Robert Murray Haig.

The exemption of improvements from taxation in Canada and the United States [electronic resource] : a report prepared for the Committee on Taxation of the City of New York online

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cash value as it would be appraised in payment of a just debt from a solvent
debtor, the value of the improvements, if any, being estimated separately
from the value of the land on which they are situate "(3) The specific power
to exempt improvements is conferred in the following clause : " The council
may, by by-law, exempt from taxation, wholly or in part, any improvements,
erections and other buildings erected on any land within the city, notwith-
standing that they may be part of the real estate."

(1) For the present status of opinion among the aldermen of Vancouver on the
question, cf. infra, pp. 211-214.

(2) Original Charter, 49 Vict, 1886, c. 32, s. 34; Act to Revise and Consolidate,
passed August 31, 1900, 64 Vict., c. 54 ; cf., also, 1891 edition of Charter, c. 72, s. 18.

(3) Italics are the writer's.


The city council is designated as a court of revision and of equaliza-
tion. The debt limit is fixed at twenty per cent, of the " assessed value of
real estate of the said city, computed on an average taken from the assess-
ment roll for the two years antecedent to the creation of the debt." Debt
incurred for the purchase of public utilities may be disregarded so far as
the debt limitation is concerned. In spite of the fact that the city has for
the last five years not taxed buildings at all, they continue to be counted as
part of the " real estate " whose value is used as a basis for computing the
legal amount of the city's debt. This practice differs from that in the prairie
provinces where a decrease in the tax base means a decrease in the debt limit.
In Vancouver the fact that the council has the power to return to the tax on
buildings at any time makes the building value potentially a resource, and the
practice of Vancouver can be easily justified on that ground. The tax limit
for all purposes except interest, sinking fund and schools is 13.33 mills.

Property Taxed and Exempted

In Vancouver the city assesses nothing but land and improvements, and
both are always assessed whether buildings are taxed or not. The reason
for this is that, at the time when the assessment is made, the decision as to
whether buildings shall be taxed has not been made. This decision rests
with the city council. Nominations for aldermen are made the first Thurs-
day in January and the election is held one week later, the new aldermen
taking office the following Monday. It is necessary that the assessment rolls
be in such shape that the new council shall have the opportunity to tax
buildings if it cares to do so when it assumes control.

The definition of real estate in force in the city is so interpreted as to
embrace such machinery, including boilers, as are " fixtures." The street
railway is assessed upon its real estate in addition to the percentage tax,(l)
which is levied upon its earnings.

The powers of taxation of the city so far as subjects of taxation are con-
cerned have always been practically the same as they are to-day. The city
has never been permitted to tax personal property or incomes, these items
being left to the province.

The exemptions in Vancouver are very narrow. Even the property of
^/churches and of private schools, except incorporated seminaries, is taxed.
Practically the only property exempted, aside from that which falls within
the scope of the exemption provisions of the charter, is a tract of land at
the time unsubdivided belonging to the Canadian Pacific Railway. Most of
the land owned in the city by the Canadian Pacific has always been taxable,
but in 1887, when the railway located its shops and round houses in Van-
couver, a special provision was made, under the terms of which a tract about
a mile long bordering along the inlet was exempted for thirty years as an

(1) Cf. supra, p. 186.


inducement to the railway to choose Vancouver, rather than some other
place. This property will become taxable in 1918.(1)

The Process of Assessment

The assessment of property is made annually by the assessment commis-
sioner and a corps of assistants during a period which ends December 31st.
Therefore, the property is assessed in one year for the taxes which are
levied the next. The assessment notices are usually sent out early in
February. Fifteen days must elapse before the meeting of the court of
revision which is composed of the members of the city council. In actual
practice the court usually begins its sessions late in February.

Assessment Data

As is to be expected, the land values assigned by the assessor represent
not only the pure site value of the land but also the value due to certain
expenditures of capital. The assessor, however, sometimes makes allowance
for the expense to which a man has been put because of the necessity for
artificial filling and the construction of retaining walls, but this allowance
seldom continues for more than a few years. The following table shows
the assessed values of lands and improvements and the composition of the
tax base for the years designated. It will be noted that the exemption of fifty
per cent, of all buildings from taxation in 1895 resulted in a slight decrease
in the tax base, but that both in 1906 and 1910, when further decreases in
assessment of buildings were made, no decrease appears in the tax base,
instead a very considerable increase in both cases.

