Today the B.C. legislature sat for its fall session, and one of the key pieces of legislation on the table this season is the NDP’s proposed speculation tax.
The controversial plan is to impose an annual tax on owners of unoccupied second homes in Metro Vancouver, the Fraser Valley, Victoria, Nanaimo-Lantzville, Kelowna and West Kelowna by varying percentages, depending on the owner’s place of residence. The tax is intended to increase rental supply by exempting any homes that are rented out long term, and reduce speculation by disincentivizing overseas buyers – who would be charged the highest annual rate of two per cent – from parking funds in empty homes in these areas.
Two-thirds of those who pay the tax will be B.C. residents with second and vacation homes, finance minister Carole James confirmed in May – but she added that 99 per cent of British Columbians will not pay the tax. The tax is expected to bring in about $201 million each year, of which $140 million is projected to come from overseas or out-of-province owners, and approximately $60 million from British Columbians, who pay the lowest 0.5 per cent rate, said James.
According to an Insights West poll, 81 per cent of B.C. residents said they were supportive of the measure, which was announced in the B.C. Budget back in February. (And that was when the idea was for everybody who was liable, including B.C. residents, to pay the higher two per cent annual rate – the proposal was later scaled back by the finance ministry.)
Firmly in the “against” column are the real estate and development industry, and mayors in affected municipalities across the province. They have expressed deep concerns about how the speculation tax may damage new home development, tourism and the local economy, while doing little to help the housing crisis. Mayors at the Union of B.C. Municipalities conference in September were particularly vocal about their opposition, voting in favour of demanding the finance minister drop the legislation in its current form, and leave tackling speculation to municipal governments instead.
Political critics of the speculation tax, from both left and right, include Mike Harcourt, NDP premier from 1991 to 1996, as well as the more right-leaning Brad Wall, Saskatchewan premier from 2007 to early 2018. They said in June that the B.C. speculation tax will fail in its aim to improve housing supply and is helping destroy the province’s reputation as a place to do business. “B.C. is starting to mean ‘bring cash’,” Wall added.
Also against the tax is opposition Liberal leader Andrew Wilkinson – no surprise there – who called the speculation tax “phony,” saying it puts British Columbians’ homes and family cabins at risk and could exacerbate the housing crisis if new homes don’t get built. But also slamming the proposal the NDP’s supposed ally the Green Party, whose leader Andrew Weaver has described the tax as a misnamed empty homes tax that is unlikely to help improve housing affordability.
Both Wilkinson and Weaver backed the UBCM mayors’ demand to scrap the tax in its current form. But whether the two parties will be able to come together in this fall session in order to defeat the bill is another matter entirely.
In the meantime, whether you agree with the tax or not, it looks like finance minister Carole James is determined to push through her pet legislation this fall – no matter how stiff the opposition.
My bet? James will most likely see the current tax proposal succeed in all its flawed glory, and the new law will be applicable from January 1, 2019.
Stay tuned for updates on the legislation's progress.