B.C. Premier Christy Clark says a proposed surcharge on housing is problematic.

B.C. Premier Christy Clark says a proposed surcharge on housing is problematic.

Housing affordability tax floated by profs to cool real estate jets

Proposed 1.5 per cent surcharge would shift money from investor owners to other residents, promote rental of vacant homes

A housing affordability surcharge is being proposed as a way to redistribute money from investment property owners – including foreigners and other owners of vacant homes – to other residents in the same participating city.

The UBC and SFU business professors behind the idea say it would be a modest step to restrain the upward spiral of house prices in hot real estate markets.

But more importantly, they say, it would spur investors to rent out now-vacant homes rather than merely using B.C. residential real estate as a place to park money.

The proposal for the B.C. Housing Affordability Fund would create a 1.5 per cent tax on the assessed value – a $1 million home would be charged $15,000 per year.

But it would come with a long list of exemptions to exclude most resident owners. Seniors receiving CPP or OAS wouldn’t pay, nor would veterans, the disabled or anyone who has lived in their own home for several years.

For others, the surcharge would be reduced for every dollar paid in annual income taxes by the owners, meaning the average working family in a typical home would likely owe nothing.

Non-resident owners of vacant homes would have their surcharge reduced by the amount of rental revenue they declare to the federal government.

“The targets are people who own real estate and leave it vacant and people who live here but essentially don’t declare much in Canadian income,” UBC’s Tsur Somerville explained.

Those targets would include Canadian investors who own condos in Vancouver but find it easier to leave them empty than rent them, as well as wealthy Chinese families where the wife and kids live here but pay no income tax while the father works in China.

“Our intention was not to make it explicitly about foreigners,” Somerville said.

“It was to make it about people who through their choices make housing more expensive for the people who are trying to live and work and carry on a normal life here.”

Each municipality would decide if it wished to participate and money raised within its borders would be redistributed there. The academics are split on whether it should be rebated equally to all Canadian tax filers within the city or geared more to those in greater need.

They estimate it could raise at least $90 million within Vancouver alone.

Premier Christy Clark praised the proposal but stressed it is problematic.

“It’s a good idea, but the execution is really hard,” Clark said.

“We are looking at it. It’s really complicated, though. If somebody goes away for a year, a university prof goes on a sabbatical at the University of Beijing, should we tax them? A senior citizen finds themselves in hospital for a long period of months, should we tax them?”

Greater Vancouver Home Builders Association CEO Robert de Wit said there’s no hard data to justify such a policy.

“It’s well-intended but it’s a bit of a harebrained idea,” he said, adding it would distort the market and create more problems than it solves.

“This could lead to a flight of capital, which is not a good thing for the country.”

B.C. Real Estate Association chief economist Cameron Muir said even the authors admit the proposal would do little to make homes more affordable for most buyers.

NDP leader John Horgan praised the idea as a way to collect needed data on real estate owners and “generate money for affordable housing by taxing speculators and profiteers while remaining invisible to British Columbians filing income tax, seniors living in long-time family homes and landlords.”

The province has signaled it intends to deliver some sort of reform to address housing affordability in the upcoming budget but without hammering down current real estate prices or the equity people have in their homes.

One possibility is an extra increment of the property transfer tax that charges luxury homes more when they change hands. Assistance for new home buyers or renters are potential uses of the extra  revenue.

Somerville noted PEI bans non-residents from owning ocean front property and said it’s high time for B.C. to at least gather more information on who owns real estate here.