The assessment commissioner of Vancouver testifies that the steady rise
in the value of lands in the years immediately preceding 1915, apparent from

(1) The exemptions, as stated in the city charter, are as follows:

(a) All property vested in or held by His Majesty, or vested in any public body
or body corporate, officer or person in trust for His Majesty or for the public use of
the Province, and also all property vested in or held by His Majesty or any other
person or body corporate in trust for or for the use of any tribe or body of Indians,
and either unoccupied or occupied by some person in an official capacity :

(b) When any property mentioned in the preceding clause is occupied by any
person otherwise than in any official capacity, the occupant shall be assessed in re-
spect thereof, but the property other than the improvements placed or affixed thereon
by the occupant itself shall not be liable :

(c) The buildings and grounds of and attached to and belonging to every uni-
versity, college, high school, public free library, public hospital, or any incorporated
seminary of learning, mechanics' institute, the land of any agricultural or horticultural
society, or any incorporated charitable institution, whether vested in trustees or other-
wise, so long as such building and grounds are actually used and occupied by such
institution, or if unoccupied, but not if otherwise used or occupied ; provided, that
such grounds shall not exceed in extent the amount actually necessary for the require-
ments of the institution. The question as to what amount of land is necessary shall
be decided by the Court of Revision, whose decision shall be final :

(d) The property belonging to the City, whether occupied for the purposes
thereof or unoccupied, but not when occupied by any person as a tenant or lessee or
otherwise than as a servant or officer of the City for the purposes of said City:

(e) Every public poor-house, alms-house, orphans' asylum, house of industry and
lunatic asylum, and every house belonging to a company for the reformation of
offenders, and the real property belonging to or connected with the same, and used in
connection therewith.


the assessment figures given, represents a very general increase in values
throughout the city, that is, the increase in the total assessed value of lands
represents an increase in all sections rather than an increase in a few par-
ticular sections and stationary or decreasing values in other sections.


Assessed Values



Legal Valua-




Land and

tion of Im-

Total Tax







1887. . .

$2,456,842 00

$182,235 00

$2,639,077 00


$2,639,077 00


2,786,509 00

677,096 00

3,463,605 00


3,463,605 00

1889. . .

5,275,596 00

730,027 00

6,005,623 00


6,005,623 00


8,077,505 00

1,326,940 00

9,404,445 00


9,404,445 00


10,447,420 00

1,501,665 00

11,979,085 00


11,979,085 00


14,061,311 00

2,586,401 00

16,647,712 00


16,647,712 00


16.032,744 00

2,832,960 00

18.865.704 00


18.865,704 00


15,513,604 00

2,787,480 00

18,301,084 00


18,301,084 00


13,829,724 00

4,317,660 00

18,147.384 00


15,988,554 00


13,109,394 00

4,278,680 00

17,388,074 00


15,248,734 00


13,000,869 00

4,441,490 00

17,442,359 00


15,221,614 00


12,672,649 00

4,551,740 00

17,224,389 00


14,948.519 00

1899. . .

12,705,099 00

5,011,190 00

17,716,289 00


15,210,694 00


12,826,905 00

6,726,740 00

19,553,645 00


16,190.275 00


12,792,530 00

7,440,600 00

20,233,130 00


16,512,830 00

1902. . .

12,842,150 00

8,223,220 00

21,065,370 00


16,953,760 00


13,845,565 00

9,091,270 00

22,936,835 00


18.391,200 00


14,440,935 00

10,247,920 00

24,688,855 00


19,565,895 00


16.739,640 00

11,804,250 00

28.543,890 00


22,641,765 00


25,101,760 00

14,087,640 00

39;i89,400 00


28,623,670 00


38,346,335 00

16,381,475 00

54,727,810 00


42,441.703 75


41,641,870 00

20,127,035 00

61,768,905 00


46,673.628 75


48,281,330 00

24,405,210 00

72,686,540 00


54,382,632 50

1910. . .

