Opponents of speculation tax take no time off for summer
There will be no summer slowdown in the Okanagan assault on the province’s proposed speculation tax.
This week, in a four-page open letter to NDP Premier John Horgan, West Kelowna Mayor Doug Findlater demanded the community be exempted from the tax.
West Kelowna has held this position since the tax was introduced in February’s provincial budget.
The tax, scheduled to take effect this fall or in early 2019 in West Kelowna, Kelowna, Vancouver, Chilliwack, Abbotsford, Victoria and Nanaimo, would see an extra annual levy of 0.5 per cent for British Columbians, one per cent for those from the rest of Canada and two per cent for foreigners.
In Kelowna, where the average selling price of a single-family home is $725,000, the tax would be $3,625 a year for British Columbians, $7,250 for buyers from elsewhere in Canada and $14,500 for foreigners. That’s on top of regular property taxes and any strata fees.
It would apply to any property that isn’t the purchaser’s primary residence and sits empty for more than six months a year.
The government’s reasoning is the tax will moderate overheated real estate markets, and increase affordability and inventory of rental accommodation.
Victoria’s hope is buyers of vacation and investment homes will think twice before purchasing, reducing demand for housing and thus bringing down the price of real estate, which is at record highs.
And if they do buy, instead of the house or condominium sitting empty most of the year, they will rent it out when they aren’t using it to help ease the rental crunch.
At the recent B.C. Chamber of Commerce annual general meeting in Kamloops, a Kelowna chamber resolution to press the pause button on the tax was supported unanimously by the more than 20 community chambers that make up the organization.
Talk of the tax has already damaged B.C.’s brand with Albertans who buy second homes, vacation homes and homes they hope one day to retire to in the Central Okanagan, according to the chamber.
“Recent halts in affordable rental developments prove this speculation tax is having a negative effect,” said Kelowna chamber president Carmen Sparg.
“It’s stopping projects that could have alleviated some housing demand pressures.”
Opponents say it isn’t a speculation tax at all because its not aimed at true speculators — those who buy property and flip it quickly to make a fast profit. Rather, they see it as an asset tax on a segment of the population that helps drive the economy in tourist destinations and big cities alike.
The chambers are also a part of the Scrap the Tax coalition of high-profile groups from across the province, including the Central Okanagan branch of the Canadian Home Builders’ Association, Okanagan and Capital Region (Victoria) branches of the Urban Development Institute, Peachland Chamber of Commerce, Tourism Victoria, Independent Contractors of B.C., Nanaimo Chamber of Commerce and Stop the Speculation Tax Petition (#StoptheSpecTax).
“We want the tax completely scrapped,” said Justin O’Connor in a previous interview with this newspaper.
He’s president of the Central Okanagan branch of the Canadian Home Builders’ Association and a real estate agent with Sotheby’s.
“It’s punishing the very people that support our economy. At the end of the day, it will affect all British Columbians in a negative way because it will slow the economy and lead to job losses,” he said.
“It’s unCanadian to create walls to investing and living in certain communities with this tax.”
The tax could put the brakes on otherwise healthy housing markets.
“If implemented, the B.C. government’s housing-related taxes, coupled with recent federal mortgage-tightening rules and interest-rate hikes, could be the tipping point that takes the market from a gradual downturn to potentially steep decline,” said the then-president of the Okanagan Mainline Real Estate Board, Tanis Read, in a statement in April.
“At the end of the day, these proposed housing-related taxes are bad for B.C. and, while they are aimed at enhancing affordability, they have the opposite effect, harming the very people the government is trying to protect and support.”