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CONTENTS

Routine proceedings

Assessment Amendment Act, 1977 (No. 2) (Bill 31) Second reading.

Mr. Wallace –– 4317

Mr. Gibson –– 4324

Mrs. Jordan –– 4332

Mr. Haddad –– 4334

Hon. Mr. Wolfe –– 4335

Division on second reading –– 4338

Privilege

Contempt of House by ministers. Mr. Speaker rules –– 4338

The House met at 10 a.m.

Prayers.

Orders of the day.

HON. G.B. GARDOM (Attorney-General): Mr. Speaker, I move we proceed to public bills and orders.

Motion approved.

HON. MR. GARDOM: Adjourned debate on second reading of Bill 31, Assessment Act. I believe the hon. member for Oak Bay adjourned the debate rather than conclude it in 30 seconds yesterday afternoon.

MR. SPEAKER: Yes, the hon. member for Oak Bay adjourned the debate.

ASSESSMENT AMENDMENT ACT, 1977 (No. 2)

(continued)

MR. G.S. WALLACE (Oak Bay): I'll just remind you, Mr. Speaker, that I'm designated speaker for the Conservative Party on this bill. (Laughter.)

MR. SPEAKER: Thank you for the information, hon. member.

MR. WALLACE: It's difficult to be brief, Mr. Speaker, when you haven't any back-up speakers to fill in the gaps that you leave open.

Bill 31, Mr. Speaker, in my opinion, is the sleeper bill this session. Assessment is a very complicated matter, regardless of the government of the day or the type of legislation. I think the minister's comments and much of the debate already have emphasized that point. The previous adjustments that applied artificial mechanisms to this very complicated matter of assessment prior to 1974 proved beyond all doubt the complexity and sensitivity of the assessment field, and if there is one element in this very difficult field that could spell disaster for the property owners in British Columbia, it would be haste.

I suppose as a Conservative I would be the easiest one to blame for always suggesting that we take things slowly and carefully, but this has to be the bill this session that I would predict will cause the taxpayers of British Columbia more heartache and headache and deep concern than probably any other tax measure that we've had before the House.

I would, in talking about the dangers of haste, Mr. Speaker, I just would like to mention the Ontario experience as an example. The provincial treasurer, D'Arcy McKeough, in his 1976 budget had intended to bring in property tax reform and assessment reform, and there was so much concern expressed that he agreed to defer the matter until 1978 and set up a similar type of commission to the British Columbia experience under Mr. William Blair. The document that was produced in Ontario has become a very well-respected outline of the complexities and difficulties in assessment.

MR. SPEAKER: Hon. members, would you kindly refrain from the dull roar that seems to be occupying the chamber while the hon. member is speaking?

MR. WALLACE: Mr. Speaker, you gave me a fright. I thought you were going to talk about the dull speech that the member for Oak Bay was giving. It is rather a dull subject, I admit. It's difficult to understand assessment, and yet we all know that down the line the impact of this bill will hit the property owner in the pocket. The point that is important is that in Ontario already the Blair commission report has pointed out some of the very complex aspects of assessment and the difficulty in predicting the impact of new legislation.

There was a very interesting editorial in The Globe and Mail last November and it was entitled: "Too Massive to Rush." It pointed out that although the implementation of assessment reform had already been delayed two years, it might be in the best interests of all the people in Ontario to defer it even further. One of the comments made in the editorial is:

"Changes of this nature will create enormous confusion. Time is needed to acquaint the public fully with all the changes and the impact which they will have on different kinds of property. It is even possible that the changes should be implemented in two stages - first of all, move assessment to the new market value level, and then in the second year implement the tax changes."

I know this isn't completely comparable to the B.C. situation but I would like to just start off by making the point that the assessment mess, as it's been described in many papers and elsewhere, is undoubtedly with us. But do we necessarily make the situation better if, after all the time that has been taken, we hasten to get an answer when probably we still don't have all the solutions? I'm sorry I've come to this conclusion, but I don't believe that this bill has the solutions.

Careful adjustment in assessment law will always, of course, however effective or thoroughly studied, finally depend on the determination of local mill rates by municipal councils.

I believe that in this bill, Mr. Speaker, with the

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assessment of actual value and the removal of the existing practice of assessing improvements at 75 per cent of actual value, it will be very much in the autonomy of municipal councils to choose appropriate mill rates in response to the new assessment legislation. It has been the experience before, and may well be the experience again, that the kind of local, municipal mill-rate adjustment will not take adequate cognizance of the greatly increased assessed base for property taxation. Now this is not meant to be a premature or unfair criticism of the municipalities; I'm simply talking about the formula out of which each of us who owns property finally finishes up paying an annual tax bill.

I would say, at this juncture, that you really can't separate taxation. Assessment is simply a vehicle which enables the government to finish up with a tax bill. That is why, Mr. Speaker, it was wise that a commission was set up in British Columbia to come up with proposals. The men who served on that commission were very earnest, diligent and well-informed individuals. I would have to agree with the comment that appears in the report that they were asked to get the report in before they felt they had done justice to the complex and important task they had been given. At the time, for example, Mr. Speaker, that they were asked to come up with a report they had embarked on some indepth research.

Again I would say the lessons learned in Ontario made it clear that a tremendous amount of research is required. I think the minister, after considerable study of the report and all the information we have acquired since the 1974 freeze, has recognized the need for attesting. I would like to touch on that point later, but it is clear recognition that despite all the work, and despite the complexity of this bill, and despite the best intentions of the government, this government is obviously very uneasy. It knows how difficult it is to predict the impact of this bill on the average property owner, plus other property owners - I don't mean just the residential property owner, by any means. I'll come to the point in a moment as to why I feel there are some serious problems in this bill.

I think that it is indeed unfortunate that while the government with good intentions wanted to have access to the report and get on with the preparation of legislation, I still feel that on balance, by having ended the research work earlier than the experts would have chosen, we may now be implementing a bill which had there been even more delay, might have been capable of considerable degree of improvement.

The minister in introducing second reading of the bill admitted that artificial ceilings on assessment up until the freeze of 1974 produced inequities and distortions. Some of the distortions, of course, have only increased since 1974, because of the kind of fluctuations in property value that we've seen in different parts of the province and different categories of property.

Undoubtedly assessment is an extremely complex subject. The more I read about it, I often think the less I understand. Certainly if people in this chamber who study it and discuss it find it difficult to understand, what about the property owner who simply gets a very confusing and complicated piece of paper dumped on his doorstep? How is he expected to begin to understand? I would just say in passing that that must surely be another basic purpose of this bill - to try and make the whole difficult subject more readily understood by the property owner. I tell you, Mr. Speaker, the property owner is concerned, and I think that again is demonstrated by the fact that the McMath commission had 364 witnesses appear before it. They presented 206 briefs and there were 43 public hearings. I would submit that there again is a clear example of the concern of the people of this province on this subject.

There were, I understand, six research projects underway and in various stages of production. According to the report all of these had to be terminated and the report done hurriedly. At least I notice that the commissioners have described it as a preliminary report. It speaks for itself when you get a preliminary report that takes 200 pages. I shudder to think what a more timely and more complete report would have amounted to.

One of the basic facts that should be mentioned when we are discussing this subject is that while real property tax is the: principal source of revenue for local government throughout Canada, it is more significant in British Columbia than any other province, expressed both as a percentage of municipal income and as a tax per capita; British Columbia is the highest in Canada. Now those are 1974 figures, on page 20 of the McMath report. In 1974, British Columbia had the highest real property tax as a percentage of personal income. That, Mr. Speaker, is also a direct quote from page 22 of the McMath report, which goes on to say that real property tax expressed as a percentage of personal income has declined in every province of Canada in the years 1970 through 1974, indicating that this source of revenue utilized by local government has not kept pace with the growth and personal income. The next point I would like to mention is the decision by the government to use the term "actual value." It seems to be generally accepted that actual value means market value. But it seems equally obvious that there is no precise definition of actual value. I think I'd like to touch on that point later.

Another element in the goal of any assessment law reform should surely be to reach the goal that we establish equal treatment of equals. The whole purpose of trying to establish public confidence in any tax system should surely be to ensure that

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taxpayers who are in equal, relevant circumstances should be subject to the same assessments and the same tax. I am not at all sure, as I'll try to point out later, that this bill accomplishes what really is the fundamental goal. That is what assessment is all about - so that you have equal treatment of equals. When an individual property owner looks across the street or down the road or in another part of town, he should be able to feel that a similar property owner, owning similar and equally valuable property, should be assessed and taxed in exactly the same fashion.

The McMath report, Mr. Chairman, also quite correctly stresses the need for some uniform approach in order to try and reach the goal of the equal treatment of equals. It states: "Such a uniform approach would result in equitable treatment of the tax base and would assure each owner that his property is valued and assessed fairly as compared with like properties in the area."

Continuing with a quote from page 166: "Another advantage of such an assessment system, and one that cannot be overemphasized, is that it would be easily understood by the public at large, and therefore would not likely be criticized on the basis of confusion and misinterpretation." Here again we , come back to the other fundamental goal of this legislation, which is not only to establish the equal treatment of equals through a uniform approach to assessment, but to create a system which is easily understood by the public at large. In that respect, this bill fails miserably. I don't know how one in a thousand citizens could begin to understand this particular bill.

HON. E.M. WOLFE (Minister of Finance): Does that make it bad?

MR. WALLACE: No, it doesn't necessarily make it bad. The minister interjects a very reasonable question. He said: "Does that make it bad?" -because it's not easily understood. What I'm saying is that perhaps if the minister had waited until the McMath commission had its final recommendations and all its research done, we might have been able to create a more easily understood bill.

Interjection.

MR. WALLACE: The minister is interjecting that that wouldn't change things at all. I guess we're going to have to agree to disagree on that point,

Not just because we're talking about assessment, Mr. Speaker, but I feel that public confidence in government - your government, any government these days - is something that is far more important than perhaps all of us recognize. When this or any government calls upon eight, nine or 10 skilled and talented professionals to give a report....

AN HON. MEMBER: We're not faulting them.

MR. WALLACE: No, I know you're not faulting them, but I'm saying that the people who were asked to provide the information themselves feel they could have done a better job had they had more time. There again I guess we have an honest difference of opinion. The government obviously felt it wanted what information it could get and demanded the report earlier than the researchers were ready to give it.

HON. MR. WOLFE: They did a good job.

MR. WALLACE: The minister interjects that the McMath commissioners did a good job, and I think they did, but I also think that it leaves the public wondering a little bit why, when the government took the trouble to commission that work, they could not have left the commissioners themselves -the experts - to make the decision as to how much more research should be done. How much better the ultimate report would be as a result of that further period of time and work on the whole subject.

I mentioned a moment ago, Mr. Speaker, that the McMath report wanted the government legislation to use the term "market value" rather than "actual value." To the average citizen this might sound like hairsplitting or just being too fussy about a particular term, but again, I would plead with the government that what we're trying to do is not only get better. assessment law, but to get assessment law that is better understood by property owners.