76,881,820 00

29,572,445 00

106,454,265 00


76.881,820 00


98,720,345 00

37,858,660 00

136,579,005 00


98,720,345 00


138,557,595 00

53.515,295 00

192,072,890 00


138,557,595 00


144,974,525 00

68,010.654 00

212.985,179 00


144,974.525 00


150.456,660 00

76,199.743 00

226.656.403 00


150,456,660 00


. 145,603,952 00

79,137,378 00

224,741.330 00


145,603,952 00

(a) Subject to modification by the court of revision.

Relationship of Assessed Values to True Values
The degree of success which has been attained by the assessment officials
of Vancouver in their attempt to reach a full, fair valuation of property
for taxation is a matter about which there is the greatest difference of
opinion among the citizens of Vancouver. This is due largely, of course,
to the uncertainty which exists as to what is the real value of property, par-
ticularly land. This uncertainty, in turn, is due to the general economic situa-
tion in Vancouver — to the rapid growth and the varying and conflicting
views of its citizens as to the future of the city. So far as buildings are con-
cerned, the assessment commissioner states that before 1905 it was the cus-
tom to set down as the initial assessments about seventy-five per cent, of the


cost. In late years the percentage has been higher. Until the last two years
it was the custom to allow nothing for depreciation because the rise in the
cost of materials and labor was considered to make such an allowance
unnecessary. ( 1 )

The rule laid down in the charter for the guidance of the assessor in
valuing a piece of land is that it shall be valued at a price at which it " would
be appraised in payment of a just debt from a solvent debtor." During prac-
tically the entire history of the city this rule has been interpreted as a
direction to make the assessment very conservative in cases where the specu-
lative element in the value of land is large. The assessor estimates that
before 1893 the assessed values of lands represented only about seventy-five
per cent, of even a fairly conservative estimate of their selling value. In
this year values approached very closely* to a fair market price. Under-
assessment began to appear almost immediately, and in 1900 the assessment
was once more clearly low, not representing more than seventy-five per cent,
of a conservative valuation. The 1914 assessment, the assessor believes, is a
full valuation of the land ; although, he admits, it is a fairly conservative
one. The assertion that the assessment is conservative is supported by the
evidence of the small number of the appeals to the board of review by
persons dissatisfied with their assessments, and by the exceedingly insignifi-
cant number of appeals allowed. In 1914 there were only eighty-seven
appeals and of this number three were allowed. The action on two of the
three objections which were allowed was taken at the request of the assessor.
The assessor does not claim that his figures represent the prices at which
property was selling during boom times. His aim was to make his estimate
conservative enough to render unnecessary a contraction of the tax base in
time of reaction. In other words, he refused to consider part of the specu-
lative value which was apparent in the sale prices during the boom period
as representing any real value. He testifies that he has been able to use
sales to a very slight extent in fixing his assessment values.

In support of his claim that his present assessment does not represent
an under-valuation of the land. Assessment Commissioner Painter cited a
large number of land sales made recently. A few of his examples are these :

A forty-five foot lot on Main Street was assessed for $39,600. At this
time the owner, who was not compelled to sell, advertised the lot for sale
at $30,000. Eventually he sold the lot for $27,000.

A twenty-five foot lot in Granville Street is assessed at $22,000. The
price paid for the land in a recent sale, which was not in any sense forced,
was $20,000.

A lot which was assessed at $1,275 sold under a long-time payment
agreement for $1,500.

Another assessed at $3,375 sold recently for $4,000, although it was
worth $7,500, on the basis of sales of similar lots in the vicinity some time

(1) The trade union officials deny that there has been any increase in the cost of
labor since 1907.


The unstable condition of land values is illustrated well by two further
examples :

A lot in McGill street, for which an individual paid $4,200, was adver-
tised in May for $2,100. Later the owner accepted $1,900.

