. As a matter of fact, the other day I was reading an

article by

one of the movers and shakers in the Fraser Institute, Mr. Black, who

feels that any taxation by government can be likened to robbery. He

feels that taxation is not something someone does voluntarily; that

it's something people are coerced into by a government; it is not a

voluntary action, therefore it is undemocratic; that any taxation is

bad. Of course, the Fraser Institute stands alone — like many of their

other ideas. There aren't that many people who would go along with the

extreme views of the Fraser Institute and its participants. The Social

Credit government is the only group I know of that listens to the

Fraser Institute about the kinds of public policies that should be

developed. No one else.

Interjection.

MR. LEA: That's good. Isn't it interesting, Mr. Speaker, that

the Minister of Highways (Hon. A. Fraser), who has yet to speak during

this term of the Legislature, has a lot to say without getting to his

feet. But he has very little to say when it comes to discussing,

defending or offering contributions to legislation.

There are the two extremes: the Fraser Institute's no taxation

whatsoever — a completely laissez faire economic system; and those who

would tax you to death and leave nothing at all. Surely it is our duty

to come to some sort of moderate tax system that is fair and equitable.

For the past two days we've listened to the second member for

Victoria put forward some ideas on taxation. I don't think the member

for Victoria is saying: "'Accept these in their entirety." He is

saying: "Let's put some of these and other ideas to the test. Let's put

those ideas in front of an all-party committee, which would go around

this province and share ideas with the public, and listen to the

public's ideas of what an equitable and fair taxation system would be."

What is wrong with that?

Interjection.

MR. LEA: The Minister of Small Business and Economic

Development (Hon. Mr. Phillips) said: "We did that once." That's true.

It may be news to the minister, but times change. I know the minister

doesn't, but times do. There are different cures for different problems

at different times. It would be pretty damn stupid to go after the Red

Army with a slingshot. But the minister, if you're going to follow his

thinking in other matters, would do exactly that. The fact of the

matter is that times are changing, and we really do have to examine

taxation policies. I have to admit that I've changed my mind two or

three times on property tax. One of the problems with the Social Credit

government is that they feel it's a sign of weakness to change one's

mind, not a sign of strength. I submit that it is a sign of strength

for a government to be flexible; it's a sign of strength for the

government to re-examine its own policy; it's a sign of strength not to

be afraid to go out to the people whom we serve and ask them their

opinions.

When we start dealing with a variable taxation rate, there are going

to be real problems. Communities are going to start vying with one

another for industrial and commercial development. There's going to be

a taxation policy that has no uniformity anywhere in it in terms of all

the municipalities of

[ Page 1148 ]

B.C. It isn't too bad if you're like Terrace and

Prince Rupert and there are a hundred miles between you; you're not

right up against one another's borders. But what about places like

Delta and Surrey? What about all of the municipalities on the lower

mainland? Can you imagine, if each one of those municipalities is

allowed to set its own rates in every category, and they're actually

competing with one another for industrial and commercial development,

based on who is going to give the best tax rate to the people who are

going to come in....

Interjection.

MR. LEA: The Provincial Secretary (Hon. Mr. Chabot) says:

"Isn't that local autonomy?" Just look at the mess you could get

yourself into, because unless....

Interjection.

MR. LEA: Mr. Speaker, would you shut that person up? I don't

mind interjections from all over the place, but when he does it, it's

disconcerting — it's nonsense. When Barney Rubble speaks, it's too much.

If that municipality needs X amount of dollars to run its business....

Interjection.

MR. LEA: Mr. Speaker, I'm going to wait.

DEPUTY SPEAKER: Order, please, hon. members.

MR. LEA: If a community....

Interjections.

MR. LEA: Mr. Speaker, I'm not going to put up with it. I'll wait.

If a community needs X amount of dollars to run its business for a

current fiscal year and they are going to vie with other communities in

terms of special taxation breaks for an industry to come into that

community, but they still need X amount of dollars, then the shortfall

brought about by the taxation break is going to mean that some other

segment of the community that pays taxes is going to have to pick up

the shortfall. We know who that will be. It will be the residents. It

will be the ordinary working people living in a community and paying

residential tax who are going to have to make up the shortfall. On the

one hand, the city will end up giving a new economic development a tax

break. But because they still need the same amount of dollars to

operate, they're obviously going to have to get it somewhere else. It's

like every other form of economics. You can only transfer it around,

unless the pie increases. You can't increase it to anyone without

taking it away from someone else unless the pie increases.

That isn't happening in municipalities. They're losing out all over

the place. They're losing out in cost-sharing programs from the

provincial government. Water and sewer programs, in which the

government used to share 75 percent and the local community 25 percent,

are now turned around exactly the opposite. Now the community is going

to have to come up with 75 percent and the provincial government is

going to come up with 25 percent.

