Like Vancouver's so-called Empty Home Tax, it would penalize many owners of second homes, and add to the tax bill of house-rich seniors and others living in more expensive homes. In other words, it seemed like the budget would tax the so-called rich to pay for the poor. Like Robin Hood....hence this follow up column.
“To ensure information security… smartphones… will not be permitted in the briefing area and must be checked in at the media registration desk.”
It was with this understanding that I arrived at the Canada Place provincial cabinet offices for last week’s media lock-up budget briefing.
Earlier that morning, I had written a Courier column reviewing the NDP and Green Party election promises, government announcements and throne speech related to housing affordability.
Following the briefing, and Finance Minister Carole James’ presentation, I wrote a follow up Courier column headlined “B.C Budget: A good start to tackling housing affordability crisis.”
My concluding paragraph summarized my sentiments. “Given the severity of the problem, it is going to take a long time before we will see any significant improvement in the level of housing affordability in the Lower Mainland. However, this budget is a good start, especially for those in greatest need.”
My reasons were as follows:
- Between $6 and $7 billion would fund delivery of 114,000 affordable homes over the next 10 years through partnerships.
- A $378 million investment over three years would support 14,000 rental housing units for middle income seniors and families.
- An additional 2,500 new homes with 24/7 care would be built for the homeless or those at risk of homelessness.
- Rental assistance payments for low-income families would increase $800 a year and Shelter-Aid for Elderly Renters (SAFER) payments would increase $930.
However, as I added up the budget promises to address housing affordability and other social program costs, a question crept into my mind. How was the government going to pay for all of this?
According to the Budget and Fiscal Plan, it would crack down on tax cheaters and speculators who kept homes vacant. It would increase the foreign buyers tax from 15 per cent to 20 per cent and expand its geographic application. It would also take actions to end hidden ownership and move to stop tax evasion in pre-sale condo assignments.
There would also be a two per cent increase in the Property Transfer Tax for that portion of a new home price above $3 million and increases in the school tax rate on the value of homes over $3 million.
Again, these all seemed like good initiatives.
While I was concerned the budget did not include any real measures to improve municipal approval procedures and the delivery of new housing, I now have new concerns.
The additional Property Transfer Tax will apply not only to $3-million homes, but to most development sites, adding to the cost of all housing
It appears the Speculation Tax will mimick Vancouver’s unfair Empty Home Tax and have similar negative consequences by imposing punishing taxes on those who invest in parts of the province by keeping second homes. Imagine if all the second homes in Whistler or Saltspring Island are taxed as “speculative vacant properties.”
The impact of the school tax increase is much greater than first appreciated. West Side seniors owning properties worth more than $3 million will see their tax bill rise. Already some are complaining.
As a result, there is a growing “empathy gap” between those who cannot afford to rent or buy anything and those complaining about tax increases on their multi-million-dollar homes.
Some analysts now worry that if the culminative effect of the new taxes has the desired effect, the province will not receive the revenues needed to fund the affordable housing.
I worry how the province will fund a likely dramatic increase in deferred property and school taxes.
As children we delighted in the story of Robin Hood, who supposedly took from the rich to give to the poor. Years later, we discovered many parts of that story were fictional.
Budget 2018 also appears designed to take from the rich and give to the poor. Let’s hope it too doesn’t turn out to be fictional with little impact on B.C.’s housing affordability.