Another lot which was supposed to be worth $5,000 sold recently for

In view of such conditions in the real-estate market, it is not surprising
that there should be a great difference of opinion as to the percentage of
real value represented by the assessment figures. In conversation with vari-
ous citizens, the greatest conflict in judgments became evident. Ex-Mayor
Taylor stated that in 1910 the assessment of lands was only thirty-five per
cent, of the cash value of the lands. Alderman Enright testified that the
present assessment does not represent more than forty per cent, of what
land was selling for two years ago. Alderman James estimated that, on
the whole, land is assessed about fifty per cent, of its true value at present,
but that some sections are assessed at a higher rate than others, the valua-
tions running from forty to seventy per cent, of true value according to the
locality. Alderman Hepburn thought that property in general was assessed
at about 60 per cent, of its true value. The last two said that property in the
outlying sections was over-valued as compared with business property.
Alderman Crowe, on the other hand, although admitting that there is a good
deal of unevenness in the assessment, believed that the property in the busi-
ness section was greatly over-valued as compared with property in the out-
skirts. Property, he believed, in the central business district was assessed for
its full value but in the outlying districts property was under-valued as much
as forty per cent. Alderman Kirkpatrick, disagreeing with most of the
others, stated that the total assessment was " pretty well up to value," some
of it being assessed at even more than it was worth. Mr. Wade was under
the impression that the assessment closely approached actual value. Mr. T.
L, Smellie, manager of the Canada Permanent Mortgage Corporation,
thought that on the whole the assessment was well within the real value of
the land.

Bewildered by this conflicting testimony, help was sought from the two
special assessment commissioners who were appointed in 1914 to assist the
regular assistant commissioner in equalizing the assessment of real estate on
the 1915 tax roll. Both of these gentlemen, Mr. J. P. Nicolls and Mr. J.
W. Allan, agreed that the land value situation over the entire city, except for
two or three streets in the business section, was simply "chaotic." Mr. Allan
believed that on Hastings Street the values could be considered fairly staple
and that the assessment there represents about two-thirds of the actual cash
value of the land. He believed that there has been no substantial decrease
in values in the business section or in the strictly residence section but that
there has been a considerable drop in values in the semi-business zone, where
the property is potentially business property and where the sites have an
imputed value due to the fact that they are expected to be in demand for


business purposes sooner or later. With the decline of activity in business
circles, the estimate of real-estate men and property owners as to how soon
this property will be demanded for business purposes has decreased con-
siderably. Mr. Nicolls stated that the very best business property in town
is valued for loan purposes at $3,500 a front-foot. The assessment on this
type of property at present is $2,500 a front-foot. This is in spite of the fact
that some of it has sold as high as $6,000 a foot front. When Mr. Nicolls
and Mr. Allan, who are both very prominent real estate men, started on
their task of equalizing the assessments in the city, they thought seriously of
raising this valuation upon the choice business property to $2,700 a foot
front but, after due consideration, it was decided that this step was not wise.
The general rule which they had adopted in making their valuations was
that land should be assessed at from seventy to eighty per cent, of its market
price. Its market price, however, was not to be the market price of 1912.
In many cases, to secure the present market price, it would be necessary to
cut in two the prices which were prevalent two years ago.

The special assessment commissioners have not increased the assess-
ment of land. The assessed value of land for 1915 is approximately five
millions below the 1914 figures, the first decrease since 1902. This fact
seems to indicate that Assessment Commissioner Painter's assessment values
are, as he estimates, a fairly close approach to a true, conservative value of
the land. This inference is strengthened by the fact that the special assess-
ment commissioners were appointed by the mayor with the direct purpose, it
is claimed, of substantially increasing the tax base in order that an increase
in the tax rate, or a return to taxing buildings, might be rendered unneces-

Tax Rates

The following table gives the tax rates in Vancouver from 1888 to



Gross. Net. Gross, Net.

1902 20. 18.

1903 20. 18.

1904 20. 18.

1905 20. (b) 18. (b)

1906 22.22 20.

1907 22.22 20.

1908 22.22 20.

1909 22.22 20.

1910 22.22(c) 20. (c)

1911 22.22 20.

1912 22.22 20.

1913 22.22 20.