Actual value and market value have been held to have the same meaning, but the McMath report on page 166 says that since actual value and market value have been held to have the same meaning, it would be more appropriate from the point of view of general understanding if the latter term - that is, market value - were adopted. It states that the phrase "market value" is in common use and would tend to relate in a realistic way to the value of the land and improvements as perceived and understood by the owner, and would assist him in making meaningful comparisons with like properties in his neighbourhood or community. That just brings us back again, Mr. Speaker, to the fact that the McMath commission was very sensitive to the need to try and bring in an assessment bill which would not only be more easily understood but would be more meaningful to the ordinary property owner trying to compare his situation with the situation of neighbours owning their properties.

I would just ask the minister in passing if, in fact, the government or his ministry has considered using the term "market value" rather than "actual value." If it was seriously considered, what were the reasons for choosing to use the term "actual value"?

The commission went further, Mr. Speaker, and

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offered an appropriate definition of "market value, " namely the value which a property would command in a sale by a willing vendor to a willing purchaser in an arm's-length transaction. Very importantly, the commissioner suggested that in trying to arrive at a market valuation, the assessor would be obliged to consider several qualifying factors that could have an affect on the value of that property - such things as the use of the property, whether the use is restricted by private covenant or public regulation, the location, the zoning and the method of financing. It seems to me that that suggestion was a very reasonable one because of the importance of trying to make the whole subject more readily understood by the property owner.

[Mr. Veitch in the chair.]

Mr. Speaker, to get to the point, one of the main reasons why I have grave reservations about this bill rests in some of the figures that are presented in the McMath report, particularly on page 38, which shows very clearly in table form frozen assessments as a percentage of 1976 actual value. Without going through all the details, the very obvious conclusion is that land is grossly underassessed in relation to improvements; single-family dwellings are underassessed in relation to multiple-family dwellings; and on the other hand, industrial land is greatly overassessed in relation to commercial land. This is all as a result of the ill-advised and artificial ceilings that were placed prior to 1974.

So when one looks at this table on page 38, just to give a quick figure - residential combination of land and improvements in a residential category in 1976 -their assessed value was 18 per cent of their actual value. Now we're talking about a system where we will be talking about 100 per cent of actual value.

The existence of variations in assessment as a percentage of actual value for various categories of property makes it imperative that increases above a certain reasonable minimum must be phased in over a period of time, and this is one part of the bill with which I wholeheartedly agree. I would wonder, though, whether phasing it in over three years is a long enough period, because I notice that despite the obvious good intentions of the formula used to phase in increases, there's a portion of the bill which makes it plain that any further actual increase in value during the three-year phase-in period will also be added to the assessment. We all know that regardless of readjustments that this bill will bring in there will be come properties where there will be increases in the value of the property for other extraneous reasons during that three-year period. This is the real fear I have: that some property owners will be faced with very substantial increases.

I noted the minister's comment that one of the things that the bill is doing is to catch up with the freeloaders, which I think was a most unfortunate use of the term. It might have been "free-riders" - I forget the precise term - but the implication was that certain property owners have been getting a free ride, Mr. Speaker, as though it was some initiative on their part to try and have a better deal as far as their individual property tax payments were concerned. I think it's quite true that older homes, certainly in Oak Bay, are assessed less accurately and at a lower level than newer homes. While the minister might be quite correct in stating that this bill will tend to bring those kinds of older and newer properties into a more accurate relationship as to assessment, it really isn't accurate to suggest that because of the freeze in 1974 some people have been getting "a free ride." I'm just concerned that the way in which this bill is written, with some of the sections making changes in the method of assessment, many people will be faced with pretty drastic property tax increases, even with the attempts of phasing in.

That probably brings me to the most important point of the bill. While the bill allows for phasing in of tax increases over a three-year period, it also provides a basis for the continuation of discrimination against certain categories of property. I just don't think there's any doubt about that possibility. In other words, the bill allows the cabinet to fix different percentages of actual value for each class of property defined by cabinet. This, in the clearest way, allows for discrimination against any chosen class of property whether it be industrial, commercial or residential as the case might be. I'm saying this in terms of the government of the day, not necessarily of this government, although this government might well manipulate these percentages just possibly before election time, down on the residential properties and up on the industrial ones. That's why this particular section of the bill is the real hooker in this bill, in my opinion. We've heard from many sources that the reason assessment is in a mess in this province is that there has been artificial and expedient measures taken which have distorted the picture to the degree that there is in no way equal treatment of equals, as I have mentioned earlier on. There's been distortion and inequities developed.

All I'm saying is that by allowing the cabinet to fix different percentages of actual value for each class of property defined by the cabinet, this bill, in my view, is simply replacing one sin with another sin. The sin of freezing and the sin of the 5 per cent and 10 per cent ceiling we're well aware of, and the consequences have been mentioned in this chamber in the last several sessions of the House, but the government, by changing to this system whereby the cabinet will fix the different percentages of actual value that will be used for different classes of property, has just left itself enormous centralized power to manipulate these percentages up and down. These manipulations or adjustments just might not be made on the basis of property situation in British

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Columbia.

I suggest that it could be used as a very powerful, blatant political tool to try at an appropriate time - for example, just before an election to win the wholehearted support of the single-family dwelling owners.

The minister winces, and I don't mean this as any kind of personal insult to him.

MR. G.R. LEA (Prince Rupert): He doesn't understand the bill anyway.

HON. MR. WOLFE: That's the way I look all the time. It's a pain in my stomach.

AN HON. MEMBER: Would you like some milk of magnesia?

HON. MR. WOLFE: Please. A couple of aspirins would be nice.

MR. WALLACE: I'm just saying that this particular potential in the bill for these different choices as to the percentage of actual value that will be applied to these different categories of property makes it very obvious that from time to time the cabinet can simply manipulate the amount of revenue which can be derived from property taxation according to the category of property from which that revenue is derived.

There's a very interesting letter from Mr. Adkins of the B.C. School Trustees Association.

MR. G.F. GIBSON (North Vancouver-Capilano): He's a constituent - a good man!

MR. WALLACE: The Liberal leader tells me - at my right elbow here - that Mr. Adkins is a good man. Well, I don't know Mr. Adkins, but I've read what he wrote about Bill 31 and I think it's absolutely right on target and bears reading into the record, word for word. He says:

"Hopefully the effect will be to provide a steady increase in total assessed values with no significant change in the tax share paid by each class of property, in which case school districts should be able to rely on a stable tax base in order to develop a planned, efficient school system. Nevertheless, there is recognition by school boards that times and the government change, and should there be any reason for major changes in the percentages of actual value in one or more categories, or should there be major transfers of property within categories, the effects could be serious for school districts, particularly those with a heavy reliance on one category of property."

I'll continue his quote in a moment, Mr. Speaker, but

1 think that just puts the finger on it right there. If a municipality depends heavily on residential property, for example, as is the case in Oak Bay, and the government decides just before an election that the percentage of actual value to be assessed against residential property will drop from 60 per cent to 40 per cent, just to pick arbitrary figures, the municipality of Oak Bay and the school board responsible for School District 61 would, I think, find themselves very unhappy....

MR. GIBSON: They may have written Oak Bay off!

MR. WALLACE: Oh, no, Mr. Member, you could never write Oak Bay off.

MR. GIBSON: No, but this government might.

MR. WALLACE: But to go on with Mr.Adkins, statement, Mr. Speaker, he says:

"The present annual uncertainty created for school district budgeting by the provincially determined basic mill rate is bad enough. But to have the possibility of annual changes in the assessment base of school districts could make nonsense of planning for education programmes extending beyond a 12-month period. The alternative would be for school boards to impose major fluctuations in mill rates in order to provide the level of income required to finance continuing school programmes."

That, Mr. Speaker, if one isn't exaggerating in a bill that's quite a long and complicated one, is very much the nub of this whole bill. It is the allocation to the cabinet of the power to pick and choose the percentages of actual value that will be applied to different categories of property. There are many principles in this bill and there are many things that will have considerable impact on the B.C. property owner. But if there is any one, central and important part of this bill, it is that aspect which I have just described.

Mr. Adkins also points out that on or before October 21 each year, the cabinet will fix the percentage of actual value for each class of property for the succeeding year. He points out that while this provides adequate notice, "it does nothing to temper the practical effects." In other words, if the government has chosen between one year and the next to substantially alter the percentage in any one category of property, then, of course, it doesn't matter how much notice you give the school boards; the practical consequences would be the same.

Mr. Adkins, on behalf of school trustees, strongly recommends, therefore, that the cabinet should consult with school boards and municipalities prior to October 21, to consider the practical effects on

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school districts and municipalities of the changes which at that time the cabinet might be considering. He adds that this would be a practical demonstration of the government's philosophy of consultation with local governments, which was expressed by the Premier in 1975 when he introduced the municipal consultation Act.

Another aspect of this bill, Mr. Speaker, which bothers me is that the cabinet defines the types or uses of land or improvements to be included in each class of property. Unless I am mistaken, there is no appeal mechanism against the classification in which a property is placed. I have already pointed out that industrial property is overassessed in relation to commercial. I am just asking the minister: what happens if an owner considers that his property is wrongly classified - let us say industrial when he considers it should be commercial? Is there a mechanism of appeal? I can see none in the bill. Again, the cabinet has taken this power to define the type or use of land or improvements to be included in each category or class of property.

At the moment, certain categories are overassessed and some are underassessed. It obviously makes a difference to the property owner to get into the most advantageous classification. I suppose, in most cases, there really isn't that much doubt as to whether it is residential, commercial or industrial. Nevertheless, there appears to be no mechanism of appeal for the property owner who considers his property to be in the wrong classification.

The McMath report makes the very reasonable suggestion that there should be a minimum number of categories. I wonder if the minister, in winding up debate, would care to tell us what the total number of categories will be.

My next concern over this bill, Mr. Speaker, is the fact that it allocates to the municipalities four options. Here again, I just have to ask the question: was not a fundamental purpose of this bill to simplify assessment, period? That is, to simplify it for the property owner, for the assessor, for the municipal politician, for the school trustee, for the regional board - for everybody. Was this not one of the fundamental goals of this legislation - to simplify assessment? How anyone can consider that you simplify assessment by giving the municipalities four options, I don't know. I can just conjure up a thought, Mr. Speaker. We've got four core municipalities in the greater Victoria area, and it's conceivable that these four core municipalities could each choose a different way to work out their assessment on real property. A person living in the area who might own property in Victoria as well as Oak Bay gets two completely different formulae on his assessment notice.

I just can't understand why in a complicated matter such as assessment, which we are trying to simplify, one of the fundamental elements in the bill is to give municipalities four choices. It seems to me to create needless complications. Four options, I would suggest, are not necessary.

