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Kelowna, Okanagan real estate board still opposing speculation tax

Click to play video: 'NDP government introduces speculation tax legislation'
NDP government introduces speculation tax legislation
The NDP government has introduced its controversial legislation that would impose a speculation tax on some properties. Keith Baldrey has the details – Oct 16, 2018

The City of Kelowna said on Wednesday that it will continue to work with other municipalities in opposing the provincial government’s proposed speculation tax.

According to the provincial government, the speculation tax is “designed to prevent housing speculation and help turn vacant and under-utilized properties into homes for people who live and work in British Columbia. The tax is a part of the government’s 30-point plan to address the housing crisis and help make life more affordable for people.

“This annual tax is payable by owners of residential property in designated taxable regions of B.C. More than 99 per cent of British Columbians are estimated to be exempt from the tax.”

READ MORE: Municipal leaders put pressure on provincial government to change speculation tax

The proposed tax will only apply to properties to various regions in the Lower Mainland and Vancouver Island plus Kelowna and West Kelowna.

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“Kelowna has made its concerns well known to the premier and the finance minister ever since the tax was proposed in March,” the city said in a press release. “Those concerns include the potential for unintended consequences on the local economy and the proposed legislation’s actual impact on housing speculation. The city is also concerned that the tax is not equitable due to its limited geographic nature – true speculators can simply purchase in neighbouring communities that are not impacted by the legislation.”

The proposed tax ranges from 0.5 per cent on secondary homes left vacant by B.C. residents, to two per cent on foreign-owned properties.

Yet if the tax becomes reality, the city said it believes some of the revenue generated should remain in the community to deal with the municipal impacts associated with housing affordability and homelessness.

“But we need to use good data to guide policy development and decision making. In the case of any new tax policy, we support a full economic analysis prior to implementation,” said City of Kelowna real estate services manager Johannes Saufferer.

WATCH BELOW: The NDP says it imposed the speculation tax to help create more accessible rental units. But there are growing concerns it might have the opposite effect.

Click to play video: 'It’s goal is to make rental housing easier to access but some say the speculation tax may have the opposite effect in already tight markets like Kelowna'
It’s goal is to make rental housing easier to access but some say the speculation tax may have the opposite effect in already tight markets like Kelowna

The Okanagain Mainline Real Estate Board also took aim at the proposed tax.

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“I’ve not met anyone who disagrees that we need more affordable housing, but suggesting that this tax, as proposed, would somehow improve the situation is misleading to say the least,” said OMREB president Marv Beer.

READ MORE: Findlater to Horgan: Ditch speculation tax in West Kelowna

Beer contends that the proposed tax doesn’t target the speculator, defined as someone who purchases and ‘flips’ properties within a relatively short time-frame for profit.

“Speculators, because they don’t hold a property for long, would be minimally affected by this tax. Instead, it would be the long-time home owner who would pay, year over year, for choosing to spend time and money in B.C.,” he said.

“Ironically, it’s possible that the tax would encourage speculators to set their sights on homes under $400,000, competing with legitimate buyers for lower cost homes. If the government really wanted to go after speculators, it could apply a levy to homes sold within a short time of being purchased.”

Beer also took issue with the government’s claim that the proposed tax is aimed at foreigners and those from other provinces who don’t pay income taxes here. According to Beer, the minister responsible for this tax revealed in legislature that almost two-thirds of those who would pay the tax would be British Columbians, about 20,000 of 32,000 homes targeted.

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“The good news is that the government has included a number of exemptions from the tax. The bad news is that the myriad of exemptions would create a costly administrative nightmare and still, housing affordability would not be enhanced nor speculators deterred. While measures to address both problems may be needed, this tax, as it is currently proposed, is not the answer.”

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