Using a backdrop of new construction in Victoria

Using a backdrop of new construction in Victoria

BC VIEWS: Real estate tax increases windfall

Finance Minister Mike de Jong found an extra half billion from property transfer tax last year, with much more to come

The lights came back on in the B.C. legislature last week to reveal the government’s sudden decision to impose a 15 per cent tax on foreign property purchases in Metro Vancouver.

This came after months of government refusal to intervene in a heated urban market in ways that might devalue properties for people whose homes represent a large chunk of their life savings.

It remains to be seen whether this large wrench applied to the problem will cool the market, or trigger declining property values as similar efforts have done in other major cities. The extent of the ripple effect on B.C. communities outside Metro Vancouver is also something that will be closely watched.

Premier Christy Clark and Finance Minister Mike de Jong announced the tax with a week’s notice, leaving realtors and developers scrambling to close deals before thousands more in property transfer tax was imposed on foreign buyers.

This dramatic intervention was based on less than five weeks of information on the nationality of buyers. Early results showed foreign buyers represented five per cent of Metro Vancouver real estate sales. Another two weeks of data showed a spike to nearly 10 per cent, and suddenly the big wrench came out.

Housing Minister Rich Coleman acknowledged that the surprise tax left the real estate industry “taken aback and a bit grumpy.” They worried foreign buyers might back out of deals after sellers have bought another home. They also fear that the tax might pop the real estate bubble, causing a rapid reversal of the long sellers’ market that has taken on a life and a psychology of its own.

One thing is certain. The province’s windfall from the property transfer tax can only grow even further as foreign buyers pay up.

The size of this windfall was shown in the government’s audited public accounts for the 2015-16 fiscal year, which de Jong released just days before announcing the new real estate tax.

The property transfer tax has been a cash cow for the province since Bill Vander Zalm introduced it in the 1980s, and by 2015-16 it had reached about $1.5 billion. For comparison purposes, that’s almost twice as much as total provincial revenue from the forest industry.

The current B.C. budget had forecast that property transfer tax revenues would decline this year and next year. The public accounts showed that for 2015-16, the government took in $468 million more than expected, meaning real estate accounted for most of the provincial surplus.

How much more is raked in by the new transfer tax on foreign buyers remains to be seen, but it will be substantial. And Coleman allows that he has been developing “a really cool plan” to use that money to improve the housing situation for lower-income people.

A couple of weeks ago I described the clamour of urban protesters demanding that governments build thousands of units of social housing. Coleman has long rejected the idea of social housing projects that create clusters of poverty, and he assured me last week that isn’t going to change.

B.C. has 20,000 low-income households getting a rent subsidy today, and Coleman suggested that will be increasing. He’ll be announcing new measures in September to stimulate construction of new rental housing.

It remains to be seen how that will work as well. But it gives the B.C. government lots more money to spend in an election year.

This is the latest of a string of Clark’s election-year fixes. I’ll look at some others in a future column.

Tom Fletcher is B.C. legislature reporter and columnist for Black Press. Email: tfletcher@blackpress.ca Twitter: @tomfletcherbc

 

Just Posted

Black Press file photo
RCMP seek suspect in Vancouver Island-wide crime spree

Crimes stretched from Deep Bay to Qualicum, Ladysmith, Chemainus and Youbou

Karl and Stephanie Ann Johanson were thrilled to spot a pair of Sandhill Cranes in the Panama Flats this month, an unusual appearance for such birds. (Photo by Stephanie Ann Johanson)
WATCH: Sandhill cranes an unusual, joyful sight in Saanich parkland

The birds don’t often touch down in the south of the Island

Jesse Roper tackles weeds in his garden to kick off the 2021 season of What’s In My Garden Man? (YouTube/Whats In My Garden)
VIDEO: Metchosin singer-songwriter Jesse Roper invites gardeners into his plot

What’s In My Garden, Man? kicks off with the poop on compost

(Victoria Cool Aid Society/Facebook)
Victoria food drive aims to feed those also struggling with housing

Quadra Village furniture store hosting drive-thru event Saturday from 10 a.m. to 2 p.m.

Victoria police are asking for witnesses who might have information about this tricycle that was stolen in downtown Victoria on Thursday. (Photo courtesy of VicPD)
Police seek witnesses after downtown Victoria company’s tricycle stolen

The three-wheeler was taken from the 2100-block of Store Street on Thursday

A small pod of Pacific white-sided dolphins pass by close to shore in Campbell River June 16, 2021. Still capture from video courtesy of Kimberly Hart
VIDEO: Dolphin sunset captured from Vancouver Island shore

Spectacular setting for view of travelling pod of Pacific white-sided dolphins

Police are asking for public assistance in locating Anthony Graham who has been charged with the murders of Kamloops brothers Carlo and Erick Fryer. (RCMP photo)
2 charged, suspect at large in killings of B.C. brothers linked to gang activity: RCMP

Kamloops brothers Erick and Carlo Fryer were found deceased in May on a remote Okanagan road

Albert Health Minister Tyler Shandro and Alberta Premier Jason Kenney unveil an opening sign after speaking about the Open for Summer Plan and next steps in the COVID-19 vaccine rollout, in Edmonton, Friday, June 18, 2021. THE CANADIAN PRESS/Jason Franson
Alberta 1st province in Canada to lift all COVID-19 public health restrictions

70.2% of eligible citizens 12 and older in the province have received a dose of the vaccine

Fraser Health registered nurse Ramn Manan draws a dose of the Pfizer COVID-19 vaccine into a syringe at a walk-up vaccination clinic at Bear Creek Park, in Surrey, B.C., on Monday, May 17, 2021. THE CANADIAN PRESS/Darryl Dyck
‘Honour our fathers’ with COVID-19 vaccine protection, B.C. urges

109 new cases Friday, 75 per cent of 12 and up immunized

Freighters have becomd abundant in the Trincomali Channel on the east side of Thetis Island.
Nanaimo ponders taking on waste from nearby anchored freighters

Vancouver-based Tymac petitioning the Regional District of Nanaimo to accept waste at its landfill

(Paul Henderson/ Chilliwack Progress)
Trutch Avenue in Chilliwack to be renamed to remove racist taint

New name to have Indigenous significance as Chilliwack takes new step toward reconciliation

Canadian Prime Minister Justin Trudeau is seen during a joint news conference following the EU-Canada Summit, in Brussels, Belgium, Tuesday June 15, 2021. Trudeau says Canada is on track now to have 68 million doses delivered by the end of July, which is more than enough to fully vaccinate all 33.2 million Canadians over the age of 12. THE CANADIAN PRESS/Adrian Wyld
Vaccine deliveries enough to fully vaccinate all eligible Canadians by end of July

Three in four eligible Canadians now have their first dose, nearly one in five fully vaccinated.

Chief Public Health Officer Theresa Tam listens to a question during a news conference, in Ottawa, Tuesday, Jan. 12, 2021. The number of confirmed COVID-19 cases attributed to the highly contagious Delta variant grew in Canada this week. THE CANADIAN PRESS/Adrian Wyld
Canada’s public health agency reports spike in confirmed cases of Delta variant

More than 2,000 cases of the variant confirmed across all 10 provinces and in one territory

Most Read