With files from Penelope Graham
British Columbia’s ruling NDP government has responded to the backlash from homeowners protesting the Speculation Tax (ST), with new details announced March 26 by provincial Finance Minister Carol James and Premier John Horgan.
Originally unveiled in the provincial 2018-19 budget within a 30-part housing plan, the ST had proposed taxing BC homeowners who don’t pay income tax to the province, 0.5 per cent of their home’s value in 2018, and 2 per cent in 2019 and forward. It applied to non-permanently-occupied secondary or vacation homes in Metro Vancouver, the Fraser Valley, Capital and Nanaimo Regional Districts (including the Gulf Islands), and the municipalities of Kelowna and West Kelowna.
While BC residents would get a tax credit to offset the bill, depending on how much income tax they pay in the province, all non-BC residents would be liable for the full tax. This parked a major outcry among owners of homes in the affected areas, many of whom say they aren’t speculators and cannot afford to pay the tax.
Vacation Regions Now Exempt
Policy makers have scaled back the tax’s reach, excluding the Gulf Islands and Juan de Fuca – popular vacation home destinations – and have introduced a new tax rate; British Columbians with secondary homes that remain vacant a minimum of six months per year in affected areas will pay just 0.5 per cent. Canadian citizens and permanent residents with BC properties who reside outside of BC will pay 1 per cent, while foreign purchasers will be taxed the full 2 per cent.
“Over 99 per cent of British Columbians will not pay the tax,” stated James. “Only those who hold multiple properties and leave them empty in our province’s major cities will be asked to contribute.”
Homeowners in Neighbouring Provinces Hardest Hit
Much of the initial backlash came from Canadians – many from Alberta and Saskatchewan – who own vacation homes in the province. They argued they’d be negatively impacted by the tax, with the worst affected likely to sell their properties.
Local districts had also raised strong objections, with Nanaimo, the City of Kelowna, and West Kelowna all registering their protests with the Horgan government over fears of lost tourism and development. West Kelowna’s council had stated it wants to be excluded from the new tax, though it remains within the affected area under the updated proposal.
Horgan, in response to Canadians’ concerns, stated the tax would neither be scrapped nor radically altered.
“My office has spoken to the Mayor of Kelowna as recently as [March 20],” Horgan stated at the time. “Minister James is responsible for the file and I have every confidence in her that she will be able to deal with the challenges that have been raised by some. I have to tell you there are a lot of people who are cheering us on and saying we have to stem the speculation.”
Real Estate Association Still Has Concerns
The British Columbia Real Estate Association released a statement in response to the tax changes, saying it’s “pleased to see more details of the proposed speculation tax,” but continues to have underlying concerns.
“We look forward to more answers as the speculation tax takes shape and more opportunities to minimize its negative impact in all affected areas for all homeowners who pay income tax in Canada,” states BCREA’s release.
“For example, homeowners in the city of Vancouver could potentially be charged twice for leaving their homes vacant: once by the city, and once by the province. Communities could face economic problems, due to fewer visits, less consumer spending, and lower housing prices.
The real estate association adds that development properties can also remain empty for years before work commences, and that those tax costs would ultimately be passed onto buyers of new builds, and calls for a formal, public consultation before the tax is officially rolled out.
Also read: Pat Carney slams Horgan government’s new Speculation Tax