I agree, Mr. Speaker, that the majority of municipalities, at the present time, choose to apply the same system as is applied to assessment for school purposes. As I understand it, there are only 10 municipalities in the province that do not use that same assessment roll and the same system, but here's a bill which now gives municipalities four options. It would seem to me that human beings being what they are, if they are given choices, they are more than likely to make them. We will probably end up with various numbers of municipalities choosing to use one or more of the four options, or rather, using one of the four options across the province. I don't see how, in any way, that can either simplify the system or help the property owner to a better understanding of what the assessment is all about.

I've discussed this matter with one of the commissioners, Dr. Clark, whose name I think has already been mentioned in debate. Dr. Clark has taken a great interest in the assessment field over many years and, I think, has made an excellent contribution to the work of the McMath commission. I would like to take this opportunity to express my personal regard for his work on this commission and to say that I think he represents the kind of conscientious and very diligent approach which was taken by all the members of this commission. I might add that he is presently in England, I understand. One of the purposes of his trip there is to study further the whole question of real property tax and the use of value-added tax, which is now a concept in Europe and which the McMath report mentions fairly briefly but asks that British Columbia undertake research into the role and value of such a value-added tax.

Dr. Clark, in discussions and correspondence with me, feels it is important to have only those options which provide no opportunity for municipal councils either to compete with each other for location of new industry or to discriminate against some or all businesses in favour of other categories of property.

I am quite impressed by the straightforward, simple suggestion he makes that municipalities should have two options. They should assess and tax all properties at actual value allowing for the phasing in of increases, or they should assess and tax all properties'at the same fraction of actual value with provision for the phasing in of increases to be uniform for all categories.

I wonder if the minister, who is otherwise busy at the moment, could also cover this point in winding up second reading. Could he tell us why he considered that four options were necessary and why it would not be much simpler and easier to have the two kinds of options that I mentioned?

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HON. MR. WOLFE: There are two options now.

MR. GIBSON: That's too many! There should be one.

HON. MR. WOLFE: Are you against municipalities?

MR. GIBSON: No, I'm against this bill.

HON. MR. WOLFE: Why don't you read it?

MR. WALLACE: Mr. Speaker, it is also disappointing that this bill overlooks many of the other basic requirements that were needed in reform.

HON. MR. WOLFE: Would you repeat what you wanted me to get for you?

MR. WALLACE: I just want the minister to comment, in winding up second reading, as to why he considered that four options were necessary. Does he not consider that it will just add to the existing confusion rather than eliminating confusion?

Mr. Speaker, one of the essential things in the McMath report was the statement by the commissioners that they were impressed by the number of witnesses who appeared before the commission saying they had been treated unfairly in the matter of assessment. One opinion that apparently was expressed frequently was that the B.C. Assessment Authority has excessive latitude in determining actual value. The assessor at the moment has discretion to decide whether or not each of the factors mentioned in that particular section 24 (2) will be considered.

I know that in second reading, Mr. Speaker, we don't want to get into specific sections, but I would just mention in passing that the part of the bill that the assessor uses in determining actual value spells out certain factors that may be taken into consideration. Many of the witnesses before the commission felt that the present legislation allows far too much discretion to the assessor. This is another reason why the term "market value" would be better than actual value since it is more readily understood and more readily would be used to take all of these factors Into account that are described in section 24.

It was the feeling of the commission that that section should have been amended to ensure that the assessor gives consideration to all of these items such as present use, public or private restrictions, location, zoning, revenue or rental value and the price that such land and improvements might be expected to bring if offered for sale on the open market by a solvent owner. Another area where the McMath commission found great unhappiness was in the area of appeals. I realize that one can't go into all this in detail, but I think it is important to very quickly ask the minister why some of the simple amendments were overlooked when his ministry studied the McMath report. First of all, I'll just reel off three or four simple ones. When you are unhappy with your assessment, you go to the court of revision. That term alone seems to be one that isn't well understood.

The McMath commission simply suggested that it would be an easy matter to change the term. I can't find the precise page in the report at the moment, Mr. Speaker, but they wanted to change it so that it had the word "appeal" in the title.

The recommendation is on page 194. "We recommend that the term 'code of revision' be changed to 'assessment review board, ' and that where the word 'appeal' appears in the Assessment Act it be replaced by the words 'formal complaint."' Now that seems very simple, but I think it adds to the understanding of what that part of the procedure's all about. Again, I just say that the idea in the bill is to simplify it and make it more readily understood.

Another recommendation is to stop using the word "improvements." I must have been in Canada 10 years before I really understood what the word "improvements" covered in assessments. This bill suggests that the words "buildings and structures" be used instead of "improvements."

It suggests that on the assessment notice land classification be described in real terms rather than code numbers. I remember hearing the Liberal leader (Mr. Gibson) talking the other day about the way in which our social insurance number has depersonalized our existence. We're all numbered in many different respects in society today based on a social insurance number. It would seem a similar analogy that when you get your assessment notice and your land is classified, why should you have to take a second step and try to decipher what the code numbers mean? Can you not just describe it in real terms?

The McMath report also went into the matter of the appeals procedure suggesting that there should be a longer period of time between receiving a notice and being able to give notice that you're going to appeal. At present time the notices are sent out by December 31, and you have to lodge an appeal by January 20. The McMath report suggests that it would make a lot of sense that they be mailed out by December 1. That would allow six or seven weeks.

They mentioned that the city of Castlegar made the statement that there's practically no public access to assessment information, and the Union of B.C. Municipalities said that some type of information service be made available for individual property owners to enable them to enter an appeal before the court of revision, although such service should not extend to acting as spokesman for the appellant before the court.

The next recommendation is equally simple and

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straightforward - that the assessors provide to any property owner information on the amount at which other properties are assessed, the details on the enquirer's value and the methods by which it was arrived at, along with any other relevant information. These are simple matters that would have been much easier to amend than some of the complicated formulas which the minister has introduced into the bill, not the least of which is the setting of specific percentages for different classes of property by cabinet.

The commission also suggests that we do away with one-man review boards, and I think that's a good idea. It also tries to plead for the fact that persons serving on what are now called courts of revision should certainly have amongst the three of them some basic experience and expertise. I presume that leaves the implication very clear that we have in the past been using persons who are perhaps less knowledgeable an expert than they should be.

But since this commission did a detailed job, Mr. Speaker, and since the minister has taken the trouble to bring in some fairly complicated and obviously long-considered amendments, I'm just surprised that since better understanding of assessment was one of the goals and since better understanding comes from better information, simpler forms, simpler procedures, that of these particular areas of information simpler forms, simpler language - all of which are very well documented in the McMath report - there's hardly any in this bill. I think many of these recommendations regarding language information and appeal procedures are very reasonable and are straightforward, and would have been easily introduced into this bill. I think it's a great deal easier to translate these kinds of amendments than the matter of defining assessment formulas, percentage of actual value, assessment values and all these other complicated aspects of this bill.

So, Mr. Speaker, there are many reasons that I am unhappy about this bill. Perhaps the last one I'll mention is, again, the fact of the cabinet taking a great degree of authority in the case of deciding for school purposes the percentage of actual value which will be chosen. I don't know to what degree the minister has given any commitments that prior to setting that percentage he would consult with school boards and others. But I would say that this again gives the government of the day a tremendous potential to manipulate, for reasons other than the purely fiscal and economic ones, particularly at election time.

Finally, the minister has stressed that the full impact of the proposed changes is uncertain and that there will be a testing period prior to proclamation. Frankly, Mr. Speaker, in such a complicated matter as this, I'm puzzled to know how and over what time frame that kind of testing is to be done. One of the reasons we are proceeding with this bill at this time and that the commissioners were told to get a move on and submit the report was that changes had to be made. Now that the changes in the bill are before us, the next thing we discover is that there is to be some further period of testing before the law is actually implemented. It also, of course, makes it very clear that the minister is anything but confident of the impact of the far-reaching proposals in this bill. I would like to know in particular how the testing is to be done. Is this to be done on a regional basis for six months or on a spot-check basis for three months or what? It seems to me that this leaves a great big question mark as to the appropriateness of this bill if in fact the minister, after all this study, a royal commission and extensive amendments, still doesn't feel sure that this is the way it should be done and we must have a time of testing. I would like to know how it is to be done, in what parts of the province and over what time frame.

Mr. Speaker, the test of a good tax measure is that it be easily understood by the average citizen. On that basis, this bill falls far short of that very desirable goal. For the various other reasons which I have mentioned, I cannot support this bill.

MR. GIBSON: Thank you, Mr. Speaker. Thank you, Mr. Minister.

HON. MR. WOLFE: Are you the designated speaker? I just want to be sure.

MR. GIBSON: Yes. I'm the designated speaker for my party, Mr. Minister, but I won't take up all the time available to a designated speaker, I assure you.

HON. MR. WOLFE: You're speaking on their behalf, are you?

MR. GIBSON: Yes, I'm speaking on behalf of my own caucus. In opening debate on this bill, the minister gave a brief tracing of the history that has brought us to the state which we are in today in assessments in British Columbia. But I thought it extraordinary, Mr. Speaker, that he didn't trace for this House the measures which really led to the foul-up of our assessments, when he was sitting as a member of this House in the former Social Credit government and when the moves were made in 1966, in 1968 and particularly in 1971 that really caused the inequity that we have before us today and which the government is inadequately seeking to redress, in this bill.

How did the minister vote on the worst of the three amendments in 1971, which was the 10 per cent limit, Mr. Member, on the increase in assessment in any property in a given year, just as we were about

[ Page 4325 ]

to enter an extraordinary inflationary period?

Listen to what the McMath report had to say about that. "While the assessors would find it difficult but nevertheless possible to cope with the 5 per cent rule . . . ". That was the earlier limitation, which, I presume, the now minister also voted for.

HON. MR. WOLFE: Your party did, too.

MR. GIBSON: The report goes on: ". . . the 10 per cent limitation enacted in 1971, like the original 5 per cent limitation enacted 1966, guaranteed a lack of uniformity assessment." - Guaranteed it! - "With this particular rule it is virtually impossible to maintain equity between individual properties or between classes of property." Let's be very clear, Mr. Speaker, as to where the blame lies for the grossly distorted assessment pattern we have in this province today. It lies at the door of the old Social Credit government, of which the minister who is introducing this bill was a member, which he supported and I can find no record that he in any way opposed this in 1971.

HON. MR. WOLFE: Nor your party.

MR. GIBSON: Perhaps he's learned something in the interim.

HON. MR. WOLFE: What was your party's position on those?

MR. GIBSON: You were the government, my friends.

HON. MR. WOLFE: You're backstepping now.

MR. GIBSON: Mr. Speaker, I'm being harassed by these ministers.

As a matter of fact, part of the explanation for that is the fact that many of what was then my party is now your party, so perhaps there's been some inconsistency there, in at least the then-membership. The philosophy of my party has been consistent; the membership has changed.

HON. MR. WOLFE: I imagine you'd like some of them back too.

