By Andrew Mitchell
A new formula for assessing taxes on ski hills in British Columbia has been hailed as a fair solution, following almost two years of negotiation between the government and the Canada West Ski Areas Association (CWSAA).
The new formula, which will be applied to 17 large and developing ski hills, links the assessment value of those resorts to their respective gross lift revenues. Under the previous system, assessments were made on a regional basis by local assessment offices, and as a result the industry was concerned that some resorts may have been paying too much while others were paying too little.
According to Jimmie Spencer, president and CEO of the CWSAA, the new assessment reflects the industry’s concerns.
“This valuation approach shows government wants to see tourism and ski hills grow and develop throughout British Columbia,” he said. “It’s consistent with the discussions we had and our shared goal of promoting investment certainty for existing, expanding and new ski resorts.”
Under the new assessment guidelines, effective in 2008, Whistler-Blackcomb will see its taxes increase, while taxes for other resorts will go down.
According to Doug Forseth, senior vice president of operations for Whistler-Blackcomb and chair of the CWSAA board, the added taxes were an acceptable exchange for making the assessment equitable.
“I think it’s a fair settlement, and I like the certainty of what this option has given to the ski industry overall,” he said. “(In discussions with the province) we looked at a lot of other policy options, like land base, gross revenue, changing the regulations, and lift revenues, and we felt the combination of land and lift revenues was an improvement.
“We looked long and hard at this, and felt this was a good way to go because of the certainty of what it is and the simplicity of it, which will make it easier for businesses at tax time.”
The province’s total income from ski area operations is expected to be “revenue neutral” as a result of the change to the assessments, with some resorts paying more and others paying less. The main reason for the change, says Forseth, was to level the playing field.
“(Whistler-Blackcomb) will see our taxes go up with this, but not so much it was uncomfortable for us,” he said. “One of the whole problems with this whole thing, and why the CWSAA was involved is that in our different geographic areas of the province we have different tax assessment offices, and different people have different views how to apply the taxation policies of B.C. It was not a level playing field. There were hills that overpaid and other hills were seeing a great benefit, but at the end of the day it was not great for the business climate.”
Under the previous formula, resorts like Whistler-Blackcomb were constantly appealing their assessments every year. That won’t be necessary under the new formula that all ski operators have agreed upon.
Although the province claims that the change to ski hill assessments will aid the development of the industry, Forseth says changes to strata hotel assessments will have a bigger impact by giving prospective buyers more certainty in their property tax assessments.
The province also addressed that issue in recent changes to assessment legislation, giving people buying property in strata hotels more certainty over their taxes. See related story page 12.