School taxes. Over the years since Social Credit has been in power

we've seen the provincial share to the local community diminish year

after year. If these municipalities still need the same amount of

dollars to operate their communities but revenues from the provincial

government are shrinking, and then on top of that they start, out of

desperation — because they need revenues — to make tax breaks for

commercial ventures and industrial developers, hoping to recapture in

the future.... There's going to be an intermediate period of hardship

in that community. The only place the councils will have to go to make

up the shortfall is the residential taxpayer.

The outcome of this piece of legislation for many municipalities —

not all of them — will be that there is going to be an extra tax burden

levied on the residential landowners to pick up the shortfall from

taxation breaks to business. I don't think anyone can deny that that is

probably, beyond a doubt, going to happen in a number of

municipalities. If that's the case, is that what we desire? Is that the

intent of the legislation?

HON. MR. PHILLIPS: On a point of order, Mr. Speaker, I have

been listening very intently to what the member for Prince Rupert has

been saying, and I would humbly suggest to you that he is speaking to

the original bill and not the amendment. I would suggest that you bring

that member to order, Mr. Speaker, and tell him to speak to the

amendment or lose his place in the debate.

MR. LEA: Mr. Speaker, I'm very glad the hon. minister brought

that up, because I'm trying to point out all of the reasons why the

six-month hoist should take place, and therefore I am speaking to the

amendment. But I do thank the minister for trying to help me. I know he

was well meaning and definitely didn't have any skullduggery in mind.

Right? You smiled! You didn't mean it, did you?

Mr. Speaker, what are we going to do about a very complex system

that I'm afraid this piece of legislation is going to make more

complex? It's almost like the transportation formulas that are worked

out federally. It's a house of cards: pull one card out and the whole

thing comes crumbling down. What we've been trying to do over the years

since I've been in the Legislature is to dabble at reform measures to

the property taxation system. The Minister of Industry and Small

Business Development (Hon. Mr. Phillips) said we've already studied it

once. He's wrong. We've studied it over and over again. And each time

we seem to make it worse, regardless of who is on what side of the

House. Because what we're trying to do is take a very complicated tax

structure and do some little thing over here that we hope will

straighten out the whole complicated mess, and it doesn't ever seem to

work.

The biggest thing that's wrong with it is that it is so complicated.

One of the appealing arguments put forward by the second member for

Victoria (Mr. Blencoe) is the simplicity of the procedure that would go

into place if we followed some of his suggestions.

AN HON. MEMBER: Which one?

MR. LEA: Which one? Mr. Speaker, the first member for Surrey

(Mrs. Johnston) has been a council member in Surrey, and I am sure has

had much more to do with municipal taxation of property than I have,

but she is not contributing to the debate. Why not contribute to the

debate? This is not

[ Page 1149 ]

really a partisan issue. We're dealing with a

pretty basic thing in society. We're talking about the ways and means

by which we're going to deal with property taxation, which affects

everyone: the renter, the property owner, the worker — no matter where

he works or what his station in life, I don't believe that there's

anyone in this House who wouldn't like to see a simple, fair and

equitable property taxation. We're not going to get it under this bill,

because it's tinkering.

Interjection.

MR. LEA: That's the problem. We've done that so many times:

we've said we've got to start somewhere, but we never start at the

beginning. We always take the system and say: "Let's plug this hole

this year. Let's do this this year. Let's bring in a piece of

legislation this year that will do this." But we never take the system

completely apart to try and find a simple, fair and equitable solution.

The second member for Victoria may very well be putting ideas

forward that won't work, but my God, let's at least discuss them. I

doubt very much whether the members on the other side have any more

idea than I do whether what the member is saying is a workable solution

or not. All they're saying is: "It's from an NDP member; wipe it out.

It's from the opposition side of the House, don't listen to it. If it's

coming from the NDP it's crazy; therefore don't listen." It's backed

up: "Hear, hear!"

[4:00]

One of the biggest problems in this Legislature is that this

government will not listen to constructive criticism. They have got

their minds made up, and that's it. They are the most rigid people whom

I've ever had the misfortune to debate with. They believe that once

they've thought of something it's perfect; it's the absolute panacea,

no matter what we're talking about. In eight years under this

government I can recall only two amendments ever being accepted from

the other side of the House, and one of those was from one of their own

members. They will not take amendments. They will not listen to

constructive....

MR. VEITCH: Not so.

MR. LEA: What do you mean not so? Look at the records. No

more than twice in eight years, and I'm probably being 100 percent too

liberal in that.

AN HON. MEMBER: Liberal!

MR. LEA: There are different meanings for liberal. You see,

Mr. Speaker, when you're dealing with people who are basically

uneducated.... I don't mean that they haven't been to school; I mean

that they're uneducated. There's a difference. One of the nice things

about having people over there who would listen to reasonable

arguments, even if they reject them after, would be the pleasure of a

legislative assembly that's working together to try to solve common

problems. We do not have that here.