MR. GIBSON: Mr. Speaker, the member for Oak Bay (Mr. Wallace) was very thorough in his remarks, and it relieves me of the necessity of a good deal of canvassing of some of these topics. There are, nevertheless, a few remarks I want to make.

Most people's eyes glaze over at once when the matter of assessment is raised unless it refers to their own particular personal property taxation. It has been made, by the actions of this House over the years, one of the most complex topics in our society, and unnecessarily so. But the practical effect is so great that in my opinion this forum in which we are working right now is not sufficient to bring an appreciation to the average British Columbian of the impact of this bill upon them. It will be a great impact in the average case.

What we really ought to do once second reading is passed - which I assume it will be, even though I, like I think other opposition members, propose to oppose it - is send it to a committee which can hear citizen representation. It is going to have an enormous effect on the ordinary people, and they should have a chance to hear the government's standard of classification and the percentages they are going to apply to each class and then make the calculations for their own property and decide how their taxes are going to go up and down and then have a chance to appear before a committee and say what they think f this bill. They should have that chance before the fact, not after the fact. Since they are not going to have that chance, I will predict to the government that this bill is going to get them into a great deal of trouble.

Each person at this point should be able to estimate the effect of this bill on their property taxation because of the change of assessment, but they are not able to do so because the information is not available. I say that is wrong. That's one of the reasons why this House should not pass this bill.

It has some merits - I will not contest that. It does some good things in a housekeeping way. It updates many archaic references and it consolidates in one bill many of the features of the Municipal Act and the Taxation Act and so on that relate to these property taxation matters. That is good and proper, but it is lacking in philosophy, and it is lacking in operational detail in the sense that there is far too much government discretion to judge the effect of the bill on the ordinary taxpayer. For that reason alone it is sufficient at this stage to oppose it.

This is not merely my speculation, Mr. Speaker. I want to read from the minister's press release of March 25,1977. It says this:

"The government will test the system before it is actually put into operation. The amendments Wolfe proposed to the Legislature today will only be proclaimed by cabinet when it is certain of the impact and before the changes are reflected in the assessment rolls."

Mr. Speaker, the minister introduced this bill before he was certain of the impact. What an astonishing statement that comes out of his own press release. Such an important basic thing to British Columbians as what their property taxation is going to be based on and he introduces a bill to revolutionize it without being sure of the impact. That's a disgrace. I can hardly conceive of a minister

[ Page 4326 ]

admitting in a press release that he's introducing a bill that he doesn't understand himself. He's not sure of the impact.

Mr. Speaker, I'd like to know what attention the minister has paid to the McMath commission, which is to be congratulated in just a little over a year from the time of their appointment, in producing quite a remarkable report. They did not have time to complete the studies that they had commissioned because the government had cut them off, I presume because they were a creation of the former government and the new government has chosen to destroy as many of their works as possible. Nevertheless, they did have time to produce a report.

Why is there no comment on that report in the minister's opening remarks, in his press release relating to the introduction of the bill or, indeed, at any time at all? Why is there no statement of the government's philosophy of property assessment and taxation? Even if not commenting directly on the McMath report, why is there no statement of government philosophy?

There are some pretty basic questions here, Mr. Speaker. What do they think should be the extent of reliance on the real property tax in the province of British Columbia? I won't cite the figures again; the hon. member for Oak Bay (Mr. Wallace) used them. But in British Columbia we are the highest of any province in Canada. Is that the government's philosophy?

HON. MR. WOLFE: That's gross.

MR. GIBSON: I agree, it is gross.

HON. MR. WOLFE: You should point that out. That's gross taxes.

MR. GIBSON: The minister wants to get into....

HON. MR. WOLFE: You haven't read it; that's all.

DEPUTY SPEAKER: Hon. members, if we could have one speaker at a time addressing the Chair, I think we could continue with an orderly debate.

HON. MR. WOLFE: Get him to speak the truth.

MR. GIBSON: Mr. Minister, when you are closing debate on second reading....

HON. MR. WOLFE: I'd like to.

DEPUTY SPEAKER: Please address the Chair, hon. member.

MR. GIBSON: I'll be very glad to hear what you have to say about ...

HON. MR. WOLFE: I'll explain that.

MR. GIBSON: ... the fact that ...

HON. MR. WOLFE: Go on to your next point.

MR. GIBSON: ... the percentage of personal income in British Columbia ...

HON. MR. WOLFE: Page 22.

MR. GIBSON: ... at 4.9 per cent - that's on page 22 of the McMath report - is the highest in the country. The minister is going to bring in the question of the homeowner grant. If he will kindly adjust other provinces for the homeowner grant as well and the other things that they pay, and give us the figure on that....

HON. MR. WOLFE: That's got business taxes in it.

MR. GIBSON: It relates to real property tax.

DEPUTY SPEAKER: Hon. members, I must insist that the banter across the floor cease, please. Would the hon. member please continue?

MR. GIBSON: Actually, I think it is quite useful, Mr. Speaker. I have no objections at all.

DEPUTY SPEAKER: The Chair objects to it, hon. member. Would you kindly continue?

MR. GIBSON: All right, but I don't think you should seek to inhibit debate. I'll carry on here.

So there is a greater reliance on that tax in British Columbia than anywhere else in the country. Is that part of the government's philosophy? The minister has not spelled out the government's philosophy; that's my point.

The extent of reliance on the property tax for the school system in this province is that 55 per cent of the property tax collected in this province goes to the school system. Of the total funds going to the support of the school system, 40 per cent is generated out of the assessment rolls. Is that a part of the philosophy of the government? It is the philosophy which I am trying to arrive at, Mr. Speaker, at this point.

It is a part of the platform of that government -and it's been a part of the platform of the Minister of Education (Hon. Mr. McGeer) for many years, no matter which party he belonged to - that the property tax burden should be removed in respect to education. We see not the slightest indication in this bill that that is about to happen. In fact, what is very specific is that the public school portion of the assessment roll is made more precise than ever. It

[ Page 4327 ]

obviously is to be continued. One can only assume that that is the government's philosophy. What I am asking for is an explicit statement of their philosophy.

HON. MR. WOLFE: We wouldn't cover that in the bill anyway.

MR. GIBSON: You wouldn't? It seems to me exactly the place to cover it,

HON. MR. WOLFE: It seems to you, all right.

MR. GIBSON: It seems to me, Mr. Speaker, that if a person were going to take the school tax load off properties, you would simply remove it from the Assessment Act.

[Mr. Speaker in the chair.]

What about the philosophical tests for assessment that are suggested in the McMath report, the ways in which assessment ratios may be judged? There are three tests that they propose. The first test is equal treatment for equal property owners. Does the minister agree with that test? I'd like him to tell us specifically, though I think I can tell you the answer, because the provisions of this bill make it very clear that equal property need not be treated equally in terms of assessment.

The next philosophical test the McMath commission suggests is the test of ability to pay. I should say that the commission pretty well rejects that in terms of the tax system, except insofar as a person with greater ability to pay presumably has more valuable property. But what is the government's philosophy on that?

The third test the commission suggests with equity in the property tax system is equity received. Once again, Mr. Speaker, nowhere explicit in this bill or in the minister's statements is the concept that benefits received will be a test of the way in which the tax system is ultimately structured. Obviously, it should be. Obviously farmland, for example, as a result of that test, should be taxed in a much lighter way than more intensively used property. But nowhere do we have that philosophical statement, and I would like to hear it from the minister.

When you look at assessment and property taxation from that point of view, it is really more of a service charge. It is a service charge with a high visibility, which makes it a good form of taxation, in my view.

Nowhere has the minister said what he thought about the property tax as a guarantee of local autonomy. I wish he would comment on that because it is one of the justifications for having a high level of property taxation in British Columbia. It is one of the reasons that the BCSTA, for example, over the years has insisted that there should be some fraction of the school cost levied on land. The minister has not dealt with that.

What does this bill do if it has a lot of omissions? It goes to the concept of current actual value, and that is good. That's a wonderful start. That is how all assessments should be done. Then it is at once destroyed by the power of the cabinet to vary, without let or hindrance, the valuations that are arrived at in terms of classification. So it goes to current actual value, which is a wonderful thing in theory, and then it destroys it.

There will be very great shifts in going to current actual value. I assume the government realizes that. Again we find advice in the McMath commission, at page 38, where we learn that at the moment, as a percentage of 1976 actual values, land overall is at only 14 per cent whereas improvements are 34 per cent. In other words, when we go to 100 per cent value, land is going to be factored up by about seven times and improvements by about three times.

There is going to be a very considerable shift there from the impact of taxation on improvements. This will be a shift towards the direction of taxation on land. Will the minister be good enough to tell this House, in closing second reading, how he thinks that is going to affect landholders in this province? Would he also tell us whether he proposes, in his power to vary the rates of classifications, to lighten the burden on landholders? If he does, what effect does he think that is going to have on the cost of holding land, on the price of land, and on the eventual price of housing or other development that may be put on that land? These are all serious economic questions, Mr. Speaker, and I very much doubt the minister has the answers to them or has given them much thought, but they are implicit in this bill that he has brought before us.

In this bill, Mr. Speaker, the question of the differential taxation of machinery and equipment in terms of the public school assessment rolls and the municipal assessment rolls is not resolved. It should be. It is about time. It should be one way or the other. It should be either in both or out of both. There should be a consistency between the municipal rolls and the school rolls. They should be the same. This is one of the reasons for the confusion of the taxpayer about his assessment.

He sees one assessment on a school basis and another assessment on a municipal basis and the numbers are different, for whatever reason. In my own particular district municipality of North Vancouver they are different because one is taxed under the Public Schools Act and the other is taxed under a 100 per cent base. It's one of the municipalities in the province that does that. But for every commercial and industrial taxpayer they are

[ Page 4328 ]

different, no matter where in the province. Why can we not eventually - and it should be now in this bill - have a single tax base? It is such an elementary thing.

I see the Minister of Labour (Hon. Mr. Williams) shaking his head and I know he is a bit of an expert on taxation matters. Why can't we have the question of whether machinery and equipment is to be included in the property tax base resolved one way or another and applied to both the municipal and the public school side? That does not seem too much to ask.

The McMath report addressed this question. It noted that there was a theoretical way around it - I have no doubt it needs more work, but it is used in other countries - and that is the value-added tax, as mentioned by the hon. member for Oak Bay (Mr. Wallace) . It can take into account the fact that the capital assets employed in different kinds of businesses are of a different nature and, therefore, differentially subject to taxation under our current law.

Some businesses for their production happen to use a lot of machinery and equipment. They happen now to be taxed on one of the tax rules but not on the other. Other businesses happen to use a lot of inventory. They happen not to be taxed, but nevertheless it's a capital asset employed in the business just the same way. They're getting a better break than those businesses who happen to use machinery and equipment in taxation terms. Other businesses' capital intensivity happens to be in buildings. Why hasn't the government been able to make this the same across both rolls? It's one of the most obvious inequities that's endured for years. It's clearly addressed in the McMath report. The minister hasn't said a word about it and his bill doesn't patch it up.

