Kelowna city council has voted to draft a letter to the provincial government saying it doesn’t want the speculation tax to apply within its borders.
On Monday afternoon, councillors directed city staff to craft the wording of a letter it hopes makes a difference on the provincial level.
“Our first step right now is to get the provincial government’s attention and say please don’t implement this tax as proposed,” Kelowna mayor Colin Basran told Global News.
The speculation tax targets foreign and domestic speculators who have “removed their units from B.C.’s long-term housing stock.”
That means properties that are not owner-occupied or a “qualifying long-term rental property.” The tax will also target “satellite families,” or households that have high worldwide income but don’t pay much income tax in B.C.
Once implemented, the tax rate will be $5 per $1,000 of assessed value in 2018, and $20 per $1,000 of assessed value in 2019.
Kelowna and West Kelowna are two of six regions in B.C. affected by the speculation tax.
“We don’t want to be subject to this speculation tax as proposed,” Basran said. “We will be wiring the provincial government stating that as well as putting forward an alternative which we think will achieve the same objective but not hurt our economy in ways that we’re seeing it will.”
Basran said that alternative is imposing a tax on people who flip properties.
“A true flipping tax which would really be targeting people who purchase units and sell them in a short period of time who are true speculators just waiting to see the equity in their property rise and then getting out of the market,” Basran said.
“That is something we believe is truly impacting the affordability of homes and we would like to see that targeted instead of a vacant home tax which is what this speculation tax essentially is right now.”
Kelowna’s mayor fears the speculation tax will have some serious consequences for major sectors including tourism, construction and the real estate market with out of town buyers choosing to invest elsewhere.
Basran said the tax hasn’t even been implemented yet but its effects are already starting to be felt.
“I have already heard of two really key projects in our community that may not be moving forward as a result of the speculation tax and all the uncertainty it has created,” he said.
“Those two projects alone are worth in the neighborhood of $300 million worth of investment into our local economy.”
West Kelowna has also drafted a similar letter to the provincial government citing the same types of concerns.
Kelowna city council is also calling for a meeting with the premier, minister of finance and minister of municipal affairs and housing to discuss the potentially damaging tax.
“I really want the city to know that we are committed to try and find ways to make housing more available and affordable for our local residents,” Basran said.
“We know that it is a major issue but we also know that this speculation tax as proposed may not have the desired impact and in fact will be further detrimental to our community in terms of economic impact, it will be a disaster.”