Attempting to get clarity on the BC NDP “Speculation” Tax
Today in Question Period I took the opportunity to see if I could get more details from the Minister of Finance on the BC NDP’s so-called “Speculation Tax”.
Last week I was very critical of the way the BC NDP introduced this tax. Ironically it doesn’t even address speculation in the real estate sector.
I remain unconvinced that the BC NDP know what outcome they are trying to achieve with their tax measure. It’s clear to me from the Minister’s responses to my questions (reproduced in video and text below) that they don’t understand the difference between a vacancy tax and a speculation tax. In fact, under the Vancouver Charter, that city have already imposed a vacancy tax.
A better way forward would be to enable all local governments (not just Vancouver) to introduce vacancy taxes if they felt it was in their community’s interest. At the same time, a speculation tax could be applied exclusively to properties owned by offshore individuals and entities, the bare trust loophole could be closed and a flipping tax could be applied when the same property is sold multiple times in a short time period.
Fortunately there is still time to fix what the BC NDP have proposed.
Video of Exchange
Question
A. Weaver: There’s no doubt that we need to take bold action to address the drivers in our housing crisis. A fundamental component of this is clamping down on speculation. But the government’s botched speculation tax doesn’t in fact target speculation.
A speculator is someone who buys a property solely to flip it. A speculator is someone who parks offshore money in our real estate, hoping to protect themselves from the turmoil in global markets. A speculator is someone who uses bare trusts to avoid paying property transfer taxes, thereby allowing multiple sales and resales with no change in title.
A speculator is not someone who pays taxes here and owns a vacation cottage. These folk are not trying to capitalize on our out-of-control housing market.
My question to the Minister of Finance is this. The minister has said that her aim is to make sure she gets speculators out of the market. Does the minister consider British Columbians with vacation homes to be speculators? Or will she ensure that they are fully exempt from this tax? If so, how will she do it?
Answer
Hon. C. James: Thank you to the member, the Leader of the Third Party. I appreciate the question, and I appreciate his support for a speculation tax.
We were left, in this province, with a crisis when it comes to the housing market, because the other side ignored the issues and the crisis that people were facing around affordability. We’ve seen rents skyrocket. We’ve seen families who can’t afford to live in the community that they work in. So our goal is to ensure that British Columbians can afford to work and live in their own province.
We’re including measures in the speculation tax that will protect British Columbians. We are looking at getting people out of the market who are using our housing market as a stock market. The specifics will come. We’re continuing to listen to the issues that people raise, including the member at the end. We will make sure that housing is affordable for British Columbians. That’s our aim, and that’s what the speculation tax will do.
Supplementary Question
A. Weaver: The government has had years to consult with British Columbians. Instead, it brings in a poorly thought out tax measure whose interpretation seems to change every time the minister or Premier is in a press scrum.
As far as I can understand from the tax information sheet still on the government’s website, British Columbians with second homes have to pay the tax, and then they get a non-refundable tax credit after the fact. Low or moderate-income British Columbians will, in many cases, not even be able to use the tax credit. But if you’re very wealthy, you get the full benefit of the credit. That doesn’t make any sense. It penalizes people with moderate and low incomes and further entrenches the idea that home ownership is reserved only for the wealthiest.
Hon. Speaker, my question, through you to the Minister of Finance, is this: will the minister reconsider this tax credit model to ensure that British Columbians with vacation homes are actually protected from the effects of this speculation tax?
Answer
Hon. C. James: I would say to the member, once again, that we introduced the speculation tax as part of our 30-point plan to address affordable housing in British Columbia. I said in the budget lockup and on budget day that the details would be coming. We are listening to British Columbians, including the member and other people who have put forward ideas. We have been working on those issues since we introduced the speculation tax.
The specific concerns that the member raises are issues that are already on the table, which we are reviewing and looking at as we implement the tax. As I’ve said all along, details will come. The aim is to make sure that we get speculators out of the market.
I would say to the member that if you are an individual who owns four empty houses and you’re leaving them vacant in Vancouver, you are speculating in the housing market. We will be addressing that, and we will be addressing affordable housing for British Columbians.
12 Comments
This proposed tax is pure insanity. Period. The NDP apparently has no conception of the serious negative consequences of this most unfair tax. Even the exemptions regarding rentals are totally ridiculous. Does anyone really think that a retired, or semi retired person or couple is going to rent out their property for 6 months and move all their personal items such as clothing, bedding, toiletries, computers, cutlery, utensils, photos etc.etc. back and forth every time they rent and then return for their personal use ? In addition, renting a property is not for the inexperienced landlord, and requires a lot of time and expertise.
And how does renting a place valued at $700-800,000 for let’s say $4000.00 a month going to assist those in need of affordable housing. The reality is that most affected will sell their property, which will do untold damage to the real estate market and the economy in general, and which will result in very little, or no revenue raised as a result of this tax. Brilliant !!
This tax has to go!! And so does the NDP !!!
Seems we could be caught in an “interesting” situation with regard to this ‘speculation tax.’ We own two homes outside Vancouver. We live in one and rent out the other. If I understand correctly, we will be forced to pay ~$6000 per year for the one home (or ~$24,000 for the other) with the expectation of a tax refund in the next year. We don’t have that cash on hand so will have to borrow it. A simple interest calculation shows $350/year (or $1,200/year) to borrow that money. So, we now have to pay somewhere between $350 and $1,200 a year because for years the government let foreign buyers with suitcases of questionably legitimate money buy homes in Vancouver?
