Payments in Lieu of Taxes – An Executive Summary

Prepared by the Saturna Island Property Owners Association

January 2008
Taxes are all about paying your fair share. But what's a fair share for the federal government’s national park on Saturna? As we all know governments don't pay taxes, but they do make payments-in-lieu-of-taxes (better known in government-ese as PILTs). *

The SIPOA executive waded through mountains of paperwork and meetings to get answers to two questions: What federal PILT amount is paid to BC? And how much of it actually benefits Saturna?

Why is SIPOA focusing on this?

• In 2006-2007 Saturna Island Fire Protection Society and Saturna Parks and Recreation Commission received PILT payments totaling $2500. What happened to the rest of the $28,911 paid by federal government for park lands on Saturna?
• PILTs, properly collected and fairly distributed, mean that the federal government is paying its fair share for the national park, along with the taxpayers of Saturna. Is this happening? Apparently not.

SIPOA has reviewed federal and BC legislation regarding PILTs and received an accounting of PILT distribution from the federal, provincial and regional levels. (All had different figures but appeared to show that PILT funding is being directed to services not necessarily related to Parks Canada's lands). The executive worked with Parks Canada to determine accurate billing for park properties on Saturna and met with MP Gary Lunn and MLA Murray Coell who agreed to encourage the BC Ministry of Finance to invoice the federal government for all Gulf Islands National Park properties on Saturna.

What does all this mean?

While the federal government is not subject to property taxes in the same way as private property, SIPOA is of the view that the national government has a duty to pay a fair amount to the province for properties it owns and to provide compensation to communities where the land has been taken off the tax rolls. Because the federal and provincial acts are not integrated, the federal government unilaterally and arbitrarily decides on the assessed values for federal lands on Saturna and ignores the provincial system for assessing properties and allocating taxes. This is unfair to all taxpayers in the province and it reduces revenues for local services such as the CRD, hospitals, schools and Islands Trust but it is especially onerous for property owners on Saturna.

The Gulf Islands National Park is for everybody but Saturna property owners should not be required to unfairly subsidize its operation. If the federal government does not pay its fair share it means higher taxes for Saturna property owners to ensure essential services such as fire, ambulance and emergency care, as well as a safe road system, are there to help park visitors and protect the park.

*Here’s a brief introduction to PILTS:

a. BC Assessment sets the assessed values of all lands in BC, including federal lands.

b. The BC Surveyor of Taxes takes the assessed property values, the various taxation rates (school taxes, provincial rural tax, etc.) and funding requests (CRD, Islands Trust, etc.) and generates the mill rate and your tax bill. All tax bills have categories for school taxes, rural taxes, BC Assessment, municipal financing authority, Islands Trust, CRD, hospitals, Saturna Parks/Recreation, Fire, SGI harbours and applicable local service area fees such as the Boot Cove Lyall Harbour Water District.

c. There are eight classes of land used to determine assessment. The assessed value of forest lands for private property on Saturna of similar value to national park lands (Class 7) is approximately $3700 per acre. The province assesses federal park lands on Saturna (Class 8) at $2700 per acre.

d. A bill for PILTs, similar to what taxpayers receive, is sent to Public Works Canada for all BC federal lands.

e. Unlike private property owners, the federal government can arbitrarily revise the assessed values and, in effect, decides what PILTs they will pay the province for federal lands regardless of the system described above. (BC Hydro operates the same way.)

f. Once the amount is determined, Public Works writes one cheque covering all the federal lands in the province. The province allocates this payment to individual service areas using the same formula as they do for taxes of private property owners (described above) but on a prorated basis.

g. Thus, when the Saturna Fire Protection Society requests $115,000, a prorated portion of the PILT ($2200 in 2005) is applied directly to that year's funding request. Saturna Property owners are then taxed to raise the remaining $112,800.