Mr. Speaker, you yourself are a thoughtful member. You put forward

ideas, and over a period of time you're going to find — or now it's the

member for Dewdney (Mr. Pelton) — frustration at a government that

won't even listen to its own back bench. That's the kind of government

we have. I know that new members don't believe that. The members in the

House on the government side still think that somehow or other they

have a special place of being able to convince government to do

something other than the original step that they've taken. It just will

not work. You are dealing with a very rigid, ideological group who sit

on the treasury benches. Don't expect them to listen to you

back-benchers either, because it just isn't going to happen.

I venture to say that if this government brought in any piece of

legislation, no matter how abhorrent, ridiculous or inane it was, those

back-benchers would vote for it. In fact, we've had members from the

other side of the House stand up and say that while they oppose the

legislation in every way, they are going to vote for it.

AN HON. MEMBER: Is this on the bill?

MR. LEA: We are putting forward, we hope, reasoned arguments

as to why we should hoist this bill. We're not speaking to the bill;

we're speaking to an amendment, Mr. Member.

AN HON. MEMBER: Tell the truth.

[Mr. Strachan in the chair.]

MR. LEA: Yes, on both sides of the House.

One of the things that I said during the throne speech was that the

new members are yet to know the anguish of having to vote against their

conscience and with their party. Already we're seeing it. Mr. Speaker,

I don't believe that there is one of them, in good conscience, who can

vote for this legislation. Many of the people in this Legislature — and

it's basically the new back-benchers who've come in....

DEPUTY SPEAKER: Hon. member, at this point I must advise you

that I'm having a lot of trouble trying to relate your comments to the

principle of the bill, or even to the principle of the amendment. If

the member could relate his remarks to the bill, it would be most

appreciated.

MR. LEA: I suppose that's the complexity of my argument. I'd

rather put it on me than you, Mr. Speaker; I'm having no problem

following it at all.

DEPUTY SPEAKER: You will relate your remarks to the amendment or you will discontinue. Those are the rules.

MR. LEA: Absolutely right. We're talking about the reason it

should be hoisted. I'm suggesting that the members on the other side of

the House are new members — new to this Legislature. A six-month hoist

would not only give the public a chance to digest the changes that

we're discussing, but it would also give government back-benchers a

chance to try and do something that has never been achieved before;

that is, convince their government that they're wrong. It's never been

achieved.

Mr. Speaker, to me it's incredible that we can have 26 pieces of

controversial legislation in front of us, and not one person from the

back bench finds anything wrong with any of them.

DEPUTY SPEAKER: Hon. member, to the principle of the property tax bill.

[ Page 1150 ]

MR. LEA: Mr. Speaker, I'd rather not do that because I'd be breaking the rules.

DEPUTY SPEAKER: No, I don't think you would, hon. member.

MR. LEA: I'm speaking to the amendment. You want me to speak to the legislation itself?

DEPUTY SPEAKER: Yes. The amendment to the legislation — the property tax legislation.

MR. LEA: Exactly, Mr. Speaker, what I'm asking is for six

months. Is six months going to be the ruination of the province? Is it

wrong, as the member for Alberni (Mr. Skelly) said, to have democracy

work every day, 12 months a year, every year? Is democracy only to be

carried out when we vote every four or five years? Or is there an

ongoing process of participation and consultation with the people who

are going to be affected by the legislation? Is it wrong? I don't think

there's anyone that can say it's wrong.

MRS. JOHNSTON: Twenty thousand people said yesterday that they support our program.

MR. LEA: Did they speak to you personally, Rita?

MR. REID: They might as well.

MR. LEA: Did they speak to you, Bill?

DEPUTY SPEAKER: Order, please. I'd ask the hon. members not to interject, and the member for Prince Rupert should...

Interjection.

DEPUTY SPEAKER: Order!

...address the amendment.

MR. LEA: Mr. Speaker, I think it proves how very nervous they

are about this piece of legislation. Not only will they not get up and

debate the legislation but they are somehow trying to make out that

Bill 7 was the reason that the Conservatives won in the by-election

yesterday.

Interjections.

MR. LEA: Mr. Speaker, the reason we're asking for a hoist is that

we would like to see some ability to pay written into the legislation. It seems

pretty ridiculous. I think we all know people who have property and improvements

that are worth quite a bit of money, but when the taxation comes in they can't

afford to pay it because they have no cash flow for a particular year, or a

particular couple of years. Doesn't it seem a little cruel of government

to say to a business person who owns their own building and runs a business

in it: "You've had a couple of bad years and can't pay your taxes

because cash flow is down. Now I'm afraid we're going to put your building

up for a tax sale. You're out of luck. Two years of bad luck for you and

now we're going to give you a nice little double whammy. We're going

to take your building and put it up for tax sale." Wouldn't it be more

equitable if that business person were allowed to pay more tax per year during

good times and in those bad years he could pay less? Doesn't it make sense?

MR. MICHAEL: It's already in effect.

MR. LEA: No, it's not. Mr. Speaker, one of the members over

there says that's what the variable tax is all about. If for no other

reason, we should have a six-month hoist so that member can read the

bill. That is not what the variable tax is all about. Variable tax will

only work from category to category; there are no individual

exceptions. The municipality can only change the tax rate for a

category, not for an individual. Right, Mr. Minister? Explain it to

your back-bencher.

