In search of equity: Rethinking the residential provincial property tax system in British Columbia

Applying four equity criteria, we find that the provincial property tax (PPT) system in British Columbia is inequitable. First, the system discriminates against renters in the allocation of property tax relief. Second, the system can 'use up' more tax room in low income municipalities with weak fiscal capacity such as Vancouver, worsening their ability to provide equal levels of public services. Third, the system does not ensure school districts across the province with equal per-household incomes pay equal amounts of taxes, and fourth, it fails to provide a larger property tax credit to those with lower incomes. This paper proposes three alternatives to the existing PPT system. We discover replacing the Home Owner Grant (HOG) program with the Ontario method of property tax relief would be the most equitable. Alternatively, a different PPT formula could be used in conjunction with the revenue-neutral substitution of income tax cuts for the HOG.