B.C. Premier Christy Clark says a proposed surcharge on housing is problematic.

B.C. Premier Christy Clark says a proposed surcharge on housing is problematic.

Housing affordability tax floated by profs to cool real estate jets

Proposed 1.5 per cent surcharge would shift money from investor owners to other residents, promote rental of vacant homes

A housing affordability surcharge is being proposed as a way to redistribute money from investment property owners – including foreigners and other owners of vacant homes – to other residents in the same participating city.

The UBC and SFU business professors behind the idea say it would be a modest step to restrain the upward spiral of house prices in hot real estate markets.

But more importantly, they say, it would spur investors to rent out now-vacant homes rather than merely using B.C. residential real estate as a place to park money.

The proposal for the B.C. Housing Affordability Fund would create a 1.5 per cent tax on the assessed value – a $1 million home would be charged $15,000 per year.

But it would come with a long list of exemptions to exclude most resident owners. Seniors receiving CPP or OAS wouldn’t pay, nor would veterans, the disabled or anyone who has lived in their own home for several years.

For others, the surcharge would be reduced for every dollar paid in annual income taxes by the owners, meaning the average working family in a typical home would likely owe nothing.

Non-resident owners of vacant homes would have their surcharge reduced by the amount of rental revenue they declare to the federal government.

“The targets are people who own real estate and leave it vacant and people who live here but essentially don’t declare much in Canadian income,” UBC’s Tsur Somerville explained.

Those targets would include Canadian investors who own condos in Vancouver but find it easier to leave them empty than rent them, as well as wealthy Chinese families where the wife and kids live here but pay no income tax while the father works in China.

“Our intention was not to make it explicitly about foreigners,” Somerville said.

“It was to make it about people who through their choices make housing more expensive for the people who are trying to live and work and carry on a normal life here.”

Each municipality would decide if it wished to participate and money raised within its borders would be redistributed there. The academics are split on whether it should be rebated equally to all Canadian tax filers within the city or geared more to those in greater need.

They estimate it could raise at least $90 million within Vancouver alone.

Premier Christy Clark praised the proposal but stressed it is problematic.

“It’s a good idea, but the execution is really hard,” Clark said.

“We are looking at it. It’s really complicated, though. If somebody goes away for a year, a university prof goes on a sabbatical at the University of Beijing, should we tax them? A senior citizen finds themselves in hospital for a long period of months, should we tax them?”

Greater Vancouver Home Builders Association CEO Robert de Wit said there’s no hard data to justify such a policy.

“It’s well-intended but it’s a bit of a harebrained idea,” he said, adding it would distort the market and create more problems than it solves.

“This could lead to a flight of capital, which is not a good thing for the country.”

B.C. Real Estate Association chief economist Cameron Muir said even the authors admit the proposal would do little to make homes more affordable for most buyers.

NDP leader John Horgan praised the idea as a way to collect needed data on real estate owners and “generate money for affordable housing by taxing speculators and profiteers while remaining invisible to British Columbians filing income tax, seniors living in long-time family homes and landlords.”

The province has signaled it intends to deliver some sort of reform to address housing affordability in the upcoming budget but without hammering down current real estate prices or the equity people have in their homes.

One possibility is an extra increment of the property transfer tax that charges luxury homes more when they change hands. Assistance for new home buyers or renters are potential uses of the extra  revenue.

Somerville noted PEI bans non-residents from owning ocean front property and said it’s high time for B.C. to at least gather more information on who owns real estate here.