Mr. Speaker, need we say more? A back-bencher is going to get up and

vote yes to this legislation when he doesn't even understand it. He

probably hasn't even read it. I think it's stretching the point to say

that a Social Crediter may need six months to read a bill like this.

They may need six months to read it and understand it, obviously. We

actually have someone who's willing, on a moment's notice in this

House, to get up and vote on a piece of legislation when he candidly

admits he doesn't really know what it's about.

Interjection.

MR. LEA: You were just asking me. I see. It's a little test, Mr. Speaker, to see whether I knew. Is that right?

Mr. Speaker, isn't that proof enough? A government back-bencher

didn't know that variations in the mill rate can only be done from

category to category, not on an individual basis. In doing that you're

not dealing with the real problem. The beauty of having it based to

some degree on income is that you can deal with an individual case.

Let's take a commercial category. A commercial category could

include, say, a drycleaning firm and a gas station. If they're lumped

into one category, then the drycleaning firm may be doing really well

and the gas station not well at all. But no matter how they're doing

financially they both have to pay tax according to the same formula,

one based on property value and improvement value. Wouldn't it make

more sense to individualize the tax system so that it related to how

people were actually doing business-wise? We do that with ourselves,

Mr. Speaker.

Interjection.

MR. LEA: Yes, a tax based on profit and loss. That may be

worth looking at. When the minister yells across the floor at me, "Is

that a recommendation?", I go back to when I first started speaking and

say I'm no expert. But I would like to know what the experts think. I

would like to know what the people who have to suffer under a taxation

policy think. We should go out to the residential homeowners, to the

landlords who own apartment buildings, and see how a tax policy affects

them and their tenants. We should go out to the industrial sector. We

have some things to think about, and it'll take six months at least to

think about them.

The pulp mill in Prince Rupert: city taxation on a tonne of pulp

amounts to $22. We're looking at a $450 tonne in order to break even in

the international marketplace where we sell our pulp. Now $22 on $450

is quite a bit of money, when you consider that it isn't only corporate

tax, business tax, property tax, improvement tax and capital tax on

equipment;

[ Page

1151 ]

we're looking at a number of things all lumped together, bringing $22 against

every tonne of pulp leaving Prince Rupert. That's a significant factor in

examining a tonne of pulp in the marketplace. Is there a better way to handle

it? And that's whether the pulp mill is doing well or badly. It doesn't

matter. As the member for Port Alberni (Mr. Skelly) pointed out, wouldn't

it be a more reasonable approach to put taxation, wherever possible, on the

ability to pay, as opposed to a formula that cuts across the board, that fits

some and doesn't fit others, that doesn't take into consideration good

or bad years? Corporate tax does; income tax to citizens does.

Interjection.

MR. LEA: Not necessarily a municipal income tax. We are

talking about a cost-sharing arrangement between the provincial and

federal governments and municipalities. Municipalities are being

starved for money. Regardless of how we relieve that starvation, we do

have to find some solution to feeding those tax dollars into those

municipalities so they can do the kind of jobs they were elected to do

at the local level.

Even as they are starving for tax money to do the kinds of things

they should be doing, and want to do, this provincial government is

cutting back on cost-sharing of revenue to the municipalities, starving

them even more.

[4:15]

Somehow or other this problem has to be solved. We are not going to

solve it with a bill that lets them compete against one another for tax

dollars, and that is basically what this piece of legislation does. The

pie is only so big at the upper level too. The minister wants all the

municipalities to compete with one another for business. There are

other ways of competing. Quality of service would be one. That way you

are at least putting all communities on an equal footing. They have the

same tax rate and the same rules, rules they can really apply in

competition. Efficient well-serviced lots, efficient well-serviced

commercial sites — there can be a cooperative measure there too between

the federal, provincial and municipal governments. I really believe

Social Credit has forgotten its roots when they start starving a

municipality.

A really good example of why I think this bill should be hoisted for

six months is not the municipalities themselves but the regional

districts, where the problem is even more immense. This bill won't work

because many of the cost-sharing programs are already being cut back.

In Queen Charlotte City, a community in my riding, the provincial

health inspectors have said the water is really not fit to drink. It is

not a municipality; it is a specified area under the act. This is a

small community, and the ballpark figure to put in a water and sewer

system there is $5 million. We were barely able to put together the

package of 75 percent sharing from senior government and 25 percent

from the local government; now it is impossible, with the sharing 75

percent from the local level and 25 percent from senior government.

Queen Charlotte City now has absolutely no possibility of getting a

water and sewer program.

On the other hand, another branch of government, the department of

health, tells us the water is not safe to drink. Is that well planned?

