MLA REPORT: Speculation tax can carry unforeseen consequences

MLA REPORT: Speculation tax can carry unforeseen consequences

By Andrew Weaver

BC Green Party Leader

There has been a lot of uncertainty in our community concerning the BC NDP’s proposed speculation tax. My office has received thousands of emails from across the province on this topic. Recently, a group of constituents held a town hall, where about 200 people attended. I was able to hear many views as well as clarify my position and the actions the BC Greens are taking on this issue.

The speculation tax will be proposed in legislation that is to be brought forward in the fall.

In accordance with our Confidence and Supply Agreement, government consults with our caucus on many matters. All input we provide government is aimed at producing evidence-based public policy that will deliver outcomes that are in the best interests of the province as a whole.

The BC Greens have indicated to government that we do not support the speculation tax because 1) it doesn’t address speculation; 2) there are too many unforeseen consequences; 3) it is administratively burdensome.

The speculation tax targets two distinct issues. The first is vacant properties. The second are satellite families — families who pay little or no taxes here in Canada.

The BC Greens recommended several alternate approaches to government on how to better deal with the housing crisis. First, we suggested that government introduce enabling legislation to allow local governments to implement a vacancy tax if they felt it was necessary for their communities. Victoria, for example, has asked for the powers to introduce such a tax. Enabling the ability of local governments to introduce a vacancy tax is relatively straightforward. The legislative language already exists in the Vancouver Charter.

Three benefits of this approach are that any monies raised would remain in the affected community, its implementation would be highly focused, and the issue of double taxation in the Vancouver area would be addressed. Should vacancy or rental shortage issues no longer be a problem, local governments could also respond rapidly without the need for provincial legislation.

Another recommendation of the BC Greens was to introduce a New Zealand-style ban on foreign purchases in the secondary housing market unless trade agreements prohibit this. New Zealand, for example, excluded Australia in its offshore buyer ban due to existing agreements.

In addition, we recommended the closure of the bare trust loophole and the introduction of a flipping tax – a tax levied on people who flip properties, buying and selling them in a short timeframe for significant profits.

The information that we provided government regarding the speculation tax was that it should be as targeted as possible in addressing speculative activity in the housing market. We also communicated that government should work to minimize unintended consequences on people and activity we don’t want to target, without fundamentally undermining the impact of the tax.

The BC Green caucus also articulated a number of problems with the proposed speculation tax. We pointed out that it made no sense to have a vacancy tax applied to strata units that had “no rental” clauses in their rules.

In areas that are disproportionately home to vacation property owners (e.g. Cultus Lake prior to its exemption), the local economies are dependent on seasonal visitors and part-time residents. Therefore, implementing this tax would have negative consequences on these economies that likely outweigh the benefits. This remains a problem with the proposed inclusion of Kelowna and West Kelowna in the Speculation Tax.

We noted that in some areas covered there is no substantive rental market (e.g. islands with no ferry service). And we continue to remain concerned that Canadians from different provinces will be treated differently. We remain committed to the notion that all Canadians should be treated equally.

We look forward to seeing the government’s legislation in the Fall. We remain committed to our shared goal of taking action to address the housing affordability crisis.

Andrew Weaver is the MLA for Oak Bay-Gordon Head and Leader of the BC Green Party