We’ve raised these concerns directly with the Finance Minister.
Thanks for pointing out the absurdity of this tax. Seems like it’s designed to destroy the economies of the Gulf Islands and similar small rural communities. If it’s truly about “foreign” speculation in the real estate market, why isn’t Whistler included? There’s a lot of good people that work in various small businesses that will suffer from this, the predictable side effect of that most useful tool that government always reaches for first – taxation.
Anyway, what more can be said on this topic? It seems like all we can do now is shake our heads and marvel at the strange decisions of our elected and unelected bureaucrats. No ridesharing services, check. Aged, and unsafe road infrastructure in our urban centres, check. A government hell-bent on increasing the tax base and densifying without providing the required transit infrastructure, check. Government employees that receive above inflation salary increases, and have a taxpayer funded defined-benefit pension plan to look forward to, who then have the audacity to call people with a multi-generational cabin on a Gulf Island “Privileged”, subject them to an extortionate tax, and essentially force them to rent their own sovereign property back from the government.
Kinda sad really. BC is getting a reputation for being a taxed, unpredictable, big-government welfare state. And to the rest of Canada, you’re all “foreigners” to us, and by the way, we’re closed for business.
I too want real solutions from my government and not misguided and poorly thought through tax grabs. It seems our government wants to make it even harder for BC’ers who work hard all their lives to enjoy the retirement dreams that they deserve. The NDP are showing that they don’t care about us and instead are bullying their way into our pocket books and hard earned savings. This tax is overly punitive on the wrong people and not properly thought through. The NDP just lost my future vote and I hope this tax issue flushes out the people in government that should not be making decisions on all of our behalf.
Keep the speculation tax and bring in the flipping tax. If you own two homes but only live in one you should be penalized. Homes are for living in and we all deserve a home for life enrichment. What we need to address are the easy bank loans and why banks have a higher debt ratio than savings. Banks shouldn’t be allowed to give out so much credit.
Andrew, you should have teamed up with the Libs when you had the chance. Apart from the Green Philosophy which I support, the ethos of the Green Party is more to the right of center than the NDP leftism. Wrong team Andrew plus there is not a workable majority as would have been the case with a Lib coalition. All that being said, please get us out of this NDP idiocy re the proposed Speculation Tax
Here is a new point of view….My friend works in Alberta but lives here in BC. He brings his Alberta income back to B.C. where he pays B.C. provincial income tax. With the newly declared war with the rest of Canada I’m sure the next shot fired in this tax war will be the Alberta Premier kicking out out-of-province (B.C.) workers from the oil patch. If you don’t pay Alberta Income Tax then you are not welcome to work here!!!!! GO back to B.C. This war is going to spill over in ways we can’t even imagine yet. THIS TAX MUST BE STOPPED AT ALL COSTS!!!!!
Further the idea of a tax credit on the first $20000 is absurd.
I did a rough math on a person who makes $60k a year and pays about $415 BC tax would still end up paying an extra $9585 Tax on a assessed value of $500k.
Or the same person with a trailer on a lot with an assessed value of $250 k
still paying $4585 extra tax above the regular property tax
This will make it so only the very wealthy can afford a 2nd anything in BC and the lower and middle class are pushed out of a cottage or similar home.Tax credits are useless if you cant use them…..
Thank you Andrew Weaver for pointing out to the NDP that this is a wealth tax grab and not a speculation tax.I like many thousands of BC residents bought my home not for speculation but for enjoyment of the outdoors and lake.The home which is not in the Capital region fortunately was not bought with money in mind but enjoyment.
A better policy would be to not remove the bridge tolls ,can site C
and divert the largest dollars possible into building social housing on a massive scale.Also to encourage municipalities to zone more land to rental builds only,as well as get developers to condense zoning for rentals.Further encourage developers to build rentals
by offering say a ten year reprieve from rental controls as Ontario once did.creating supply and less luxury homes is the key.
Dr. Weaver: “Ready, Fire, Aim”
This link above is to a post I made on the “pricetags” blog. ( https://pricetags.wordpress.com/2018/02/21/a-modest-proposal-on-b-c-real-estate-and-taxation/ )
I would be more than pleased to discuss this with you. Below is the text of a follow-up comment I made on the blog.
Ron Usher Parksville/Vancouver
604-562-2487
“My post was written before we knew about the “Speculation Tax” in the BC 2018 Budget. Much has been said about the term “Speculation”, in particular as it applies to other Canadians. I have been concerned about the use of this highly charged word – but perhaps it is the right word to use.
Turns out it is a “speculation” tax – Speculation by the government.
Definition #1 applies, not #2.
From Google’s dictionary:
“1. the forming of a theory or conjecture without firm evidence.
2. investment in stocks, property, or other ventures in the hope of gain but with the risk of loss.” “
This tax is so unfair. My small summer cabin on Mayne Island is not suitable for year round housing. Mayne Island has ferry service to the lower mainland but the cost for car and driver is much to high to commute. The service to Vancouver Island is much less but the ferry schedule would not facilitate workers. Yet similar cabins on the Malahat Shawnigan Lake and Duncan are exempt. It is quite reasonable for workers to commute from these areas. This is not what I voted for. We want real solutions not misguided and poorly thought through tax grabs.