Is that good government? Is that the kind of planning going into this

piece of legislation that we are trying to have hoisted for six months

so the government can rethink? I will admit that we are looking for

other means to solve this problem in Queen Charlotte City. The minister

has been available, and has made available $10,000 for a ground-water

study to see whether we can't do it that way. I thank the minister for

that. But once we have that study done, under the present formula we

are still beaten. We cannot do it.

I have spoken with other ministers of municipal affairs and pointed

out to them that the formula in place is one that may work very well

for larger communities, but the formula does not work for the small

unorganized communities in rural areas of this province.

I put that forward as an example of how a well-meaning formula can

lead to disaster for individual communities, or for individuals or

individual businesses. On this side of the House, the New Democratic

Party is concerned that this piece of legislation which we are trying

to have put aside for six months is going to have that same unjust,

unfair, unworkable formula attached to it.

I am sure there must be other rural members in this House. I know,

Mr. Speaker, that you are a rural member. I know that within your

riding there are small communities that are suffering the same kind of

unfairness under the water and sewer program that I have in my rural

riding. This legislation will also affect individuals in your community

unfairly and inequitably. It will. So why would you vote for it? Why

would I vote for it? Why would anyone vote for it? Is it so that we, as

legislators, hope that we can put this little piece of band-aid on

there and say: "Well, we've done something"?

Interjection.

MR. LEA: Mr. Speaker, there is a real parliamentary no-no.

The member for Shuswap-Revelstoke (Mr. Michael) says: "Graham, it's

already in effect. You've got to vote for it." That's one of our real

problems. What they did was put a policy in without legislative

approval. A program went into effect that needed legislation in order

to go into effect. That program was put into effect by this government

before they had the legislative approval to carry out the program. More

and more and more the power is leaving this Legislature — the elected

members — and going into cabinet. That's what's happening.

There are municipalities that do not want it. As I understand it,

the UBCM has said as a group that they do want it. The mayor of Prince

Rupert, Mr. Peter Lester, who has spoken out fearfully....

Interjection.

MR. LEA: I didn't say he didn't want it. I said that he is

putting forward.... As a matter of fact, he spoke to me about some of

the fears he has. Mayor Lester is the longest serving mayor in North

America, and has, in his time, worked for the Liberal Party, the CCF

and the Social Credit. Only the Conservatives are left. Mr. Lester, the

mayor of Prince Rupert, is — like myself — also fearful that the vying

for economic and commercial business by communities is going to

transfer the burden from the industrial-commercial

section over to the

residential owners. Now a man who has been the mayor since 1958 and who

I think has always been a pragmatist, as opposed to a partisan, is

concerned. When you have someone of that seniority and experience, who

is pragmatic, concerned about a piece of legislation, then I think we

have some obligation to be concerned ourselves. Those concerns,

expressed by Mayor Lester from the municipality of Prince Rupert and

which I've heard from other municipal officials, are real concerns.

What's wrong? What's the rush?

[ Page 1152 ]

As the member for Shuswap said, it's already in effect. It doesn't

matter whether this legislation passes today, whether it passes six

months from now, or whether it passes a year from now. As a matter of

fact, this may be a godsent opportunity. The program is in effect. Why

don't we wait a while? Why don't we wait for six months and take a look

and see how it's working and see whether some of the fears that we have

will be realized or not? What's wrong with that? There's nothing wrong.

It's in effect already, for all practical purposes, so why should we

bring this legislation rushing through the House when many people have

fears? It's inequitable, in our opinion.

We believe that there are other ways. I believe that there are

members of the Social Credit back bench who could probably contribute

to a bill to take a look at property taxation from the bottom up. As

legislators, let's take a look at this kind of legislation and try to

put it together as people who are concerned for our communities and for

individuals, both people who are in business and residents. If we are

truly concerned, then why don't we show our concern by trying to work

together cooperatively to come up with commonsense legislation that

will meet the test of time? I'm not saying that we won't have to look

at it again down the road. Nothing should be cast in stone, but if this

bill is allowed to go through the way it is, I think we're going to

have real problems.

For those reasons, Mr. Speaker, I'd like to move adjournment of this debate until the next sitting of the House.

DEPUTY SPEAKER: Hon. members, under standing order 44, which

I will commend to you, I find that that motion is an abuse of the rules

and I am going to decline to put the question to the House.

MR. NICOLSON: I challenge your ruling, Mr. Speaker.

DEPUTY SPEAKER: The Chair has been challenged. Shall the ruling of the Chair be sustained?

Deputy Speaker's ruling sustained on the following division:

YEAS — 28

Waterland

Brummet

Rogers

Schroeder

Heinrich

Hewitt

Ritchie

Michael

Pelton

Johnston

R. Fraser

Chabot

McCarthy

Nielsen

Gardom

Bennett

Curtis

Phillips

McGeer

A. Fraser

Davis

Kempf

Mowat

Veitch

Segarty

Parks

Reid

Reynolds

NAYS — 18

Macdonald

Barrett

Howard

Dailly

Lea

Lauk

Nicolson

Sanford

Gabelmann

Brown

Hanson

Lockstead

Barnes

Wallace

Mitchell

Passarell

Rose

Blencoe

Division ordered to be recorded in the Journals of the House.