Incidentally it might be as good a time here as any to say that the minister can afford to make these changes without worrying too much about the impact on equity because there's no question who pays these taxes that at least most of our commercial enterprises are charged. They're paid by the consumer. Generally speaking, property taxes on commercial enterprises, particularly consumer enterprises, are regressive. There's no question about who pays the taxes levied on Dairyland, of the property tax on the Hudson's Bay Company, or the property tax on Super-Valu. It's paid by the consumer. Since lower-income people consume a higher fraction of their income, they pay a higher fraction of the property tax which is passed on by these enterprises. So it should be obvious to the minister that he can do justice in this area and be progressive at the same time in terms of ultimate taxation on the consumer.

The three-year phase-in, I assume, was put in because it was politically expedient. The hope is that people will notice the changes less if they're impacted on them over a three-year period, and I suppose that is true. Personally, I think it's philosophically objectionable that if one property is carrying a singularly light tax load now compared to its neighbours, and another a rather heavy tax load compared to its neighbours, the length of time of this injustice should be expanded even further. But because of my assessment of the particular group of people that will be hit hardest on this, I'm prepared to go along with it. I think that probably the group that will be most heavily hit by the upward assessments will be the older parts of our communities, the older residential areas. For that reason I agree to the three-year phase-in period.

The section that gives the municipalities four options in how to levy their taxes, while the school districts are only given one option, I disagree with. I disagree with it 100 per cent. The minister will no doubt say: "Don't you believe in giving municipalities flexibility?" Well, I think that flexibility was put in there by the government in order that when complaints come along on the tax rolls, as they certainly will as a result of this Act, the government will be able to point to the municipality and say: "Look, they had another choice which they could have taken, which would have resulted in you paying lower taxes." They've cleverly structured their four choices this way. Therefore they can say to the residential homeowner: "Well, if your municipality had had enough sense to choose option C or D, you'd be better off."

HON. MR. WOLFE: That's a lot of baloney, and you know it.

Mr. GIBSON: That is not a lot of baloney, and I know it is not a lot of baloney, Mr. Minister. That is why that was put in there.

Let's look at how different these four options are. The first statement I would make about the four options is that not a single one of them is the same as the school tax assessment rule base. So for starters we're going to continue to have two separate rolls in this province and that is wrong.

Let's examine the four options. Option A, not reading the technical wording of the clauses, is essentially the school tax machinery and fractions, but on the municipal tax base with the same transitional provisions over three years. Option B is the same as option A, but without any transition period. That is unlikely to be chosen by any municipality. Option C is essentially the status quo, and it had been my impression that the minister thought the status quo ought to be reformed and that's what this Act was all about. So I'm rather puzzled he's left that in there.

[ Page 4329 ]

HON. MR. WOLFE: To equalize the status quo.

MR. GIBSON: At the same average percentages of actual values of those that are determined by the commissioner to have existed within the municipality in the calendar year preceding the calendar year equalized as within classes, but with the classes bearing the same relationship, whereas the minister proposes to set different relationships for the classes in his reform. As the hon. member for Oak Bay (Mr. Wallace) says, it violates the principle of equal treatment of equals.

The fourth, option D, what is theoretically the right way, would value each property at full and actual value. That is what should be done in terms of municipal valuation and assessment, and that is what should be done in terms of school assessment. It should be just as simple as that. Assessment should mean assessment at 100 per cent - period - for every property in this province. Only when it is as simple as that will the taxpayer finally be able to understand it. I know there are variations required but those ought to be variations in the mill rate, and I'll get to that in due course.

HON. MR. WOLFE: Could you repeat that last statement you just made?

MR. GIBSON: I said I know there ought to be variations but the variations ought to be in the mill rate rather than in the percentage of the assessment class. I'll get to that in due course.

HON. MR. WOLFE: You wanted a uniform rate, though, throughout the province.

MR. GIBSON: I want a uniform assessment and I want a uniform mill rate across the province, but I'll get to the mill rate.

The next thing I disagree with is the power of the cabinet conferred in this bill to set different percentages of actual value for various classes of property in terms of the final assessment. I think it is wrong and I question whether it is constitutional. Suppose the Minister of Finance, Mr. Speaker, came before this House with a proposal that the House should give him the power to set the sales tax by order-in-council depending on which kind of item he was taxing. That's an exact analogy to what we have here. He is asking for the power to set taxation levels by order-in-council depending upon which category of item he's taxing. So he might decide, let's say, on automobiles to set a tax of 3 per cent and on furniture or a television at 10 per cent. He could just vary things around. That's the kind of power he's asking for in terms of property taxation, and that's the kind of power this Legislature should never delegate to any cabinet.

There are other objections to this. If there is to be variation, I submit, Mr. Speaker, it should be the mill rate that should vary, as I say, not the assessment level, because that is just confusing to people. The mill rate should be the one that varies, and furthermore, the mill rate should be cited in per cent. Most people don't know what on earth a mill is, but they know what a per cent is. If you receive your tax notice and you learn that your residence is to be taxed this year at 4 per cent of actual value, then you know what you're talking about.

If you learn, on the other hand, that it is to be taxed at 60 mills of 75 per cent of assessed value in terms of improvements and 50 per cent in terms of land or something like that, you lose track of it. Our tax system should be comprehensible and it should be understandable to the ordinary person. It's one of the elementary principles of taxation, and nowhere is it more important than in this kind of direct tax that affects everyone. So that's another objection.

A third objection - the hon. member for Oak Bay put it in one way. He said that the cabinet could use this power to set different percentage levels between classes to discriminate against certain groups. He suggested perhaps discriminating against industry just before an election in order to lower taxes for the homeowner who would be properly grateful and vote for the government, and then, I suppose, discriminate in favour of the industrial sector right after the election to pay for the campaign contributions. There's a nice balance to it. You could almost chart a sign wave as to how the tax is going to go up and down over the years, and there would be a peak every three years in industrial tax and then a low right after.

MR. L. NICOLSON (Nelson-Creston): It's more of a sawtooth.

MR. GIBSON: It could be a sawtooth, Mr. Member.

The B.C. Systems Corporation might be able to work it out. That might be one of their first projects.

There's another way of putting that - they might not just discriminate against certain groups, but they might reward their friends.

AN HON. MEMBER: Oh, no.

MR. GIBSON: Now don't be too sure, Mr. Member. Well, you're a man of great and generous spirit. I am not necessarily talking about this government, but some day, some government might come up with a narrow category. The category can be as small as the government wants, you know. Suppose there was a category: "New Race Tracks in Surrey." Do you think a category like that might be eligible for a particularly low assessment rate?

[ Page 4330 ]

MR. C. BARBER (Victoria): How about new car lots?

MR. GIBSON: It could be new car lots in Chilliwack. The imagination can run a bit on that. The power of the government to reward its friends through its ability to set the level of taxation through order-in-council is clear.

Mr. Speaker, why should there be variations from actual value in any case? If the government wishes to encourage certain activities in our society, let it subsidize them through an artificially low tax rate. Let's get the cost up front where we can see it, where this House can assess it, and pass on it each year.

There are some variations justified from full cost -I agree at once - and that's why I say there are some differential mill rates which are justified where there is a considerable difference between benefits received in different kinds of properties. The clearest example here is agricultural land. What you might call the residential package of the farm should be taxed in the ordinary residential way. But the balance of the farm - the agricultural, growing part of the farm, or the livestock part, or whatever it might be - is part of the farmer's productive equipment. It does not receive the same kind of services from the municipality or unorganized territory as does the residential aspect of the property. There's nobody on that agricultural property who goes to school, no fire and police protection required and so on. So in terms of benefits received, clearly a lower rate is justified in that kind of case.

But if there is to be variation, these principles should apply: First of all, it should be in the mill rate, not in the assessment. Secondly, it should be in a mill rate determined by the Legislature, not by the cabinet. If there is a need to vary these mill rates for different classes of property as this new law is phased in, then you can stipulate that now and schedule that over the next three years, or five years, or however long you think it's required. But it should be legislatively determined and when changes are required you should have to come to the Legislature to justify those changes. Anything else is an unacceptable delegation of the power to set taxation rates by this Legislature. I think it's disgraceful that this government has asked for it and no doubt will push it through the House with its majority.

Is the minister prepared to tell us right now in closing second reading how many categories there are going to be, and say, "There will be that many and no more, " and define what they will be? In this press release that came out he mentioned residential, multi-family, commercial, industrial, farm, forestry, utility, fixed-machinery and equipment. Then he threw another one in yesterday in opening second reading which wasn't in his press release. He talked about recreational property. How many more categories are there going to be? Specify precisely the number of categories that there will be and specify precisely the percentage valuation that the cabinet intends to set, and then we can judge and assess this bill. Until then we cannot. Until then we are being asked to give the government a blank cheque and I am not prepared to do that.

Mr. Speaker, most of the balance of the bill is of a technical nature, and as I say there are some good updatings and housekeeping provisions in it. But there are also some terrible omissions. I come back again to the McMath report which the government suppressed for six months, reluctantly released, then ignored. There is no limitation proposed on the raising of school revenue from property as the McMath report recommends in their number R1. There is no mention of the value-added tax as an alternative to the machinery and equipment, which, as I say, is entirely unreasonably on one role and not on the other. That is McMath recommendation R3.

There is, to the best of my knowledge, no provision for removal of the power to exempt property under order-in-council from the Municipalities Aid Act and the B.C. Hydro and Power Authority Act. If there is I have not found it. That's recommendation R7.

There is no general grants-in-aid clause which says that all provincial properties and Crown agencies will be assessed and pay taxes on the basis of those assessments to the municipalities. That's recommendation R9. It sits there in the report; the minister has ignored it.

HON. MR. WOLFE: It wouldn't be covered in this Act anyway. It's Assessment Act.

MR. GIBSON: What do you mean it wouldn't be in this Act?

HON. MR. WOLFE: Exactly what I have said.

MR. GIBSON: Is there a provision in this Act to assess the property of the British Columbia Railway? There is not.

HON. MR. WOLFE: You're talking about grants in lieu, which are taxes.

MR. GIBSON: How can you make grants in lieu of taxes unless you have a base to make those grants in lieu of? You have to have some assessment base.

HON. MR. WOLFE: You don't know what you're talking about.

MR. GIBSON: Do you have an assessment base for the British Columbia Railway?

[ Page 4331 ]

MR. BARBER: If you do, what Act is it in? It's not in this one or in any other one.

MR. GIBSON: Mr. Speaker, recommendation RI 1 deals with Crown corporations. The British Columbia Railway should be paying in excess of $125,000 a year taxation to my municipality, and it's not. It's not cured in this Act. The assessment base that could allow the cure of that is not provided for in this Act.

MR. BARBER: Or in any other.

HON. MR. WOLFE: Nor would it be - that's the point.

