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Let us decide on speculation tax, local leaders tell province

B.C. Finance Minister Carole James delivers a budget update in the legislature. Sept. 11, 2017. (via Chad Hipolito, The Canadian Press Press

Local governments, not the province, should determine whether to impose a speculation tax on vacant properties, B.C. municipal leaders have agreed.

Delegates to the Union of B.C. Municipalities convention in Whistler have overwhelmingly supported a resolution put forward by Oak Bay calling on the province to replace the proposed speculation tax by giving local governments authority to collect a levy on vacant residential properties if they choose.

Local governments that impose the tax would be required to use the collected money on non-market housing.

Oak Bay Mayor Nils Jensen, who called the measure “a constructive, common-sense approach” to the province’s proposed speculation tax, said he appreciated the support from mayors and councillors across the province.

But Finance Minister Carole James said the provincial government plans to move ahead with the new tax.

“We are moving ahead with the speculation tax because as a government, we have a responsibility to tackle the housing crisis head- on and we are encouraged by the early signs of moderation in the housing market,” James said in an emailed statement to the Times Colonist.

“People in B.C. want their government to take action and bring the housing market back to balance. Poll after poll has shown overwhelming public support for our plan to bring fairness back to the housing market, and specifically for the introduction of the speculation tax,” she said.

Langford Mayor Stew Young, who supported Oak Bay’s resolution, said the housing market is already slowing down and the imposition of a speculation tax could send it into “free-fall.”

“If you put in a spec tax in a down economy, artificially, by the government, then you’re going to have a real problem. You’ll never recover,” Young said.

The tax is not needed, he said. “There is no speculation going on right now. There may be some empty homes so let’s go deal with those. Let’s not scare away Albertans and people that own houses in B.C. and who are investing in B.C.”

The speculation tax was announced in the Feb. 20 budget. It adds a surcharge on second homes that are vacant in certain communities, but provides exemptions if the property is rented at least six months of the year or is valued at less than $400,000.

Starting next year, owners who leave properties vacant would be charged a surtax of 0.5 per cent of assessed value for 2018.

That would increase to two per cent of assessed value in 2019 for foreign investors and “satellite families,” one per cent for Canadian citizens and permanent residents who don’t live in B.C., and 0.5 per cent for B.C. residents who are citizens or permanent residents.

The province describes “satellite families” as those in which the bread winner makes money offshore but uses that money to buy B.C. properties using the name of a wife, child or lawyer who is a Canadian citizen or permanent resident.

The areas to be affected by the speculation tax are the Capital Regional District, Metro Vancouver, the Fraser Valley, the Regional District of Nanaimo, and the municipalities of Kelowna and West Kelowna.

The legislation to enable the tax will be up for a vote in the legislature this fall, and it faces opposition.

Green Party Leader Andrew Weaver has said his party does not support the tax because it doesn’t address speculation, there are too many unforeseen consequences and it is administratively burdensome.

Jensen noted that the absence of Green Party support for the tax could have dire consequences for the minority NDP government.

“If he does that [a Green vote against the bill], the unfortunate result will be that the government will lose a vote of confidence because it’s a money item and then we’ll be into an election,” Jensen said.

– Bill Cleverley, Times Colonist