MR. NICOLSON: Mr. Speaker, the motion which we have before us

now to hoist reading of this bill for six months is indeed well

considered, appropriate and, I think, quite necessary. This constitutes

the growing drift of government patching up a very leaky ship in terms

of the property taxation system, which is overloaded. There are too

many people being forced aboard the ship, and they are people who have

to pay property tax — and using "person" in the broadest legal sense,

in the sense of an individual, corporation, company or otherwise. All

of the various people who have to pay property tax, whether they be

tenants or owner-occupiers, are not being served by this piece of

legislation. It is simply going to displace one of the problems from

the backs of one group of people to those of another group of people.

We have to look at the basic underlying problems within the taxation

system rather than making allowances whereby municipal councils can

juggle among industrial, commercial, residential and various other

property classifications. But having done that, there is also the

sweeping power contained in this bill for the minister to come in and

raise or lower those various parameters. So what we're doing in this

bill is granting what is almost a war measures act. It puts excessive

powers in the hands of the minister — which he, I am sure, denies he's

ever going to use. But we have seen power abused in this country, and

if it is a sweeping and abusive power it need not be given.

It has been suggested to this House by some of those members who

speak from their seats, those who have a vote and no voice in this

House, those speakers who never get on their feet and appear officially

in Hansard on these bills — and we've seen evidence of this....

I don't know if anyone but the minister himself has spoken in favour of

this bill. If one were to go by what has been said officially in Hansard

by the members who have actually got up to speak on the bill, one would

assume that this bill is doomed to failure. But the House is full of

various back-bench groups. There's the one that's affectionately known

as the dense pack back here, and I'm sure that some creative person

will come up with an appropriate description for the other back-bench

group which sits on that side of the House. It has been suggested by

some of these members, from their seats, that we have to bring in this

legislation because this is the system that we're already embarked

upon, and for that reason we can't hoist the bill for six months. But

we could get around that problem, and I suppose that there are indeed

even other ways we could accomplish the same effect as hoisting the

bill for six months. The minister could get up and put a sunset clause

in this bill, which would assure us that this bill would not become

permanent law and that there would be opportunity for very serious

input from other agencies — particularly municipal governments, but

also, I think, other forms of local government.

I don't see this bill solving some of the problems of property

taxation faced by people who are probably the most seriously affected

by the shortcomings of this system. I don't see even in this flexible

system the flexibility that allows for considering the special case of

a piece of property in my riding owned by a couple of very

public-minded citizens who donated the property on their land for a

nominal charge of $1 a year, and allowed an alternative school, the

Argenta Friends' School, supported by the Society of Friends — or

Quakers, as they're known — to be built on their property. That school

has been assessed and taxed at rates absolutely at odds to what is in

effect a charitable non-profit institution.

[ Page 1153 ]

The owners, who have made that very generous act of donating to this

very important purpose the use of some of the land that is excess to

their own needs, find themselves being penalized through very heavy

taxation on these buildings, which, in my opinion, would have little

resale value as there is not a great market — willing buyer, willing

seller — for a school of this kind.

By passing this piece of legislation, we're not affording an

opportunity for people like that to have an input into this

legislation. I'm pretty confident that if this motion to hoist the bill

for six months fails we will not see some last-minute amendment brought

in by the government. I think that I will fail to convince the minister

through this debate that this is the kind of thing that really does

occur. I think it would only be if the people involved with the

Friends' school and the people who own that property were afforded the

opportunity, for instance, to appear before some of the groups that I'm

going to suggest might be formed to have dialogue with the people of

this province in order to involve them in a real democratic process.

Should we allow this six-month hoist, then they would have an

opportunity to make a more convincing case, because the minister

himself might even be a participant, were we to take one of the several

choices which I propose to offer the government in terms of positive

alternatives to simply allowing this bill to go through the House. I

say that you could put a sunset clause in this bill to ensure that it's

not going to be a permanent bill.

I received another letter today from a person who owns a very

important piece of property. This person is not a voter in my riding.

This person lives in Calgary, Alberta, but is the owner of a piece of

property which has a historical building on it — the Silver Ledge Hotel

in Ainsworth. It would be one of the longest surviving buildings of its

kind in the Kootenays. Ainsworth was the first village to be settled in

the Kootenays after Fort Steele. The Silver Ledge Hotel is assessed,

and thereby has to pay a huge amount of taxation in the regional

district — a good portion of the taxation being for school tax but also

for the regional district and municipal tax — and of course provincial

government tax, which has also been increased by another piece of

legislation this year. That heritage piece of property is, I'm sure,

more of a burden than an asset, and any improvements to it would be

looked upon as a responsibility. As I said, the owners of that property

are not going to vote for me, not because of political ideology one way

or the other, but because they are not residents in my riding; they do

own property in my riding. They are not going to seek relief through

this, but if there were an opportunity for us to consider this in a

more permanent and careful way, we might see that there are several

guardians of our heritage around this province who are carrying an

inordinate financial burden in addition to their other responsibilities

in making sure that buildings of this calibre and importance are

maintained. Given six months, I think there might be a chance to get

that message through to the public. But given 40 minutes, and the

minister not listening to the debate but in conversation with one of

this colleagues, I have not the confidence. I don't believe that the

minister would show the same degree of rudeness were he to be part of

some committee and listening firsthand to the people who own this

particular piece of property or to the people involved in the Argenta

Friends' School.

