The B.C. government has introduced the details around the controversial speculation tax. Finance Minister Carole James introduced legislation on Tuesday that lays out the tax applied to homes that are left empty in British Columbia but doesn’t address many of the concerns brought forward by municipalities.
“This tax is a critical component of the government’s 30-point housing plan to improve housing affordability in this province,” said James. “Our province is facing a housing crisis that is hurting people, communities and our economy. Prices have skyrocketed out of reach for local incomes.”
Mayors from Oak Bay, Langford, Kelowna and West Kelowna called on the provincial government at the recent Union of B.C. Municipalities (UBCM) meeting to allow jurisdictions to opt out of the tax. UBCM members voted in September to encourage the province to consider the exemption.
“The City of Kelowna’s concerns with the tax is that it won’t actually address speculation and there will be other potential unintended consequences,” Kelowna Mayor Colin Basran said in September.
“I am also concerned that it’s not equitable because it’s not provincewide — true speculators can simply purchase in neighbouring communities without contributing for the tax.”
The tax will apply to homes in Metro Vancouver, the Capital Regional District (excluding the Gulf Islands and Strait of Juan de Fuca), Kelowna, West Kelowna, Nanaimo, Abbotsford, Chilliwack and Mission.
B.C. residents will pay 0.5 per cent tax on a second home that is not rented out for more than six months of the year. Canadians from outside the province will pay one per cent and non-Canadians will pay two per cent tax on the assessed value of the home.
The tax will come into effect in 2019 and is targeted at people who leave their homes empty. The legislation lays out exemptions for special circumstances, including people facing medical emergencies, people with disabilities and companies that are holding multiple properties for development.
“We have a crisis where hard-working British Columbians are being shut out of the housing market,” said James. “We have seen examples of families being forced to live in tents, workers and seniors living in their cars and young professionals leaving the province.”
Green Party Leader Andrew Weaver was encouraging the province to include an opt-out for municipalities in the legislation. He previously said he would work with the opposition to amend the speculation tax legislation.
Weaver is now reviewing the legislation before determining his next steps on the issue. His main concerns are that the tax should treat all Canadians equally, that local government need to have a more direct role, and that the tax shouldn’t unfairly target homeowners who aren’t speculators.
“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,” said Weaver.
“Addressing the affordability crisis is a key shared priority between our Caucus and the government. We also agree that tackling speculation in our housing market is one of the best ways we can make a difference. However, I have been clear that the government’s approach on this particular piece of legislation is not the one I would have taken.
WATCH HERE: B.C. mayors call for changes to speculation tax
The tax was originally introduced as part of a suite of housing measures in the 2018 provincial budget.
The B.C. Liberals have indicated, so far, they are unwilling to work with the Greens to make those amendments. Liberal Leader Andrew Wilkinson says that the speculation tax is not a speculation tax, but rather an empty home tax that will hurt the economy.
“The finance minister seems to forget that during the Liberal tenure close to a million people moved to British Columbia and found housing because we provided an environment where people could build housing,” Wilkinson said.
WATCH HERE: West Kelowna hosts speculation tax townhall meeting
The government also introduced legislation to eliminate Medical Services Plan (MSP) premiums and introduce the employer health tax. According to James, the tax change will reduce taxes on people and businesses by approximately $800 million each year.
“The last government chose to double MSP fees, costing families hundreds of dollars a year. People deserve a break, which is why we’re eliminating regressive MSP premiums,” James said. “The EHT is a fairer approach, similar to other provinces, and that means lower taxes for British Columbians.”
According to the government, fewer than five per cent of B.C. businesses will pay the full EHT rate of 1.95 per cent. The majority of small businesses are protected with a $500,000 exemption amount that phases out gradually. The legislation also establishes a $1.5-million exemption amount for charities and non-profits, and is similarly phased out.
The health tax will start on Jan. 1, 2019, with MSP premiums gone by Jan. 1, 2020.
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