Proposal for a Voluntary Conservation Tax Incentive Program (CTIP): Summary

Proposal for a Voluntary Conservation Tax Incentive Program (CTIP): Summary

January 2016

In response to rising development pressure on valuable natural areas in B.C.’s gulf islands, the Natural Areas Protection Tax Exemption Program (NAPTEP) was initiated in the early 2000’s through amendments to the Islands Trust Act. Since then it has been implemented with the consent of the Capital, Sunshine Coast, Nanaimo, Cowichan Valley, Comox and Powell River regional districts in their island areas.

NAPTEP is a fully voluntary program which offers 65% tax exemption for land which is protected by a conservation covenant under the Islands Trust Fund. Qualifying land must have special features such as undisturbed natural areas with important ecosystems. Landowners applying for NAPTEP are responsible for payment of covenant initiation costs which may range from $2,500 to $12,000. Covenant holders, such as land trusts, are responsible for ongoing monitoring costs.

Since its inception the NAPTEP program has enrolled a total of 23 properties (about 2 - 3 properties per year) with a total land area of about 75 ha. The level of NAPTEP enrolment reflects the fact that NAPTEP provides only a moderate financial incentive to landowners who are considering a conservation covenant. NAPTEP is, however, likely to be a positive factor for landowners who would otherwise be undecided about the overall benefits and costs of long-term conservation of their land.

There is no provincial cost for compensation to local governments for NAPTEP tax exemption. Furthermore there is no loss of provincial or local government tax revenue as a result of the program. Instead there is a small tax shift from NAPTEP properties to all other properties in the tax pooling area (which varies by type of tax). The impact on non-NAPTEP properties is very small, estimated to be in the range of a few cents up to a couple of dollars per property per year, much less than normal year-to-year variation in property taxes due to other factors.

The B.C. Government’s “Protecting Vulnerable Species: Five-Year Plan for Species at Risk in British Columbia” recommends the adoption of “new ways (including incentives and possible project funding) to promote voluntary protection of species at risk.” In response, discussions are underway among some provincial ministries regarding the development of a conservation tax incentive program.

Nova Scotia and Ontario both offer 100% property tax reduction for land conservation, with full or partial provincial compensation for local governments for reduced property taxes.

These programs are reported to be popular and seen by the provincial governments as a cost effective means of achieving natural area protection. U.S. legislation allows donors of conservation easements to deduct a portion of the value of the easement from their income tax.

In 2011 the UBCM passed a resolution from the Sunshine Coast Regional District requesting the province to enable local governments to implement conservation tax incentive programs. A similar resolution was presented to the 2015 UBCM convention by the Comox Valley Regional District and was also passed unanimously.

Recommendation

BC should adopt a province-wide “Conservation Tax Incentive Program” (CTIP) based on the successful NAPTEP. The proposed CTIP would be fully voluntary for local governments, land owners and land trusts. Based on the model of Nova Scotia and Ontario and considering the low tax shift impacts of NAPTEP and the need to create active participation in the program, the CTIP should offer a 100% tax exemption for land under a conservation covenant.

Other implementation issues should be addressed by the provincial government, in consultation with local governments and land trusts, in the process of developing a CTIP program.