B.C.’s is defending the province’s speculation and vacancy tax as “successful,” despite new data that shows more British Columbians are now paying it than foreign owners.
The province’s NDP government introduced the tax, which applies to properties in Metro Vancouver, Greater Victoria, Kelowna and the Nanaimo-Lantzville area that are vacant for more than half the year, in 2018.
At the time, then-Finance Minister Carole James touted it as a tool to address the housing crisis and prices that had “skyrocketed out of reach for local incomes.”
But data released by the Ministry of Finance Monday shows that the largest bloc of people now paying the tax is British Columbians with second properties.
According to ministry data, the number of B.C. residents on the hook for the tax held fairly stable between 2018 and 2019, dropping slightly from 2,301 to 2,287 people.
In 2018, foreign owners accounted for 4,575 speculation taxpayers — a figure that dropped dramatically in 2019 to 2,104 as owners sold the properties or found tenants.
The number of satellite families paying the tax (families with the bulk of their income coming from outside Canada) fell from 2,628 to 1,579.
B.C. residents pay a speculation tax of 0.5 per cent, while the rate for foreign owners and satellite families rose to two per cent on Dec. 31, 2019.
The ministry says when it comes to actual dollars, B.C. residents paid less than eight per cent of the $88 million collected last year.
On Thursday, Premier John Horgan said more than 99 per cent of British Columbians don’t pay it, and that the tax is working as intended.
“It addressed what was at the time a critically important issue — overwhelming numbers of vacant properties and offshore investments that were driving up the costs for British Columbians,” he said.
“(Second property owners) can avoid that tax, as offshore buyers or owners have demonstrated, by either moving the property and having someone live in it, or renting it out. This is an avoidable tax.”
But BC Liberal MLA Mike Bernier said B.C. residents are being “punished” for owning second homes.
He said on top of that, the tax is not doing what the NDP promised it would.
“The NDP sold this to the public saying, ‘We are going to put this speculation tax in to help reduce rents, to help reduce the costs to buy a home in these areas,'” Bernier said.
“And not only have they collected $88 million for government, but house prices and rents continue to go up. So it has not had the cure they said this was going to have.”
Data released by the BC Real Estate Association on Wednesday showed prices were up across the province by an average of 11.7 per cent in 2019, despite the pandemic.
According to the Ministry of Finance, vacancy rates across the province increased by seven per cent in 2019.
— With files from Ted Chernecki