– files from Tom Fletcher

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

(Black Press Media file photo)
Court-registered sex offender arrested for breach of parole in Langford

Cameron Ratelle returned to correctional facility after female youth approached at bus stop

Jerry Dyck plans to purchase a new RV to drive across Canada in, once it’s safe to travel again. (Courtesy BCLC)
Victoria man plans post-pandemic cross-Canada RV trip after $2M lottery win

Retired electrician bought the winning ticket in Duncan

Marc Porpaczy said he’s glad he delayed his daily walk with his dog, Juno, after a car crashed just outside his driveway just before 8 p.m. on Tuesday, Jan. 25. (Aaron Guillen/News Staff)
VIDEO: Dramatic crash highlights need for sidewalks, say Colwood residents

‘The residents have gone from frustrated to angry’

Crews with Discovery Channel film as an Aggressive Towing driver moves a Grumman S2F Tracker aircraft around a 90-degree turn from its compound and onto the road on Saturday, Jan. 23, 2021. It was the “most difficult” part of the move for the airplane, one organizer said. (Jenna Hauck/ Chilliwack Progress)
VIDEO: Vintage military plane gets towed from Chilliwack to Greater Victoria

Grumman CP-121 Tracker’s eventual home the British Columbia Aviation Museum on Vancouver Island

Residents of the Cowichan Valley decorated more than 55 vehicles with anti-racist slogans for a car rally in support of Cowichan Tribes on Saturday, January 24. (Kevin Rothbauer/Citizen)
Dozens join anti-racism car rally and virtual panel in Cowichan Valley

Provincial ministry and BC Green caucus issue joint statement detailing concerns

Jesse Savidant, 31, is wanted by the RCMP after failing to appear in provincial court in Nanaimo in December. Police warn Savidant should be considered violent. (Photo Submitted)
Warrant out for man accused of stolen property offences across Vancouver Island

Jesse Savidant did not appear for court date in Nanaimo last month, say RCMP

Rolling seven-day average of cases by B.C. health authority to Jan. 21. Fraser Health in purple, Vancouver Coastal red, Interior Health orange, Northern Health green and Vancouver Island blue. (B.C. Centre for Disease Control)
2nd COVID vaccine doses on hold as B.C. delivery delayed again

New COVID-19 cases slowing in Fraser Health region

The Pacific Rim National Park Reserve is urging visitors to stay on designated trails after a hiker became injured in an unsanctioned area last week. (Westerly file photo)
Injured hiker rescued in Pacific Rim National Park Reserve

“Safety is everyone’s responsibility.”

Provincial health officer Dr. Bonnie Henry talk about the next steps in B.C.’s COVID-19 Immunization Plan during a press conference at Legislature in Victoria, B.C., on Friday, January 22, 2021. Two more cases of the COVID-19 strain first identified in South Africa have been diagnosed in British Columbia, bringing the total to three as of Jan. 16.THE CANADIAN PRESS/Chad Hipolito
B.C. now has three cases of South African COVID-19 variant, six of U.K. strain

Both variants are thought to spread faster than earlier strains

Rodney and Ekaterina Baker in an undated photo from social media. The couple has been ticketed and charged under the Yukon’s <em>Civil Emergency Measures Act</em> for breaking isolation requirements in order to sneak into a vaccine clinic and receive Moderna vaccine doses in Beaver Creek. (Facebook/Submitted)
Great Canadian Gaming CEO resigns after being accused of sneaking into Yukon for vaccine

Rod Baker and Ekaterina Baker were charged with two CEMA violations each

Police discovered a makeshift nightclub in a Vancouver apartment on Jan. 23, 2021, and say it wasn’t the first time this month officers have been called to the unit over social gathering concerns. (Phil McLachlan - Capital News)
Doorman of makeshift ‘booze-can’ in Vancouver apartment fined; police look to court order

This marks the fourth complaint about social gatherings inside the apartment in January

Local musician and artist Daisy Melville created a watercolour portrait of U.S. Senator Bernie Sanders from the recent American inauguration, and with help from her mom, is now selling t-shirts and more with funds going to the Comox Valley Food Bank. Image submitted
Island artist turns Sanders inauguration meme into art for good

All proceeds from the sale of shirts, sweaters and more will go to the Comox Valley Food Bank

Most Read