B.C.’s finance minister has introduced legislation to move ahead with a controversial speculation tax on vacant or underutilized properties.
The bill ends months of speculation about how the province planned to use the new levy to help deal with runaway housing prices in some B.C. communities, outlining a range of tax rates from 0.5 to two per cent and a number of exemptions.
If the legislation is passed, the new tax will apply to all properties in designated regions of B.C. These include most parts of Metro Vancouver and the Capital Regional District (excluding the Gulf Islands), along with Abbotsford, Mission, Chilliwack, Kelowna, West Kelowna, Nanaimo and Lantzville.
Homeowners who live at their properties — or rent them out — will receive an exemption by filing an annual declaration form.
For the remaining properties, a tax rate of 0.5 per cent of the assessed value will apply for 2018.
In 2019 and subsequent years, B.C. residents with vacant or underutilized properties will continue to pay that rate, while Canadian citizens or permanent residents who are not B.C. residents will start paying one per cent.
Foreign homeowners will pay more
Foreign homeowners or “satellite families” who make 50 per cent of their income outside B.C. will pay two per cent on all properties, unless they rent them out.
The goal is to prevent housing speculation and help turn vacant properties into rentals, said Carole James, B.C.’s finance minister.
“As a government, we have a responsibility to act, to make sure that people can afford a home in the communities where they live and work,” she said. “The speculation and vacancy tax is a critical piece if we want to moderate our overheated housing market.”
Some opposed mayors in regions where the tax is set to apply had called on the finance minister to allow an opt-out clause, but James declined.
“When you face a major provincial crisis, it is the responsibility of the provincial government to act, not to let municipalities pick and choose about whether they want to address affordable housing,” James said.
‘NDP arrogance and hypocrisy’
However, the opposition Liberals say the tax punishes people in B.C. who want to have a retirement home and it will do little to improve housing affordability.
“This is the height of NDP arrogance and hypocrisy,” said Liberal leader Andrew Wilkinson.
“Our goal is to defeat this bill because it is a phony tax. It accomplishes nothing except to grab revenue for the NDP.”
Green Leader Andrew Weaver, who has been critical of the tax in the past, said he’s still reviewing the fine print to determine if his concerns have been addressed, and any changes that may be necessary.
“I still have concerns that Canadians are not being treated equally and that there is an insufficient role for local governments in determining what happens in their communities,” Weaver said in a statement.
The legislation also includes a number of exemptions for what the province calls special circumstances, including major home renovations and divorces.
Properties that are under development or renovation are also exempt — something that will keep the tax from discouraging more housing to come online, James said.
It’s estimated that more than 99 per cent of people in B.C. won’t pay the tax, James said.