– files from Tom Fletcher

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

This male Dungeness can safely be harvested after passing muster. An official with Fisheries and Oceans Canada says it is not clear how well locals on the Saanich Peninsula are complying with crabbing regulations, but her comments suggest that any problems might be of a minor nature. (Department of Fisheries and Oceans/Submitted)
Sidney and Sooke record 57 crabbing violations in 2020

While recreational crab fishery has ‘compliance issues,’ no evidence of ‘large scale poaching’

Police seek information after a pedestrian was hit in a crosswalk at the intersection of Goldstream Avenue and Veterans Memorial Parkway on March 3.(Google Maps)
Witnesses sought in Langford pedestrian hit and run

Suspect is older man driving four-door, gold sedan

The University of Victoria has said some of its students were impacted by an off-campus exposure to COVID-19 last weekend. (Black Press Media file photo)
University of Victoria students impacted by off-campus COVID-19 exposure

UVic has not specified where the exposure occurred

Const. Mat Jones of the CRD Integrated Road Safety Unit joined a team of Saanich police officers and ICBC representatives cracking down on distracted driving at the McKenzie/Quadra intersection in Saanich on March 3. (Devon Bidal/News Staff)
‘Leave the phone alone’: 40 distracted driving tickets issued in two hours at Saanich intersection

Saanich police, CRD Integrated Road Safety Unit crackdown on drivers’ cell-phone use

Cleanup happens after an overnight flood Monday damaged areas of the Oaklands Community Centre. (Facebook/Oaklands Community Association)
Greater Victorians offer flood of support to Oaklands Community Centre

Blown hot water tank Monday night leaves staff cleaning up soggy mess

Health Minister Adrian Dix looks on as Dr. Bonnie Henry pauses for a moment as she gives her daily media briefing regarding COVID-19 for British Columbia in Victoria, B.C. THE CANADIAN PRESS/Jonathan Hayward
7 additional deaths and 542 new COVID-19 cases in B.C.

Provincial health officials reported 18 new COVID-19 cases linked to variants of concern

(Black Press Media file photo)
POLL: How’s your butter?

Recent reports have some Canadians giving a second look to one of… Continue reading

Anyone with information on any of these individuals is asked to call 1-800-222-TIPS (8477) or visit the website victoriacrimestoppers.ca for more information.
Greater Victoria Crime Stoppers wanted list for the week of March 2

Greater Victoria Crime Stoppers is seeking the public’s help in locating the… Continue reading

Chief Justice Christopher Hinkson (Office of the Chief Justice)
Judge questions whether B.C.’s top doctor appreciated right to religious freedom

Lawyer for province says Dr. Henry has outlined the reasons for her orders publicly

A sample of guns seized at the Pacific Highway border crossing from the U.S. into B.C. in 2014. Guns smuggled from the U.S. are used in criminal activity, often associated with drug gangs. (Canada Border Service Agency)
B.C. moves to seize vehicles transporting illegal firearms

Bill bans sale of imitation or BB guns to young people

The City of Duncan will implement a new pilot project targeting vandalism this spring. (File photo)
Graffiti trouble? Duncan will give you the brush and the paint to remove it

Initiative based on a successful project to protect Port Alberni from unwanted spray paint

BC Housing minister David Eby is concerned that Penticton council’s decision to close a local homeless shelter will result in a “tent city” similar to this one in Everett, Wa. (Olivia Vanni / Black Press file)
‘Disappointed and baffled’ B.C. housing minister warns of tent city in Penticton

Penticton council’s decision to close a local homeless shelter could create tent city, says David Eby

The first of Fisheries and Oceans Canada’s long-range maritime patrol aircraft—the Dash-8—becomes operational. (Photo supplied by PAL Aerospace)
Fisheries and Oceans Canada’s new De Havilland Dash-8-100 long-range surveillance air craft is capable of staying aloft for eight to 10 hours for a variety of missions up and down the B.C. coast. (Photo supplied by PAL Aerospace)
New plane will double DFO’s surveillance capacity in B.C.

The Dash-8 will fly out of Campbell River for enforcement, conservation missions

A recently published study out of UBC has found a link between life satisfaction levels and overall health. (Pixabay)
Satisfied with life? It’s likely you’re healthier for it: UBC study

UBC psychologists have found those more satisfied with their life have a 26% reduced risk of dying

Most Read