MR. GIBSON: What do you mean "nor would it be"?

Mr. Speaker, to clarify things for Hansard, the minister says: "Nor would it be."

AN HON. MEMBER: He says: "Where would it be?"

MR. GIBSON: No, he didn't. We say: "Where would it be?" Where would it be, if not here? This is the Assessment Act. This is the Act that is to provide for the assessment of property in the province of British Columbia. Now if the minister in the goodness of his heart finally comes around to the view that the British Columbia Railway should pay the taxes that it owes to the municipalities along its route, instead of just cancelling employment, what is he going to use for an assessment base? It should be in this Act.

There's no attention paid to recommendations R14 and R26, which between the two of them call for the accumulation of assessment information on exempt land and the publication every five years of information with respect to property taxes foregone as a result of tax exemptions. How is this Legislature to be able to judge the validity and the cost of tax exemptions which are continued in this Act unless we have the dollars-and-cents information about it? That was an excellent proper recommendation of the McMath commission.

MR. BARBER: They don't want us to have the information nor to make the judgment accurately.

MR. GIBSON: No, they don't want us to have the information or to make a judgment. This place is a nuisance to the government.

There is no reference to these interesting recommendations of the McMath commission, R44 and R45, dealing with the payment of taxes on farmland by the provincial government, in that increment that differs between the agricultural use of the land and the full value.

Of course the McMath recommendations go on for many pages. I can't deal with all of them except to say that they are woefully overlooked in this bill.

So, Mr. Speaker, in summary, this bill has some terrible omissions but I will be charitable and agree that that is not of itself reason to vote against the bill. If the bill was otherwise doing good things even it was incomplete, I could support it. But because of the tremendous, improper, and in my view unconstitutional, discretionary powers to in effect set tax rates that are given by this bill to the cabinet, the power to reward their friends, punish their enemies and manipulate taxation around election time; because of the failure to specify in legislation the variations in class rates that the bill proposes; because of the extraordinary confusion that will arise from a single school taxation system and four different municipal property taxation systems and the resulting unequal treatment of equal properties, which is a fundamental principle, I have to oppose this bill.

Mr. Speaker, we should hear the municipalities in committee - not a Committee of the Whole House, but a standing committee of this Legislature - to which this bill should be referred. Let us hear which of the four choices the government has proposed they most prefer or some other choice entirely. Let us hear the objections and the support of individual taxpayers once the government has given them the percentage rates necessary for people to calculate their own taxes and what it would be under this bill. In other words, let us give the public a chance to make representations based on information which they do not have now and which I am convinced the government does have and is choosing not to reveal, and on that basis hold committee hearings and try and come up with something a bit more sensible than this bill.

Assessment is a very difficult problem. I do not dispute that. It was largely the creation of the government that that minister supported many years ago back in 1971, but that makes it no less vexing today. The solution that the government has brought into this House is basically a "trust us" solution, a solution that the minister in his own press release admits he doesn't know at this point how it will work. He states: "The amendments Wolfe proposed to the Legislature today will only be proclaimed to cabinet when it's certain of the impact and before the changes are reflected in the assessment rolls."

How is he going to test it without proclaiming it? How is he going to test it without giving us the percentages? If you are going to do that, why in the name of God don't you do the testing before you bring it before this Legislature?

Mr. Speaker, I think it is an entirely unacceptable way to proceed. I predict that it is going to bring a great deal of grief to the taxpayer of British Columbia, and I thoroughly and strongly oppose it.

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MRS. P.J. JORDAN (North Okanagan): Mr. Speaker, I do not intend to go into the full complexities of this bill or to take up a great deal of time of the House.

I rise to support this bill. I appreciate its complexities and I appreciate that it may not, in fact, be a perfect bill, but unless we start somewhere in this province, the inequities that have existed and the mystique that has existed about property taxation will never be set aside.

I would like to say that I think that the whole matter of assessment is the greatest mystique that exists in the province today as far as the average citizen is concerned. They simply do not understand how to read their assessment notices and they do not understand the formula. I have found through the constituents that I represent that when they do go to the assessor's office, so often the assessors are so familiar with the system that they have a great inability to explain it in simplified terms so that the average person can understand it. I think it is important when this new Act is implemented that we do take steps to help the public to understand what assessment is really all about, how it is applied and what the effect is on their property. This not only would help the overall picture as far as the people are concerned, but it would help them in the area of appeals. Many people still do not understand that they can appeal their assessment notice. If they do, they have great difficulty when they get that assessment notice, because of the complexity of it, in understanding what the impact of that year's assessment will be on their taxes when they try to relate it to the local situation. So I feel we should address ourselves to that.

I also feel that we should make it very clear on the assessment notice by a separate inclusion that people can appeal, how to go about that appeal and how to prepare a letter which signifies to the Assessment Authority that they wish to take part in an appeal. Often they will send a note, but because they do not stipulate their reasons for appeal or those reasons for appeal are not fully understood by the Assessment Authority, due to the people's own inability to express it, they are turned down and do not have an opportunity for appeal.

I support the bill because, as I say, I think it is necessary. I do think there are going to be some shaky days ahead. Obviously, from some of the debate that has taken place, there is going to be confusion just from the discussion itself and also I think there will be some confusion as some people try to relate the changes to their own tax situation. It certainly is important, while we are debating this bill, that we make it clear to the public that any changes that will be introduced as a result of this bill do not affect their prepared assessments for this year of 1977.

The statements of the minister, which I want to repeat for the benefit of the constituents of North Okanagan, about the main purpose of the Act are very significant. He stated that it will eliminate the freeze on assessments that was implemented in 1974 and that has created great inequities or compounded inequities which previously existed, and it will establish common, province-wide, actual value levels of assessment for each class of property for school tax purposes. I must disagree with the hon. leader of the Liberal Party (Mr. Gibson) who said that this government should enshrine in the assessment bill their concern to relieve the properly tax owner of percentage of school costs and to remove totally the burden of school taxation for senior citizens. I think it is very difficult to enshrine philosophy in a piece of legislation, but this does not diminish the intent of this government to carry out that commitment.

The assessment bill will also provide municipalities with four options in the selection of an assessment standard for general municipal taxation purposes. I would like to relate this to my own constituency of North Okanagan and the city of Vernon, where they are hopeful - and we hope that the provision is in this bill - of developing a two-tier tax system. The problem we are confronted with is a great need to expand our city boundaries. In doing so, we will include large parcels of land, some in small holdings, but in total a fair number of land acres which are in fact productive agricultural units or potentially viable agricultural units. There is no way that the municipality can really levy a fair agricultural taxation on those lands and still carry out their commitments of boundary extension. This has certainly led to rejection of very necessary boundary extensions in the community of Vernon, and we would hope that the opportunity to develop this type of approach is within the bill.

With the ALR in place, much of it justified, we're finding more and more situations where we are getting pockets of community development interspersed with agricultural land or beyond agricultural land. These quite capable lands, which could be best used for people living on them, simply can't expand the way they should because of lack of sewage facilities or lack of capability of the land to handle septic tank facilities. You get into the problem of fire protection and also other services provided by the community. If we can evolve a two-tier tax system, then those development areas can join with the city on an equitable taxation basis without penalizing the agricultural units in between.

The other purpose of the Act, it should be clearly stated, is not to raise more tax dollars, but to raise the same amount of money in a fairer way. The minister's statement that there should not be any increase in total taxes resulting directly from the change in legislation as it is introduced should give

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the people confidence in the intent of this bill and confidence that this government's philosophy is a recognition that home taxation and personal property taxation must be kept within the capability of the average family to own their own home. I don't feel that one can proceed in various incentives and assistances to help people own their own homes if, in fact, once the home ownership is achieved the taxation situation becomes so extreme that they can't afford to stay in those homes.

The minister also said - and it should be repeated because it is important for the people to understand this - that the new system provides a flexible basis for the introduction of desired property tax reforms and provides a means of regulating the annual growth rate of assessments resulting from inflationary pressures. Again I feel this, Mr. Speaker, does enshrine in the legislation our intent to try and keep home and personal property taxation within reason and within the capability of the people to pay without ever moving this type of taxation onto an income basis, which I personally would oppose because that is no more equitable than the situation that has existed.

In the area of North Okanagan we are optimistic that, when the full impact of this bill is felt, it will provide a much more equitable situation and may, in fact, help to hold taxes in line without any further great increase. It would appear, in analysing the figures for the province, that the North Okanagan region is a high assessment area, and it is our hope that this assessment bill will assist in that situation.

There are two or three practical points that I would like to bring up, Mr. Speaker, for the minister's consideration. I think they are important. While they wouldn't necessarily be in the legislation, they would result through the regulations. The first is in addressing myself to the problem of agricultural land which is in the agricultural land freeze and which is under restricted zoning as agricultural land by the regional district or community plan. In the North Okanagan area and in many other areas of the province we find that those lands are, in fact, taxed as improvement lands, and yet there is no feasible way at this time or likely to be in the future, because of the land being agriculturally capable and in the ALR and because of the zoning plan and the community plan developed by the local people, that those lands could ever be taken out of agricultural classification. Therefore it is a great inequity and injustice and complete unfairness to have those lands taxed as development lands. I would hope the minister would see that this type of inequity can be dealt with by the regional district or the province or the community, whichever bodies have the capability of applying the assessment and the taxation formula.

The next matter I would like to discuss is this whole matter of the appearance and beautification of our province. They run contests around the province - most of us are familiar with them - where new developments or improved developments that submit a landscape plan and develop that landscape plan are eligible for an award. I think Park and Tilford should be commended for this approach but I feel that the government itself should address itself to the need, first of all, that there is in the province for the long-term benefit of the province, both from the point of view of investment values and from the point of view of tourist attraction and comfortable living for our own people. If British Columbia becomes nothing but a maze of small communities with black tops, a few trees and general malaise toward their appearance, then our whole tourist industry is going to suffer and we are not going to be as desirable an area to live in in competition with other areas of Canada or other countries.

I feel that the government could take a leaf from Park and Tilford's book. They could also show the necessary initiative and concern by making provision for a personal and industrial beautification rebate through assessment and taxation. To qualify, a new development would have to submit a landscape plan that was more than just one or two trees and a potted petunia, but in fact they should take into consideration the nature of the community in which it was developing and the character of that community and the lifestyle of those people. If such a plan was completed within, for example, a two-year period, then they should get a percentage refund on their taxes for a suitable number of years, perhaps five years.

I think this would give great incentive to the municipalities themselves ' and to the regional districts, in issuing building permits, to command from those who want to develop concern for the appearance of the community. I also think that, on the whole, you'd find a very favourable response from both industry and small business and that the long-term benefit to the community and to the province could not be equalled in the long-term dollar value as opposed to the small amount of tax revenues that would be lost from this type of an incentive programme. This also might act as an encouragement to other companies to join with Park and Tilford in encouraging this development.

