British Columbia is extending the property speculation tax that keeps its properties vacant to six more municipalities starting next year.
The BC government first introduced the tax in 2018.
Currently, any homeowner with a vacant residence will pay 0.5 percent of the appraised value of their property under the tax, and the tax will increase to two percent for foreign homeowners.
The tax applies to most municipalities in the Lower Mainland and southern Vancouver Island, as well as in Kelowna, West Kelowna, Nanaimo and the Lantzville district.
Now, the provincial government says it will expand it to Lions Bay and Squamish, as well as the Vancouver Island communities of North Cowichan, Duncan, Ladysmith and Lake Cowichan.
“People in these communities have spoken out. They have talked about the intense housing pressures they are facing, including speculation and near-zero vacancy rates,” the finance minister said on Wednesday. BC, Selina Robinson. “This expansion will help prevent speculation from moving from one community to another in a region.”
Robinson said affordable housing was a “generational challenge” and said the speculation tax worked according to the intention to introduce housing back into the rental offer.
“Speculation and the vacancy tax turned thousands of empty units into homes,” he said. “It reduced speculation and kept prices lower than they would have been without the tax.”
A commissioned report by the BC government in June shows that the speculation and vacancy tax (SVTA) affected Vancouver homeowners, bringing approximately 18,000 new condo units to the rental market from 2018 to 2020.
The tax changes take effect from January 2023. The government says residents of the six additional municipalities will have to declare their additional properties in January 2024.
The province says 99 per cent of British Colombians are not subject to the tax. In addition, there are numerous exemptions about bookseven for main dwellings and dwellings with long-term tenants.
“A tool in the toolbox”
The speculation tax is a type of tax unique to BC: a provincial tax that only applies to residents of specific municipalities.
The province has said it aims to target urban areas with vacancy rates close to zero with the tax to help with accessibility struggles.
When reporters asked why the tax was not expanding to other areas, such as Whistler and the Gulf Islands – Robinson said certain areas had “unique challenges.”
“We are monitoring it very closely and we are gradually looking at how to make better use of this tax,” he said. “This is a tool in the toolbox … we will continue to monitor how things work in holiday areas.”
In a statement, BC Green Party MP Adam Olsen said he was disappointed that the South Gulf islands were not included in the tax expansion and would ask Robinson why it was not.
More non-profit housing is needed, says the economist
Alex Hemingway, a senior economist at the Canadian Center for Policy Alternatives, said expanding the speculation tax was a logical step for the province.
“There would be a strong case to expand it anywhere we are seeing this kind of shortage of rental housing, rising rents and low unemployment rates,” he told CBC News.
Hemingway said that foreign buyer tax and the speculation tax should be accompanied by funding for more non-profit housing and encouraging municipalities in the area of more affordable housing.
“We need to unpack this complete set of tools and start building as many homes as possible in this province with it, emphasizing public and non-profit housing,” he said.
Another fiscal step the province could take to alleviate the housing crisis, according to Hemingway, is to expand the property tax structure.
Economist Alex Hemingway says the province could consider extending the speculation tax to all communities facing housing struggles. (David Horemans / CBC)
Currently, residential properties valued at more than $ 3 million are taxed two percent beyond the value of the property.
“[The government] “It should broaden the approach,” he said. “So that it is not only covered on individual properties separately, but on the total value of the property owned by a given owner.
“We could be progressively taxing large landowners in the province who have enjoyed massive increases in land wealth over the past two decades.”