September 14 ~ WHISTLER. The room was full. And when the final motion was voted on, September 12, BC mayors and councillors at the Union of BC Municipalities (UBCM) convention in Whistler supported that the proposed BC speculation tax instead be structured to empower local governments to collect a levy on vacant residential properties, with the funds to be invested in non-market housing.
It was a motion brought forward by the rapidly growing City of Langford that is interdependent with developers, investors, the housing industry, and the real estate sector.
“People are catching on about the spin the government is putting on the speculation tax,” says Langford Mayor Stew Young.
Young says many other mayors agree it’s a tax that targets people’s investment in retirement homes and vacation properties, effectively penalizing retirement and vacation-home buyers from outside of BC.
“The speculation tax is already hurting investment in many parts of BC and housing sales are the lowest in 10 years,” says Young. “Prices are dropping. People will soon see what that approach to taxation is doing to jobs and the economy,” says Langford’s mayor. He says the evident impact will be slow at first. “In a year it will start to hurt as investment slows.” The mortgage ‘stress test’ on homebuyers has also served to cool the housing market in the past 12 months, consequently constraining would-be homeowners within the overloaded rental market.
“Every mayor and councillor I talked to feels the Finance Minister is not listening to the communities around BC,” said Young, which has caused a backlash. And if ‘shout-outs’ are the currency of political sway, it’s evident Langford’s mayor is making his mark when it comes to leadership about expediting housing supply.
BC Liberal Leader Andrew Wilkinson in his speech to UBCM delegates on Thursday, September 13 mentioned Stew Young’s success with the housing development process, three times. Premier John Horgan (who lives in Langford and sees the local pace and density of housing development up close) told media after his UBCM speech on Friday that he hears from Stew Young a lot on the speculation tax and housing supply.
Premier Horgan also said that “much of the attention about the speculation tax is on those who want out, but opting in and out of tax policy is not effective, for any sector”.
Horgan says that some municipalities told him this week that they do want the speculation tax to be applied in their jurisdictions. But a strong movement for opting out points to trouble.
Wilkinson says the Opposition is in favour of a true anti-speculation tax which would intervene during the pre-sale phase of real estate transactions.
Premier Horgan said in an interview with West Shore Voice News during the Sooke Fall Fair last weekend that the speculation tax will be debated in the legislature this fall toward “finalizing who will be captured by that – and trying to reduce the demand on housing (so it’s not a speculator’s market).”
He reminds: “People can avoid the tax by renting their accommodation for half a year and not sit on empty homes.” But how is the use of someone’s private property appropriately within the reach of government? The impropriety of that idea greatly contributes to the clash between higher-end property owners and the provincial government. A more genuine approach to producing more housing is to increase supply, which the government is in fact working on through its 30-point housing plan (over 10 years).
But the perceived attack on the property development/ownership community through the speculation tax – the rollout of which Horgan admitted in a recent interview with Global News was “poorly executed” – is counterproductive to goodwill with the sector that finances and executes housing development.
The clumsy if not misguided speculation tax rollout has opened the door wide for opposition to the tax and toward the NDP government. And with housing sales now sagging, so too does that cash-cow source of revenue to the BC coffers. These are clear signals for a re-think.
::: This article was first published on page 1 in the September 14, 2018 print/PDF issue of West Shore Voice News.