Advertisement

Group of homeowners launch legal challenge against B.C.’s speculation tax

Click to play video: 'New legal challenge to B.C. speculation tax' New legal challenge to B.C. speculation tax
A group of homeowners have launched the first legal challenge of B.C.'s new speculation tax. Jill Bennett has the details – Sep 26, 2019

Six homeowners in Greater Victoria and Metro Vancouver have filed a legal challenge against B.C.’s speculation and vacancy tax, arguing the law is unconstitutional.

The petition, which was filed in B.C. Supreme Court Thursday, further argues collecting revenue from the tax is beyond the powers of the provincial government.

The lead plaintiffs of the lawsuit are Denise and Robert Simpson, an elderly retired couple who split their time between Texas and their home in Oak Bay.

READ MORE: Province says speculation tax brought in $58M in 2018 as meetings with mayors on tax kick off

Denise Simpson, a 72-year-old Canadian, says she and her 93-year-old husband cannot afford the $6,000 they’ve already been charged under the tax, which declared the Simpsons a “satellite family” due to Robert’s U.S. citizenship.

Story continues below advertisement

Satellite families are defined under the tax as those who earn a majority of their income outside of Canada. In this case, the province zeroed in on Robert’s U.S. military pension.

Simpson says the Oak Bay house, which she inherited from her mother 20 years ago and has been in her family since 1952, is used throughout the year — making her anything but a speculator.

WATCH: (Sept. 12) Province releases speculation tax numbers

Click to play video: 'Province releases speculation tax numbers' Province releases speculation tax numbers
Province releases speculation tax numbers – Sep 12, 2019

“It’s just so heartbreaking that a government would do this to its citizens,” she told Global News.

“I have no family left. The house to me, that’s my family. I never wanted to sell it. It’s extremely upsetting an unfair.”

The other four homeowners own property in Richmond, Surrey and Vancouver.

Story continues below advertisement

READ MORE: B.C.’s speculation tax brings in $115M, mostly from owners outside province

One of those petitioners is a Japanese foreign national in Canada on a work permit, who owns a Surrey restaurant and is working on obtaining permanent residency. The lawsuit says he faces a tax bill of roughly $20,000 for 2019.

Another is a retired doctor with poor eyesight who primarily lives in Richmond where she volunteers, while her husband lives in their shared home in Surrey. But the province found because the homes are less than 100 kilometres apart, the doctor was subject to the tax.

All of the homeowners argue the only way they’ll be able to afford the tax is to rent out the homes in question, forcing them to find new homes to rent themselves.

WATCH: (July 11) New speculation and vacancy tax numbers released

Click to play video: 'New speculation and vacancy tax numbers released' New speculation and vacancy tax numbers released
New speculation and vacancy tax numbers released – Jul 11, 2019
“The effect of the [Speculation and Vacancy Tax] Act is arbitrary, it’s discriminatory,” said lawyer Kailin Che, whose firm Lawrence Wong and Associates is representing the plaintiffs.
Story continues below advertisement

The tax rate for 2018 was 0.5 per cent of a property’s assessed value, rising to two per cent in 2019 for foreign owners and satellite families, while Canadian citizens or permanent residents continue to pay 0.5 per cent.

The tax is a major component of the New Democrat government’s $6.5 billion plan to deliver 114,000 affordable homes over the next 10 years.

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

The government said the speculation tax will target foreign and domestic real estate speculators, increase the amount of rental homes and provide revenue for housing initiatives.

Finance Minister Carole James said earlier this month the province collected $58 million from the tax last year. She said 99.8 per cent of British Columbia residents were exempt from the tax.

In a statement, James said she could not comment on the specifics of the lawsuit as it’s now before the court, but defended the tax by saying it’s proving to be effective.

“I can say that, as with any tax measure, ministry staff worked closely with legal experts to ensure that the tax would be lawful,” she said.

WATCH: (March 5) Village of Belcarra asks for speculation tax exemption

Click to play video: 'Village of Belcarra asks for speculation tax exemption' Village of Belcarra asks for speculation tax exemption
Village of Belcarra asks for speculation tax exemption – Mar 5, 2019

Che says her firm isn’t charging fees to their clients. Instead, they’re relying on a crowdfunding campaign launched by the Canadian Institute of Legal Reform.

Story continues below advertisement

The campaign has so far raised $30,000, but is hoping to earn 10 times that amount in order to cover a potentially large client base.

In the hours since the lawsuit was filed Thursday, Che says five other homeowners contacted the firm asking to sign on.

READ MORE: Poll finds strong support for B.C. speculation tax but little confidence it will help affordability

The lawsuit is not seeking specific damages, asking instead for the entire tax act to be thrown out and all enforcement of the tax to be voided.

If the petition is heard, the law firm estimates the hearing could take at least five days.

The province has yet to file a legal response to the petition, whose claims have yet to be proven in court.

—With files from Jill Bennett, Richard Zussman and the Canadian Press

Sponsored content