In September of 2017, the Union of BC Municipalities passed a motion which had been unanimously endorsed by Victoria council last June.
It called on the federal and provincial governments to “take action to introduce effective fiscal and taxation tools to encourage the use of residential property to provide housing, and discourage speculation, ‘flipping,’ commodity investment and other market distortions that contribute toward a sharp escalation in the price of housing.”
Did we get what we were asking for?
In its February 2018 budget, the NDP introduced a “speculation tax” and recently further clarified the terms of the tax. It targets non-Canadians, Canadians and British Columbians who don’t live in their houses full time with a two-per-cent, one-per-cent and 0.5-per-cent tax, respectively. According to a Ministry of Finance info sheet, “Homes will need to be rented out for at least three months to qualify for an exemption in 2018. Starting in 2019, homes will need to be rented out for at least six months, in increments of 30 days or more, to qualify for an exemption.”
The NDP is in a tough spot. They’re left with a legacy from the Liberals. Under their watch, British Columbia was prosperous and the economy strong, yet housing became extremely unaffordable to the very people who keep the economy growing – construction workers, teachers educating future generations, the people serving our morning Americanos and fixing our cars. I attend the Chamber of Commerce CEO breakfasts regularly, and the number one concern I hear from business people is that they have a hard time attracting workers because of the housing costs in our region.
But is the pendulum swinging too far in the other direction, unleashing potential unintended consequences? The worrying thing is that we don’t know.
The provincial budget introduced a number of measures to combat housing unaffordability, including the speculation tax. Will these policies have the desired effect? It’s incredibly important to measure.
I’ve spoken with the finance minister; the government is going to hold firm on the speculation tax. The request we all need to make is that government measures and reports publicly on its impact.
Is it putting more units back into the rental market? Is it putting more homes on the market in the areas targeted? Is it slowing down building altogether, thus hampering the development of much-needed supply? What about that young couple in Victoria looking for a home to buy – is it easier?
Any government that wades boldly into new territory has an extraordinary responsibility to measure and report on the impacts of their policies. The government must also have the courage to course correct if the policies they’re unleashing create unintended negative consequences.
Lisa Helps is mayor of the City of Victoria.