I would like to point out again that the province we're creating is the province in which we're going to live. It's also the province in which our children are going to live, and the general appearance is very important in terms of mental health and comfortable living within the communities. It is also vital in terms of our tourist development, which this government has put great emphasis upon, and will continue to do so over the next years. If we're going to compete with other recreational areas that are available to people in all parts of the world we simply have to do more than

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rely upon our natural assets. By designing communities, through an incentive programme, that are attractive we would be co-operating with nature and hopefully enhancing nature.

The last point I'd like to bring up is in relation to recreational assessments. More and more we're finding that communities are trying to develop recreational facilities. We have incentive programmes in this area through other ministries and we also see private individuals trying to* develop recreational facilities, but taxation becomes a major problem. The former government introduced a system of relief of taxes for these developments but, in fact, it was little more than a confiscatory programme because any defaulting lead to the confiscation of that property by the state. I would oppose this approach.

I do feel that we could have a special classification for recreational facilities. Probably it would have to be of two or three tiers. Certainly there are public facilities which are strictly for the public and open to the public - golf courses, skating rinks, any number of interest areas - but there are also other recreational facilities. I would cite as an example a riding arena. Horses are a major industry in this province, although we haven't become fully aware of it. Individuals will try and develop an arena which can be used by any number of equestrians in the area, through their clubs, but they are finding themselves taxed out of existence. These are not lucrative establishments; they're more establishments of convenience. In some instances, they are tax write-offs for major corporations or very wealthy people, and that might be looked at in a separate light. But in the main, when you look around the province of British Columbia, you'll find most of them are developed by individual families. They are loaned with great generosity to local riding clubs, trail riders, but then they are finding themselves in severe tax difficulties.

I have one in the area that I represent that is 45 miles from town. It provides a great service to people but obviously there's a major cost in young people getting there. They're faced with an assessment which has resulted in taxation this year of over $4,000. This is a completely impossible cost for them to meet and that arena is going to close. This means a lot of people in that area - particularly young people - are going to lose a recreational benefit as well as the opportunity to develop their skills in order to take part in major competitions not only in the region but also throughout British Columbia as well as the rest of Canada.

These are just a few perhaps less exciting, less technical points, Mr. Speaker, but I think they are points that concern the people of this province. They are points that must be considered when the regulations for this bill are being evolved. I would hope the minister would take them into consideration and we would receive a favourable approach, if not as I've suggested, then certainly in another form. I must state again that my own personal philosophy is that taxation of properties should not be a punitive taxation and certainly personal property and private homes should be taxed in a manner that is reasonable in relation to the people's ability to pay. In using fair-market value, we must recognize that fair-market value has to be looked at in terms of those dollars being achieved only when that property is sold. It has no relationship to the ability of those living on that property to pay.

I would also like to mention one other point, Mr. Speaker, and that's in relation to handicapped people. I have an instance within my own constituency now where the father of a family was in a severe car accident. He's now a quadraplegic. They're living on seven acres of land which is in the ALR, but it doesn't have agricultural classification. They can't subdivide the land, and yet the home is suitable for their lifestyle and for this man to carry on as much activity as possible. It's creating a tremendous burden on the family in trying to keep up very marginal land as well as to keep up with the taxes.

We might well look at special cases where a family has lived in a home for a number of years and the breadwinners or the income-earners have been, through no fault of their own, injured in accidents and they are now no longer capable of contributing to those family incomes. We should perhaps allow a special classification of taxation in conjunction with assessment, which this bill addresses itself to, for those particular people.

MR. G. HADDAD (Kootenay): Mr. Speaker, I rise to support Bill 31. 1 would like to make a few remarks regarding the leader of the Conservative Party (Mr. Wallace) . I listened to him very intently. Anyone can assume that this will happen or that will happen. I don't know how laws can be made so they can't be misinterpreted, and everyone has their own interpretation. I also listened very intently to the leader of the Liberal Party (Mr. Gibson) and he, too, had some good points, but again there was a lot of personal interpretation.

MR.BARBER:How do the car dealers feel about this bill, George?

MR. HADDAD: I'm going to give my interpretation, as I see it, and I've got it down to where it is very simple. I would like to start off by saying that the amendments to the Assessment Act have been long overdue. The minister has informed us that these amendment are not to raise more tax dollars but to raise the same amount in a fairer way to all taxpayers. We are all aware of the inequities that have existed, for quite some years where one

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neighbour would pay one amount, or his assessment was one amount, and the other neighbour was that much less. There are considerable differences in assessments of residential properties where a taxpayer is paying more dollars than others in his own immediate area. These inequities have grown out of all proportion over the years and past governments have not had the courage to correct this inequitable legislation.

The minister has stated that the enactment of this legislation will mean - and I found this simplified it to a great extent, in my opinion - firstly, the assessment freeze will be ended on December 31,1977. It is my opinion that this has caused many of the inequities. The equalized actual-value standard will be used as the basis of assessment commencing in 1978. For school purposes, assessments will be based on fixed percentages of actual values for different classes of property. The percentages fixed for each class of property will be the same throughout all school districts in the province. For municipal purposes, each municipality will be free to select from four options the standard of assessment which best meets its requirements for general taxation purposes. Land and improvements will be taxed on the same basis with assessment increases which exceed prescribed limits to be phased in over a three-year period. The changes introduced will not affect 1977 assessments. Property owners will then know that their assessments are fair and equitable compared with those of their neighbours. I ask the hon. members to note that these amendments will assist the public school system and serve the needs of municipalities in financing their local operating requirements.

As I said, there are many properties that are overassessed in relation to other properties in the same class. By the same token, a substantial number are underassessed. It follows that all overassessed property owners can expect a reduction in their 1978 assessments. Provision has been made to limit and phase in assessment increases required to equalize underassessed properties.

The hon. Minister of Finance said major shifts in tax incidence between classes will also be prevented from occurring under the proposed amendments. The transition between frozen assessments and those based on actual-value relationships will be orderly. Homeowners, farmers, and certain other classes of property owners will be protected from excessive assessment increases during the transition period. Control will be established by the cabinet which will have the power to set percentages of actual value to be used for assessment purposes for each class of property for school purposes. The classes of property for which percentages of actual value will be fixed include residential, multi-family, commercial, industrial, farm, forestry -utility, and fixed machinery and equipment.

Mr. Speaker, I wish to commend the minister on having placed these amendments before us today and I will support this bill.

MR. SPEAKER: The hon. minister closes the debate,

HON. MR. WOLFE: Mr. Speaker, what appears to be a very complex bill addresses itself to a basic problem of attempting to equalize assessment throughout the province on a basis which would be more equitable to all property owners. So many who, through the inequities in the system, now pay, in individual cases, as much as 50 to 100 per cent below a mean average and on the alternative, many who pay proportionately that degree too much, would be, over a period of time, allowed to equalize to their neighbours. Now that is the basic thrust of this bill, which naturally is couched in complicated language. But it addresses a very simple problem, which is ultimate fairness to all property owners. It is necessary, Mr. Speaker, because of the provincial government's direct involvement in its responsibility for education and school taxes. Otherwise, one could suggest that we would not need to be involved whatsoever in the administration or determination of property taxes.

Now a great many questions have been asked, but I think it's fair to summarize and say that the opposition, in attempting to find a way to oppose this bill, which they know is ultimately correct, has seized upon the fact that it allows the flexibility to determine percentage rates by the executive council - that is, percentage rates applied to different classifications of property. I have been asked a question by one or two of the opposition speakers as to how many classifications there would be, what the percentage rates would be, et cetera. Now I'm going to tell you, Mr. Speaker, that a great deal of study has gone into the determination of these rates. These will be distributed after the proclamation or after the royal assent of this bill to all municipalities, which should be in the very near future. Embodied in this distribution of information, in order to give the municipalities a chance to study these figures and a choice of the options which they have, will be a list of classifications. Now the recommendation of the government at this stage is that there will be three major percentage classifications, attempting to simplify into three main categories of percentage. So beyond the listing of percentages, the suggested percentage will become public knowledge within the very next few days or weeks, after royal assent has been determined on this bill and the municipalities will then receive this information.

A lot has been said about the need to study and test this information. Mr. Speaker, a cabinet

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committee of six members of cabinet has been addressing itself to the McMath report and the recommendations embodied in this bill for basically the past year. They have been meeting almost regularly every week. I would like to say that one of the things that they have been studying in recent months is the computer printouts of the latest assessments based on actual value.

I want to say that despite the fact we've had frozen assessments since 1974, the Assessment Authority has been developing actual-value rolls from year to year. It was necessary to have available for this committee to recommend to cabinet the very latest assessment roll, which has recently been updated. This roll has been updated perhaps six times in the last six months to provide the very latest information on which can be made a determination as to what these percentages should be.

Mr. Speaker, the object in determining percentages is to arrive at assessment totals for the province which will equate to what the various classifications now pay. There is no effort being made here through policy to make a vast change in the share paid by each different class of property owner in terms of assessments. I would remind the House that we are talking here about assessment, not about property taxes. It's a two-sided equation and we are talking about equalizing assessments to provide a basis of actual value right across the province. We now have available what you could call computer printouts for each school district with the very latest estimates of actual-value rolls for each school district. I'd like to say, Mr. Speaker, that for the benefit of the members, in the very near future these will be made available to all members of this House on request through my associate, Mr. Moore here. There's a copious quantity of this information, but any member who wishes can obtain this roll for his own school district, basically in summary - plus the summary for the province of all of the classifications and the percentages - showing the implications of the former frozen roll in each category and, on the other hand, the projected assessment roll for actual values. I see a member across nodding; I gather he understands that.

MR. LEA: Yes, I can understand that.

HON. MR. WOLFE: Mr. Speaker, once again: "Why do we need to test and examine that information?" I think that is an utterly foolish question. It needs to receive the most careful study based on up-to-date actual-value roll information which is continually ongoing. So I think we would be foolhardy to proceed without the flexibility to determine these percentages without having the very latest information in front of us. That is the reason f o r the L i e u t e n a n t-Governor-in-Council determination of these percentage rates.

Just a word about the McMath report. It has been alleged that their work was cut off short and that they were not allowed to proceed with a great deal of the work they had in mind. Certain members, I think, who were involved in this commission and asked to do this work are of the opinion that they had succeeded in doing about as much as they could. I realize they had further studies, Mr. Speaker; that's true. Further studies had been contemplated, but they had at least a year to perform the job that they did. I think it is a statement that will go without challenge that any ongoing study that might have been contemplated would not have changed the basic recommendations involved in the Act before us here today.

There were 75 recommendations, Mr. Speaker, and quite a number of those are, in fact, embodied in this Act. Other recommendations, a great many of them, do not involve assessment. They involve assessment notices, appeals, procedure for taxation, et cetera. So of the recommendations involving assessments, a great many of them, after careful study, have been adopted in the Act before you.