[4:45]

Another group of people, the senior citizens who own vacant land,

are not going to be helped by this piece of legislation. Many senior

citizens whom I know have held a little cottage on one lot with an

adjoining lot, not in places like Vancouver, Burnaby or Coquitlam —

although it is the case there as well.... It's the case in the city of

Nelson; it's also the case in some smaller villages in what is

basically a rural area, where people might have four acres but split

into two separate titles; now it's all put under two folios. It was

possible to have it under one folio at one time not too long ago, but

the two separate lots are now put on two separate folios. In my

opinion, there is nothing in this piece of legislation to allow for the

flexibility to look at that situation. We have senior citizens who have

one piece of property in which they don't use up their whole homeowner

grant, but on the adjoining piece of property there might be some

improvement — perhaps a garage — for the total unit, so it's taxed as

an improvement on that other property. So senior citizens who should be

paying the nominal $2 tax are maybe paying a few hundred dollars, and

senior citizens who should be paying a few hundred dollars are having

to pay considerably more than that.

Interjection.

MR. NICOLSON: Mr. Speaker, we've just had a suggestion that a

piece of enabling legislation that was brought in by the NDP is the

solution here: that is, tax deferral. I know that seniors can defer

taxation, so that when they die it will be taken out of their estate.

But if there was merit in that proposal when it was introduced, it was

certainly downgraded by the opposition of the day. I think most people

have been absolutely scared to take advantage of that, whether it's....

MR. MOWAT: Not true.

MR. NICOLSON: Well, I suppose, from the interjection from the

second member for Vancouver–Little Mountain, it's not entirely true.

But we have asked questions and very few people take advantage of it. I

think a lot more seniors probably should take advantage of it. But that

is not going to provide that kind of relief.

I'm talking about equity. You could have two identical pieces of

property, each of which had the same house on it and the same garage;

they could be side by side. But if the one difference is that one

property is already subdivided into two lots, the senior citizen with

the two two-acre lots pays more tax than the senior citizen with one

four-acre lot. That problem won't be addressed by this. These are the

kinds of inequities that could be addressed in coming up with a good

piece of legislation, one that everybody in this House could support,

if we were all a party to it. Regardless of what is transpiring with

other bills, with debate on the budget, and various other things, this

is an area where in the past we have shown that both sides of the House

can function.

That brings me to one of the positive suggestions that I would

favour for a course of action which would lead us to a better bill.

I've only mentioned three kinds of possible inequities that would pop

up if we were to look into this very carefully. I know that we would

find other things relating to mobile home parks and taxation of

mobile-homes on private property as a second residence, and so on.

There are many things which I think could do a great deal, plus, of

course, we could look at some of the very real problems of the

industrial tax base. Indeed, I think some of the best input could come

[ Page 1154 ]

from organizations like the Union of B.C.

Municipalities who, while they favour the principle of this

flexibility, have very serious reservations about the sections of the

bill which allow the minister to override all of those. In other words,

we're not giving this flexibility to the....

Interjection.

MR. NICOLSON: I'm being heckled from my left here. The UBCM

have real reservations about this legislation in terms of the fact that

all the powers that are being given to them are also being extended to

the minister, except the minister has the overriding power. If he

doesn't agree with the way municipalities have done things, then he can

step in. We could very well see this scenario.

Under this piece of legislation property tax relief might be granted

to industry, because the provincial government is not going to pay its

fair share — one can assume from what they've said — of the burden of

cost of local government. There have always been cost-sharing

arrangements with local government, municipalities, school boards,

hospitals, and so on. Part of it is raised by local property tax and

part of those local budgets.... A

part is raised through property

taxation, but the argument is that that property taxation has been

getting greater and more onerous and has been growing faster than those

budgets. That point is made very well by the B.C. School Trustees'

Association and could as easily be made by the UBCM. They show in an

analysis — and this was done in March of this year, just prior to the

election — that a business in a survival mode during recession cannot

afford to pay property tax in lieu of paying income tax. The fact that

some of these companies are losing money.... Property tax is a fixed

cost for these companies. This recognizes the problem, and I suppose

that this flexible taxation system is the government's answer to trying

to solve that problem. It's a very simple answer.

There is another thing that they point out in this document and that

is that stores, factories, trees and mines don't vote. We could very

well see the scenario where in order to stimulate and to give a little

bit of a boost to local business....

