B.C.’s finance minister appears ready to tweak speculation tax

VICTORIA — Finance Minister Carole James appears to be rethinking parts of her new speculation tax and now says she’s working to address specific problems before the full rules are made public in the spring.


James said she’s aware of complaints from some British Columbians who own vacation properties in locations like the Gulf Islands and who could be subject to the speculation tax in last month’s provincial budget. Those concerns are forming part of the behind-the-scenes development of the tax regulations, to make sure it focuses on speculators and not B.C. residents before it is implemented, said James.


“All of the considerations are being looked at as part of the implementation of the tax,” James said in an interview Wednesday. “That’s why we said when we announced it in February we wanted to take the time to do this right, we wanted to make sure we looked at all considerations and that’s what we’re doing now.


“So details will come. I understand people have lots of questions, that’s understandable for a bold measure like this. But those details will come.”


James’s comments are the first acknowledgment from government of the growing level of public concern that the tax may penalize some British Columbians who own second homes. Though aimed at foreign speculators and out-of-province landowners, the tax as described in the budget would also capture a Lower Mainland resident who owns a vacation property in Kelowna, on a Gulf Island, or in Greater Victoria, for example.


The government has said those residents would get “a non-refundable income tax credit to help offset the tax for B.C. residents.” But the credit may not cover the upfront annual cost of the new tax for everyone, especially for those seniors who pay low income taxes but whose second property has a high assessed value. The tax will start at 0.5 per cent in 2018 and rise to two per cent in 2019.


James also acknowledged the government is reviewing the locations the tax will apply, currently set for Metro Vancouver, the Fraser Valley, the Capital Regional District, the Nanaimo Regional District and the municipalities of Kelowna and Kamloops. Those regions encompass popular vacation islands such as Salt Spring, Mayne, Pender, Saturna, Galiano and Gabriola, but the government did not include the Sunshine Coast or Whistler.


“We are working on those details now, including all of the issues people have been raising, those are on our table, those are part of our considerations and you’ll see the responses and specifics come before the legislation,” James told reporters Wednesday.


The speculation tax would function more like an empty homes tax, because it provides exemptions for owners who put their second properties on the long-term rental market.


It’s a modified version of a housing affordability plan first proposed by academics from Simon Fraser University and the University of B.C.


UBC professor Tom Davidoff, who helped craft the plan, said the original goal was to tax people who leave second properties partly vacant in urban areas like Metro Vancouver, where the supply is scarce. “In a place like Vancouver, I don’t care where you are from, if you are staying in a place two nights a week there’s no way you should pay a bargain basement property tax,” he said.


The original academic housing plan, which the NDP endorsed in the election, allowed for local regions of the province to opt in to the tax, recognizing some areas, like the Gulf Islands, might not want the penalty. The NDP government’s version mandated the locations and expanded the second property exemptions beyond what the academics originally proposed.


Nanaimo-North Cowichan NDP MLA Doug Routley, whose riding includes Thetis, Gabriola and Valdes islands, said he took complaints from his constituents to James and received assurances they would be addressed. “The minister and her deputy both assured me the tax introduced in the budget, not to be completed until May, will be tweaked and designed in such a way that it achieves as surgically as possible its intended purpose to curb speculation in the housing market by non-residents of B.C.,” Routley said Wednesday. “The target is not B.C. residents who own a cabin.”


B.C. Green MLA Adam Olsen, whose riding of Saanich North and the Islands includes five Gulf Islands, said his constituency office has received more emails about this issue than any other. He said many of the questions are from retirees who own property they use on weekends or in the summer, and whose fixed incomes don’t give them the money to pay potentially thousands of dollars in new speculation tax costs.


“For a retired fixed income couple or individual, assuming the fact they can pay the upfront tax, the unknown of whether they’d get money back at the end of the year when they file their income taxes is problematic,” said Olsen. He’s asked James to clarify the intended outcomes of the tax, and said he’s gathering stories from constituents to present to her in the hopes the tax can be changed.


Click here to get the latest update on BC Speculation Tax


Source: Vancouver Sun. http://vancouversun.com/news/local-news/b-c-s-finance-minister-appears-ready-to-tweak-speculation-tax

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