I would also like to say, Mr. Speaker, that on passage of second reading of this bill, I have a series of amendments which I would like to table for consideration in committee. The two most important items involved in those are a revision in the appeal provision which will broaden the appeal powers of the Assessment Appeal Board. The second other major matter in those amendments involves an effort to clarify the farmland assessment system. So these farmland schedules will be established. Procedure to arrive at a better method to value farmland is involved in these amendments.

So I say that, Mr. Speaker, in, answer to the oft-raised statement from across the House that we've ignored many of the recommendations. I say that is incorrect because ' e we have, in fact, adopted the very major recommendation throughout this report of the actual-value standard. Suffice it to say that literally every organization or public body involved in municipal affairs has recommended the actual-value standard; namely, the commission of inquiry on property assessment, which involved the McMath report, recommended it; the Union of B.C. Municipalities; the B.C. Chamber of Commerce; the Islands Trust; the city of Kamloops, and other municipalities individually, have written in support of these recommendations; and also the select standing committee - it was an all-party committee on municipal matters which was a product of this House - in dealing with this matter three years ago.

Now it was said by the member for Nanaimo (Mr. Stupich) yesterday that we did not consult with the UBCM before developing this bill. Mr. Speaker, that is not correct. I just want to inform the House that we did, at the request of the UBCM executive, meet with

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them and discuss matters, and we received some of their recommendations with regard to assessments.

Mr. Speaker, the member for Oak Bay (Mr. Wallace) stressed the fact that he was concerned about the four options being presented to municipalities. He said there were too many of them and they would have too much latitude. On the other hand, the Liberal leader (Mr. Gibson) not only suggested there were too many options, but also disregard with options altogether. He said we should have flexibility in the mill-rate system instead of flexibility in the assessment system.

Well, Mr. Speaker, we already have options. The municipalities have two options in the present system. The primary purpose here is to assure the municipalities that they do have the flexibility. Really the objective in all of this is to arrive at an equalization within any municipality which does not exist at this stage.

Mr. Speaker, reference was made to page 22 of the McMath report and the inference that property tax in British Columbia is the highest on a per-income basis in Canada. No mention was made of the fact that these figures do not reflect the homeowner grant. They indicate a percentage of 4.9 per cent of personal income for British Columbia, the highest of any province in Canada. If you were to deduct the homeowner grant from this figure, I would estimate that percentage would be something like 2 per cent less, approximately - or roughly 3 per cent - of per capita income, which reduces British Columbia, on a table of provinces, to one of the lowest in Canada in terms of paying property taxes related to personal income. This is completely different from the allegations which were made earlier.

Another question raised by the member for Oak Bay was the reference to why we don't use the term "market value" and use instead the term "actual value." That is embodied in the clause in both the former Act and the one being presented, wherein the term actual value is normally used, because the determination of values is a combination of factors. In some cases, Mr. Speaker, it involves an average of recent sale prices in the vicinity of one's home, which could be determined as being an average market value. But in many other cases, that kind of information is not available. They are types of properties where market value, in fact, is not a category. For instance, there is railway trackage or other types of things, in which case you have to come down to a common term which answers all questions. That means that sometimes market value cannot be the determining factor; therefore, the term "actual value."

Concern was shown by the member for Oak Bay that the three-year phase-in period should be longer. Mr. Speaker, there is flexibility to adjust this three-year period if it does become necessary. This can be reviewed at the end of the three-year period if extreme hardship is indicated in what has taken place. I just wanted to indicate that the whole thrust here is flexibility and it is subject to later adjustment.

The same member asked about the classification system. If a person considers he's been misclassified, can he appeal? The answer is, yes, Mr. Speaker. As a matter of fact, there is such an appeal procedure in the present Assessment Act.

Just a brief comment, Mr. Speaker, on the other items in the McMath report which, after considerable review, have received favourable consideration. I mentioned earlier that the Act itself embodies most of the items reflecting assessment changes, but not some of those reflecting taxation or other changes because they would not be reflected in the Act. For instance, recommendations regarding appeals have been adopted, as have amendments, which I will place on the table after second reading, affecting broadening the powers of assessment appeal boards.

A simple item like simplifying the assessment notice - a lot of study has been given to this and, in fact, new simplified notices are being adopted.

The comment on elimination of one-man review boards - this is favourably received and we've moved in this direction. That's not possible, I presume, to show in the Act.

There was one other comment by the Liberal leader. He wanted to know the effect of the move to 100 per cent basis of assessment on land and improvements. Improvements formerly were based on 75 per cent and land on 100 per cent. He asked what the effect of this would be. About all I can say at this stage is it is obviously going to favour in the relationship the proportion related to improvements because the improvement value goes up and the total of all the assessments stays the same. I want to emphasize that in projecting this new system it is not intended that the total assessable roll will increase any more than a very small degree from year to year as required in the necessity to raise the roll for normal circumstances.

MR. WALLACE: How are you going to test it?

HON. MR. WOLFE: Mr. Speaker, the member for Oak Bay comes down to the question of testing. He showed a lot of concern about that earlier. He was not here earlier when I commented, I think, earlier on the matter of testing. I'll just say this: the testing procedure really comes down on the reason why it is necessary to have cabinet approval of these rates to arrive at the conclusion that the total assessed value of any class will not change to any degree from the way it is now. Because these assessment rolls are changed every year, and even during the year they are being updated.

So we have had before us - I am referring to the

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cabinet committee on property taxation which has been meeting for some months - continually updated assessment rolls based on the new actual values, even as recently as this week. We are only going to base the determination of these final percentages on the final updated actual roll. That is what I refer to as being testing, testing also being represented in the impact on individual school districts throughout the province. We now have these available, and they are going to be made available on request to the members of the House for any district that they want to request in the very near future.

I indicated that our intention was that as soon as this bill proceeds to royal assent, if it does, right away all this information will be distributed to the municipalities. At that occasion these will be available also to the members.

Mr. Speaker, I think that sums up the questions that needed answering. I think the opposition parties are finding trouble in finding a reason to oppose this bill, because they know that it's basically necessary and correct. Notwithstanding that, it's very necessary legislation because we are now faced with assessments that are some five years old in terms of being frozen. This is an effort to present a fair assessment, a fair property tax base for all citizens of this province, and that's the thrust of this bill. I move second reading.

Motion approved on the following division:

YEAS - 26

NAYS - 16

Division ordered to be recorded in the Journals of the House.

Bill 31, Assessment Amendment Act, 1977 (No. 2) , read a second time and referred to Committee of the Whole House for consideration at the next sitting of the House after today.

HON. G.B. GARDOM (Attorney-General): Second reading of Bill 70, Strata Titles Amendment Act, 1977.

STRATA TITLES

AMENDMENT ACT, 1977

HON. H.A. CURTIS (Minister of Municipal Affairs and Housing): Mr. Speaker, from the date of the introduction of this bill in the Legislature on June 24, it is intended that no strata subdivision of land - a support-structured strata plan - regardless of the number of lots to be created, can be registered in the land registry offices of the province unless approved by the approving officer, as defined in the Land Registry Act within the provisions of that Act.

Mr. Speaker, in 1975 the Land Registry Act was amended to allow the subdivision of land under the Strata Titles Act - support-structure strata plans -without the approval of the approving officer. On reflection that move of 1975 is to be regretted.

From time to time in recent months, a number of members of this House have learned of a number of support-structure strata plans with four lots or less being created around the province. In some instances, Mr. Speaker, there was a potential of very large areas being subdivided in this manner, completely contrary to local, community or regional planning directives, and obviously against the wishes of residents and citizens of a particular area, as well as the local government jurisdiction concerned.

On March 10,1977, orders-in-council were passed by the executive council proclaiming the provisions of the Real Estate Act, which made the requirement of a prospectus necessary before strata lots could be sold. This essentially controlled the sale of support structure strata lots. However, the requirement did not apply to strata plans where there were less than five lots.

Mr. Speaker, as you and the hon. members know, major amendments to the strata titles legislation of this province are contained in another bill which will be debated in due course. The single purpose, therefore, of this Bill 70, is to stop the practice of the subdivision of land in contravention of local government bylaws and without the approval of the approving officer. I move second reading.

Mr. Barber moves adjournment of the debate.

Motion approved.

MR. SPEAKER: Hon. members, I have a decision concerning a question of privilege. Last Thursday the hon. member for North Vancouver-Capilano (Mr. Gibson) rose on a question of privilege which he stated to be one affecting the performance of duties by members of the House. I note, however, in the

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final paragraph of his statement, the hon. member states: "Unlike a question of privilege, which is ordinarily an individual case and must be taken at the earliest opportunity, these contempts are continuing and may be raised at any time."

The hon. member cites no authority for this statement, but it indicates that it should distinguish between breach of privilege and contempt. The distinction is well expressed in the 16th edition of Sir Erskine May's Parliamentary Practice on page 43:

"Each House also claims the right to punish actions, which, while not breaches of any specific privilege, are offences against its authority or dignity, such as disobedience to its legitimate commands or libels upon itself, its officers or its members. Such actions, though often called 'breaches of privilege' are more properly distinguished as 'contempts.' "

In support of this claim, the hon. member cited a number of instances of tabling of reports at dates later than the date required by statute. These instances included the following: (1) an annual statement required by March 31,1976, under the Capital Improvement District was tabled April 27,1976; (2) an annual report required by April 1,1976, under the Debtor Assistance Act was tabled June 1,1976; (3) annual reports required by April 1,1976, and January 28,1977, under the Department of Highways Act were tabled April 5,1976, and March 16,1977, respectively, and so on with a number of other instances.

The hon. member has not alleged that he, or any member of the House, complained at an earlier date and, in particular, on or shortly after the date when the subject reports ought to have been tabled. It seems to me that if any member felt impeded in the performance of his duty by reason of late tabling, complaint would have been made before August 4, 1977. It is not for the Speaker to condemn or condone any failure to meet statutory deadlines for tabling of reports, but I must determine, as observed by Speaker Dowding in the 1975 Journals at page 43:

"If the matter is one calling for intervention before proceeding in the normal business of the day - that is, a prima facie breach requiring immediate interposition - I must also determine if the matter has been raised at the earliest opportunity. See May, 17th edition, at page 378."

The Journals of the House disclose other cases of late tabling over a period of years, and it has been held that the House will punish in one session offences that have been committed in another, and that the breach of privilege in one parliament may be punished in another succeeding, if it is readily apparent what the result might be if the House is called upon to immediately abandon its scheduled order of business.

In view of the long delay in raising this matter and the fact that it does not appear that the hon. member for North Vancouver-Capilano (Mr. Gibson) made an earlier complaint that he was being impeded in performance of his duties, I cannot conclude at this late date all other business of the House shall immediately be set aside to debate the matter.

It is clearly a situation calling for the hon. member for North Vancouver-Capilano to pursue the matter further by notice of motion, should he so desire, and I so rule.

Hon. Mr. Gardom moves adjournment of the House.

Motion approved.

The House adjourned at 12:59 p.m.