1914 24.44 22.























20. (a)

16. (a)



















(a) Assessments of buildings reduced to 50%.

(b) Assessments of buildings reduced to 25%.

(c) Assessments of buildings reduced to zero.


The tax rate which is usually quoted for Vancouver is the net rate
but if Vancouver's rate is to be compared with the tax rates in other
cities in western Canada the gross rate should justly be used. The tax bills
are usually mailed about the middle of July. The taxpayer receives a state-
ment giving the amount due on his property when taxed at the gross rate.
If that property owner pays his taxes before September 15th he receives
a ten per cent, discount. This ten per cent, represents the difference be-
tween the gross rate and the net rate which is quoted. Unless a man is able
to pay his taxes before September 15th, therefore, he is taxed at the gross
rate, so that the net rate really represents the same thing as the cash discount
which is given in so many of the prairie cities for prompt payment of taxes.
Before 1901 the city gave a twenty per cent, discount for early payment.
No " separate-school " rate is levied in Vancouver. The following table
gives the details of the tax rate for the last four years :



Interest and
Sinking Fund.



Total (a)













(a) Ten per cent, of the taxes is rebated if paid before September 15th.

Tax Levies

The following table gives the gross amount of the taxes levied in Van-
couver from 1887 to 1913 :


1887 $32,998 46 1901 $330,256 60

1888 43,295 06 1902 339,095 20

1889 75,070 28 1903 367,824 00

1890 117,555 56 1904 391,297 90

1891 239,58170 1905 475,299 58

1892 208,096 40 1906 670,776 17(b)

1893 377,314 08 1907 985,119 80

1894 366,02168 1908 1,089,316 83

1895 323,771 18(a) 1909 1,258,769 39

1896 304,974 68 1910 1,773,535 83(c)

1897 304,432 28 1911 2,304,483 02

1898 298,970 38 1912 3,183,572 93

1899 304,213 88 1913 3,403,152 55

1900 323,805 50

(a) Assessments of buildings reduced to 50%.

(b) Assessments of buildings reduced to 25%.

(c) Assessments of buildings reduced to zero.


It will be noted that the tax levy in 1895, when the first reduction in the
tax on buildings was made, is smaller than in preceding years. No decrease
in the tax levy was made in 1906 or 1910, when the further reductions in
the tax on buildings were made. The details of the tax levy for the past
four years are given in the table which follows :


Interest and
General. Sinking Fund. Schools. Total.

1911 $1,129,373 Z6 $582,295 28 $481,897 42 $2,193,566 06

1912 1,755,472 70 787,040 54 536,236 52 3,078,749 76

1913 1,490,926 53 1,101,771 14 624,769 21 3,217,466 88

1914 1,508,628 48 1,444,032 77 724,499 52 3,677,160 77

Pressure of the Tax System

All the evidence obtainable seems to point to the conclusion that the
Vancouver property owners are finding tax paying a very difficult undertak-
ing. Some idea of the pressure on the average man can be gained from an
analysis of the situation of the small property owner. The man of modest
income buys a lot thirty-three by one hundred and twenty feet. At the
present time a lot of this type with fairly good car service can be secured,
according to the statement of Assessment Commissioner Painter, for from
$650 to $700, although many persons of this description purchasing their
property from real estate men will pay $1,000 for a similar lot. According to
Building Inspector Jarrett, the house which the man erects on his lot costs,
on the average, about $1,800. The man is taxed on his lot alone. If his
land is assessed at $700 and he pays his taxes in time to take advantage of
the net tax rate, his tax rate for the year will be but $15.40; but a man with
even a very modest income would probably have assessments for street
paving, sidewalk, curb, and sewers to pay also. It will be recalled that the
burden of these special assessments is not light.(l)

While the total charges for local improvements and for taxes would not
seem exorbitant to the average American taxpayer, they nevertheless seem
to be causing considerable distress among the property owners of Vancouver.

Online LibraryRobert Murray HaigThe exemption of improvements from taxation in Canada and the United States [electronic resource] : a report prepared for the Committee on Taxation of the City of New York → online text (page 20 of 31)