Today in Question Period I took the opportunity to see if I could get more details from the Minister of Finance on the BC NDP’s so-called “Speculation Tax”.
Last week I was very critical of the way the BC NDP introduced this tax. Ironically it doesn’t even address speculation in the real estate sector.
I remain unconvinced that the BC NDP know what outcome they are trying to achieve with their tax measure. It’s clear to me from the Minister’s responses to my questions (reproduced in video and text below) that they don’t understand the difference between a vacancy tax and a speculation tax. In fact, under the Vancouver Charter, that city have already imposed a vacancy tax.
A better way forward would be to enable all local governments (not just Vancouver) to introduce vacancy taxes if they felt it was in their community’s interest. At the same time, a speculation tax could be applied exclusively to properties owned by offshore individuals and entities, the bare trust loophole could be closed and a flipping tax could be applied when the same property is sold multiple times in a short time period.
Fortunately there is still time to fix what the BC NDP have proposed.
A. Weaver: There’s no doubt that we need to take bold action to address the drivers in our housing crisis. A fundamental component of this is clamping down on speculation. But the government’s botched speculation tax doesn’t in fact target speculation.
A speculator is someone who buys a property solely to flip it. A speculator is someone who parks offshore money in our real estate, hoping to protect themselves from the turmoil in global markets. A speculator is someone who uses bare trusts to avoid paying property transfer taxes, thereby allowing multiple sales and resales with no change in title.
A speculator is not someone who pays taxes here and owns a vacation cottage. These folk are not trying to capitalize on our out-of-control housing market.
My question to the Minister of Finance is this. The minister has said that her aim is to make sure she gets speculators out of the market. Does the minister consider British Columbians with vacation homes to be speculators? Or will she ensure that they are fully exempt from this tax? If so, how will she do it?
Hon. C. James: Thank you to the member, the Leader of the Third Party. I appreciate the question, and I appreciate his support for a speculation tax.
We were left, in this province, with a crisis when it comes to the housing market, because the other side ignored the issues and the crisis that people were facing around affordability. We’ve seen rents skyrocket. We’ve seen families who can’t afford to live in the community that they work in. So our goal is to ensure that British Columbians can afford to work and live in their own province.
We’re including measures in the speculation tax that will protect British Columbians. We are looking at getting people out of the market who are using our housing market as a stock market. The specifics will come. We’re continuing to listen to the issues that people raise, including the member at the end. We will make sure that housing is affordable for British Columbians. That’s our aim, and that’s what the speculation tax will do.
A. Weaver: The government has had years to consult with British Columbians. Instead, it brings in a poorly thought out tax measure whose interpretation seems to change every time the minister or Premier is in a press scrum.
As far as I can understand from the tax information sheet still on the government’s website, British Columbians with second homes have to pay the tax, and then they get a non-refundable tax credit after the fact. Low or moderate-income British Columbians will, in many cases, not even be able to use the tax credit. But if you’re very wealthy, you get the full benefit of the credit. That doesn’t make any sense. It penalizes people with moderate and low incomes and further entrenches the idea that home ownership is reserved only for the wealthiest.
Hon. Speaker, my question, through you to the Minister of Finance, is this: will the minister reconsider this tax credit model to ensure that British Columbians with vacation homes are actually protected from the effects of this speculation tax?
Hon. C. James: I would say to the member, once again, that we introduced the speculation tax as part of our 30-point plan to address affordable housing in British Columbia. I said in the budget lockup and on budget day that the details would be coming. We are listening to British Columbians, including the member and other people who have put forward ideas. We have been working on those issues since we introduced the speculation tax.
The specific concerns that the member raises are issues that are already on the table, which we are reviewing and looking at as we implement the tax. As I’ve said all along, details will come. The aim is to make sure that we get speculators out of the market.
I would say to the member that if you are an individual who owns four empty houses and you’re leaving them vacant in Vancouver, you are speculating in the housing market. We will be addressing that, and we will be addressing affordable housing for British Columbians.