In the Ministry of Finance budget estimates yesterday I had the opportunity to question the Finance Minister on a number of topics concerning the recently proposed speculation tax.

Below I reproduce the text and video of our exchanges.

Text of exchange

A. Weaver: I have a number of questions, just to follow up on this theme. I thank the members for Prince George–Valemount and Surrey–White Rock for canvassing this issue. A couple of these questions have been addressed, but I’d like to develop the narrative just very briefly.

I’ll start off by saying I understand the issue that the minister is addressing. The housing market has got out of control through wanton speculation. I do understand that it is the government’s prerogative to choose the means and ways to deal with it.

The approach the government has taken is not the approach we would have taken. Nevertheless, we agree to disagree on this, and we do support government’s effort. I will say that our approach would have been to actually address taxation after sale of a property, when people had the ability to pay, as opposed to upfront with respect to a paper value.

With that said, I also want to thank and commend the minister for listening to the concerns that we’ve brought to her from a number of areas and issues. I just want to canvass two more of these areas and see what she says.

The first question to the minister is this. With respect to the intention of the speculation tax, is the intention of the speculation tax to reduce the number of homes being left empty by encouraging people to sell or rent, or is it to generate revenue?

Hon. C. James: I think the member has hit on a very important point. I would be thrilled if we saw all of these properties become rental properties and some people not having to pay the tax, because that would be, in fact, the achievement of providing more housing in these communities that have an almost zero vacancy rate.

I think, as I said earlier, we have been conservative in our numbers when it comes to the tax revenue coming in, because we don’t expect that everyone will look at renting their places out. But we have been conservative in those numbers for precisely that reason, because the hope and the encouragement is that people will actually utilize their empty, vacant properties to be able to increase the supply of housing in communities.

A. Weaver: The follow-up question, then, is with respect to the budget. The question is: why is the government anticipating flat revenues, then, from the speculation tax? Shouldn’t they be expecting a diminishing amount over time if the speculation tax were to take the effects that the government is hoping it would take?

Hon. C. James: Thank you to the member for the question.

I think it’s important to note, and we’ve talked about this on other taxes, that it’s important to be able to see behavioral change to be able to build into the budget. I expect that there will be adjustments after the tax is in place and after we start seeing behaviour.

If adjustments need to be made in the budget, the adjustments will be made in the budget. But we certainly expect that there are more vacant homes that are going to be not rented out that will continue to bring in tax revenue. But adjustments that need to occur can occur, and that’s why we build improvements in the budget, as we go along.

A. Weaver: I’d like to switch, then, to land that’s proposed to be under development.

Now, I’ve heard a number of concern. I’ve met with a number of developers, both here in Victoria and Vancouver and other areas, with respect to the problem that could arise if the speculation tax is applied to undeveloped land. The scenario you might imagine is a builder acquires some land, is now waiting — in some cases, a couple of years — for a permitting process to go through with the local municipality. The speculation tax starts to get involved.

The actual builder or developer has to face one of two choices. Do they pay this up front, and then that, ultimately, would be passed along to the buyer — which actually goes against government’s mission and mandate to try to create affordable housing — or do they walk away from the project because it’s just not worth the hassle.

My question with this is: will the speculation tax, as implemented, be dealt with in a way similar to the way that Vancouver has addressed the vacancy tax, by ensuring that developers aren’t liable to pay the tax in specific cases where land is being collected and put in a process for development?

Hon. C. James: Thanks to the member.

We certainly have been engaged in those discussions. I think the member points out the Vancouver model. I think one of the discussions…. We’ve been working with UDI, we’ve been working with the Canadian Home Builders Association, the urban land initiative — there are a number of groups that we’ve been working with — to look at exactly the kinds of challenges that the member raised.

There are different development timelines in different communities. Some require an upfront consultation with the community before the development permit is even issued. Others require the development permit and then out to do the consultation. So we’re looking at all of that as part of the implementation. There will be an answer shortly.

We’re working with those groups to make sure that we capture all of those kinds of examples that the member raised.

A. Weaver: I have two final questions. The last one on this topic is that one of the key things, of course, in the industry is uncertainty. Uncertainty creates turmoil in businesses. I know some examples of projects that are on hold because of this uncertainty.

My question is: when can developers expect certainty on whether or not they will be subject to this tax?

Hon. C. James: Thank you to the member for the question.

We certainly recognize that. People are eager to know all of the final details. We want to make sure we finish up these consultations and take into account all of the examples. So “soon” is what I would say. I certainly hope before the summer that we’ll have all of this wrapped up and have the details out.

A. Weaver: Thank you to the minister for the answer. My final question is with respect to secondary suites. Now, I’m not sure whether these are covered or not, so my question is: if the intention of the speculation tax is to actually reduce the number of homes being left empty, are these situations included now, or is there a way of exempting them from the speculation tax?

Let us suppose that I am somebody who lives in Victoria or Vancouver and I have a secondary home in Kelowna and that secondary home stands vacant. But now I put a secondary suite in that secondary home, and I recognize there’s an opportunity — an opportunity for income, safety for my house because I’ve got now somebody living in that secondary suite, and also I might perhaps eliminate the speculation tax.

Would a person who is subject to the speculation tax be exempt from the speculation tax if they were to create a secondary suite in their house that would not otherwise have existed were there not the speculation tax in place?

Hon. C. James: Certainly, it’s consistent with the intent, which is to make sure that people are renting their places out, so that would apply. They would be renting their place out.

Video of Exchange