As I've said on occasion, I certainly had a chance to look at the

operations of B.C. Timber and get an appreciation for the amount, the

burden and the ability to pay and what has become a tremendous growth

in property taxation, and it wasn't very great at the time. So we could

see that a local government in response to that problem might opt, even

at their own political peril, to shift more of the burden onto

residential property owners than it even is today. Then along comes the

year — I don't know, 1986, 1987 or 1988 maybe — and there's a

provincial election being planned; then we could very well see the

provincial minister using his prerogatives under this act in order to

bring the shift back to industry and commercial properties and off the

backs of business, because stores, factories, trees and mines do not

vote.

I believe that during a six-month hoist the BCSTA would have ample

opportunity and could make that point. Being very candid, I'm afraid

opposition members are not listened to too often. Just prior to me I

heard my colleague speaking about only a couple of amendments ever

being accepted from this side of the House, and I know that one time I

did get an amendment put into a bill — it was the then Hon. Evan Wolfe

as Minister of Finance. I did get a sunset clause; my amendment was

accepted by the government. But that was a long, long time ago. It has

become less and less likely not only that government would accept an

amendment from this side of the House but that they would even take an

idea from this House. That used to happen; it doesn't happen now.

Interjections.

MR. NICOLSON: Well, one good amendment in this bill would be a sunset clause.

In carefully looking over this piece of legislation I note that a

proceeding of the Federation of Canadian Municipalities took place in

June 1976. There were hundreds of delegates at that meeting. Many

people — Muni Evers, for instance — reported on directions taken in

British Columbia toward revenue-sharing and the progress that was made

when the current Leader of the Opposition (Mr. Barrett) fought with

Ottawa and succeeded in getting an increase in the export price of

natural gas and shared that with municipalities. Mr. Speaker, we really

do need to help municipalities, not to cut back and confiscate their

sources of revenue and then just give them more flexibility with which

to hang themselves.

HON. MR. RITCHIE: On a point of order, Mr. Speaker. As the

minister responsible for this bill I find it very hard to follow the

rambling of the member, who has yet to come to the part of the debate

he should be on, which is a motion to hoist this legislation. He's now

rambling around other programs. I would suggest that he get to Bill 7.

DEPUTY SPEAKER: The point of order is well taken. We have an

amendment to hoist the property tax bill. The member has spent some

time discussing assessment, which would be under the authority of the

Minister of Finance. If we can relate to the bill and the amendment to

that bill, the House would be well served.

MR. NICOLSON: If we had legislation just to set mill rates

and there was no such thing as an assessment, then we would have no

property tax. I'm sure the people of British Columbia would welcome

that.

[5:00]

Mr. Speaker, we're talking about a product. You don't get an answer

to this formula unless you have two things: a mill rate and an

assessment. That's what adds up to property tax. In opening the debate

on this bill the minister mentioned assessment. He said that this year,

for the first time, the mill rate would be based against 100 percent

assessment. Of course, we've been on 100 percent assessments for years

and years and years. If the assessment is $125,000 and we take a

certain factor of that — maybe 20 percent for one kind of taxation for

school and hospital purposes and some other percentage for something

else.... It's all based on 100 percent taxation. The minister himself

referred to assessment in his opening remarks — I remember it well. But

when there was dialogue and when people were listening to what the

municipal levels of government had to say in these proceedings, there

were reports of progress that had been made with several governments.

There was a report of the progress, dialogue, input and the

involvement of the UBCM. Speaking on behalf of the UBCM, Mayor Muni

Evers described the cooperation between the two levels of government in

coming up with the way they felt they should distribute so much for

housing starts, so much for — well, just for the percentage that their

[ Page 1155 ]

budget was of the total provincial budget and per

capita grants and so on, to come up with a program that was equitable.

The progress that was made at that time was improved upon initially, I

think, when the Social Credit government came to office, but it has

been eroded and has been in a decline since 1980. That's why we have

the problem before us. If we could get that same kind of dialogue and

hoist the bill for six months, there could be other solutions proposed.

At the same time, that attitude of cooperation between the municipal

and provincial levels of government was also abundantly clear.

Councillor Wolf from the province of Manitoba talked about how their

provincial government had come up with a clear change: 2 percent of the

personal income tax and 1 percent of corporate tax became available to

the municipalities for taxation sharing. That would help to relieve and

even out some of the problems that are being faced, and it might allow

us to spend money where it is most effective, and that is at the local

level, rather than centralizing it here by giving these people that

kind of access.

[Mr. Pelton in the chair.]

This particular move is excluding people. This particular move

should be hoisted for six months because of the very manner in which it

was introduced. Imagine it being introduced right during an election.

Then they said: "Well, this is what's going to happen if we are

re-elected, but if the NDP is elected you will have to get a commitment

from them." That was absolutely ridiculous. If they were going to do

that, they should have called a session and at least had a piece of

business like that. This is retroactive legislation. It is alarming

that people....

HON. MR. PHILLIPS: Your leader supported this during the

election campaign. You guys are all over the bloody bl