Final Copy of PILT Process - 2009

Final Copy of PILT Process - 2009

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Saturna Island Property Owners Association

P.O. Box 21, Saturna, British Columbia, V0N 2Y0

Saturna Island Property Owners Association

Payments in Lieu of Taxes

Gulf Islands National Park lands on Saturna

From its inception SIPOA has been curious to find out how much money is paid by the federal government to the provincial government in lieu of taxes for national park lands by the federal government and how these payments are dispersed on Saturna.

A review of the 2006 budgets for the Saturna Island Fire Protection Society and Saturna Parks and Recreation Commission shows island services received a total of $2500 from federal payments in lieu of taxes (PILTs). What happened to the rest of the money?

Over the course of the past 18 months SIPOA has:

· Reviewed Canada’s Payments in Lieu of Taxes Act and the BC Local Government Act to determine legislative requirements.

The federal Act purpose is to provide fair and equitable payments in lieu of taxes. The provincial Act provides the legal framework for taxation in the province. These acts are not integrated.

· Worked with Parks Canada to determine the amount of federal payments, what lands on the island have been transferred to the federal government for the national park, and if the province has billed the federal government for all of these lands.

· Asked our MLA, Murray Coell, to advise the BC finance minister to undertake a review of all the properties in the park. The province has not been assessing nor billing for all the federal lands on Saturna.

· Asked the BC finance minister for an accounting of the distribution of PILTs and received a partial statement.

· Met with our MP, Gary Lunn and our MLA, Murray Coell to assist us in securing information regarding these funds.

· Asked the Capital Regional District how it distribute PILTS for lands on Saturna. A similar request was sent by Gary Lunn and Murray Coell.

· Received responses from the CRD to SIPOA, from the provincial minister of finance to our MLA and from the CRD to our MLA and MP. All these responses had different figures and reference numbers and appeared to suggest that PILTs were going to services which had no relationship to Parks Canada’s lands and the services which the federal legislation intended PILTs to support.

· Approached BC Surveyor of Taxes with the above information. We have jointly developed a description of the inter-governmental process with respect to taxation and PILTs, particularly how PILTs are billed, collected and distributed.

The following text has been reviewed by the BC Surveyor of Taxes for accuracy.

1. The Surveyor of Taxes handles the taxation process for rural land in BC including the issuing of property tax bills and is by definition the taxing authority, including for payments in lieu of taxes.

2. B C Assessment Office establishes the assessed values of all lands in the province. This office independently sets the assessed values of all lands. It also determines if there are any full or partial exemptions that apply to the property in determining the assessed value of the property. For private property owners, these assessed values may be appealed first to the Property Assessment Review Panel (PARP), and then to the Property Assessment Appeal Board (PAAB). Federal lands or BC Hydro lands are not subject to the Court of Revision or the more formal appeals process.

3. Revised assessments (based on the values determined by PARP) are relayed once a year to the Surveyor of Taxes for initial tax billing purposes. BC Assessment will periodically send supplementary assessment rolls to the Surveyor containing PAAB decisions and any other adjustments they are permitted to make under the Assessment Act.

4. The Surveyor of Taxes takes these assessed values and does the following:

· Receives Orders in Council or board resolutions that provide the taxation rates, or applies the funding/taxation requests from various government agencies to generate the mill rate and/or the tax bill.

· Examples of tax rates include school taxes and the provincial rural tax rate. Examples of funding requests include regional district services and Islands Trust.

· There are three main tax bases - school, general (ie. provincial rural) and local/hospital. These tax bases are established in legislation and have unique exemptions.

· For the most part the taxation base is defined by provincial legislation. However, there are limited provisions available to the regional district to allow permissive exemptions that would exempt properties from taxation.

5. Taxation requests are received from the following services:
Provincial School tax
Provincial Rural tax

BC Assessment Authority

Municipal Financial Authority

Islands Trust
Capital Regional District

  • Capital Regional Hospital
  • Saturna Parks /Recreation (see Fire below)
  • Area G Capital Regional District (CRD)
  • Saturna Fire (tax is set by budget levy request but cannot exceed bylaw cap)
  • SGI Harbour Facility
  • Local Service Area fees such as the Boot Cove Lyall Harbour Water District for those who live in the local service area.

6. PILTs are based on the initial assessment values and services coding provided by BC Assessment, and the actual (taxable) tax rates established for all property owners.

  • A tax bill similar to that received by taxpayers is sent to Public Works Canada for all federal lands and to BC Hydro for their properties with the same details as taxpayers receive but in a different format.
  • However, unlike property owners, the federal government and BC Hydro can unilaterally revise assessment values and can refuse to pay certain services.
  • The federal government may arbitrarily revise the assessment class and assessed values, in effect, changing the taxation rate.
  • To date the federal government has paid for all provincial services invoiced by the province.
  • BC Hydro may also unilaterally revise assessment values and regularly indicates which services it will not pay for.
  • There are eight classes of land assessed and taxed in BC. The assessed value for Class 7 land which is forest in private ownership on Saturna is $3700 to $3800 per acre. Based on the figures SIPOA has received the assessed value for Class 8 (which is described as Recreation/Non Profit) is $2700 per acre on lands similar to Class 7.

· There is a court case in Quebec which challenges the federal government’s right to arbitrarily decide what it will pay, saying that the federal government has a duty to pay an appropriate amount and should refer to the tax rate set when making payment.

7. The bill for PILTs is for individual properties and is broken out by folio numbers. Once the federal government establishes the amount it will pay, Public Works writes one cheque for all the federal lands in the province. This is sent to the BC Surveyor of Taxes.

The Surveyor of Taxes receives the PILTs and credits the account for which it is paid in the same manner it does for all taxpayers in the province. However, if the PILT is reduced, it is prorated and then allocated to the individual service area.

8. If the federal government’s PILT payment is changed as to the property class, the tax rates are changed to the rates for that class.

· If the assessed values are changed for a class, then the tax amount is changed to reflect the revised assessment value multiplied by the tax rate.

· If BC Hydro states it they will not pay a PILT for a particular service, then none of its payment is allocated to that service.

· The amount received from the federal government or BC Hydro for the previous year’s PILTs is deducted (off the top) from the amount requested for that taxation year.

· For example, if the Saturna Fire Protection Society (SIFPS) requests $115,000 in taxes for 2006, the surveyor applies the federal PILT (eg. $2200 in 2005) to that year’s requisition amount. Saturna property owners are then taxed for $112,800 but remits to SIFPS (through the CRD) total the $115,000. BC Hydro’s PILT is used to reduce the following year’s requisition amount levied against all taxable property owners. In other words, a PILT is not a bonus on top of taxes but ends up reducing the amount of taxes paid by Saturna Property owners on a prorated basis

9. The Surveyor retains about 5 per cent of the taxes collected as an administration fee, which also covers losses on uncollected and uncollectible taxes on properties as well as other costs.

A detailed spreadsheet is attached to illustrate PILTs received in 2005 and Paid Out/Credited in 2006.

Another spread sheet (labeled 'Assessment' on the tab) details each folio of national park lands on Saturna, the BC Assessment values, and the assessed value used by the federal governments for PILT purposes.

A third spreadsheet (labeled 'PILTS Pd' on the tab) provides details on the PILTS paid by folio and by individual jurisdiction. It is based on the actual finalized individual PILTS negotiated between the Surveyor of Taxes and Public Works Canada.