In Budget 2018, the provincial government proposed several measures in an attempt to deal with a massive housing affordability crisis in British Columbia. One of the measures was a “speculation tax” which was part of the BC Green Caucus housing policy announced in earlier this year. There have been many concerns raised about how the BCNDP’s “speculation tax” is applied and the unintended consequences it is having on British Columbians.
I ask Finance Minister Carole James about the tax, the application and how it is going to impact Southern Gulf Island communities.
Adam Olsen
We need to take strong action on tackling the housing crisis gripping Vancouver and spreading across other parts of our province as well. We need to protect the future of young people in our cities. We need to target what’s really driving this crisis.
I agree with the Premier: we need to get speculation out of the marketplace. But as we do this, the unintended consequences on the areas that we didn’t intend to target must be minimized. I’ve heard loud and clear that an unintended consequence of the speculation tax, as proposed by this government, could be to hit areas like the Gulf Islands very hard.
I’m very sympathetic to the complexity of the challenge that this government has inherited. But the British Columbians who own vacation homes are not speculators, and most importantly, they are not the primary cause of the housing crisis. Applying the tools to address the supply-and-demand aspects of the housing market on places like the Gulf Islands is going to be very tricky.
My question is to the Minister of Finance: will the implementation of this tax recognize the difference between Galiano, Mayne, Pender and Saltspring Islands and places like Vancouver?
Hon. Carole James
Thank you to the member. Thank you for the support of the speculation tax. I think it’s critical. I know that the housing plan for the Greens actually called for a speculators tax that would: “Take the form of an annual property tax surcharge targeted at absentee owners and cover domestic speculators, such as residents of other properties who own property in B.C.”
I take the member’s point. We’ve been hearing, as I said, issues that have come forward. We have included those. They have been on our table as part of our implementation. We’ll be looking at all those issues, and I appreciate the feedback from the member.
Mr. Speaker
Saanich North and the Islands on a supplemental.
Adam Olsen
Yes. That’s right. We did put forward a comprehensive policy. That included a flipping tax as well. I thank the minister for the answer, and I’m glad to hear that the feedback will be taken. I welcome it.
It’s crucial that we get the implementation of this right. The target of the speculation tax should not be the senior couple who owns a vacation home on Mayne Island and stays there for several months of the year. That’s been going on in the market for a very long time. The target should be on the speculator who views our real estate as a place to park capital and a place just for profit.
I’ve been hearing from individuals and from local governments with concerns on the details of this tax. The government has got to be able to create tools that recognize the diverse needs of different parts of this province and more effectively deal with the crux of the issue.
My question is to the Minister of Finance again. Being open to feedback, will you take this a step further and reach out to the local governments as you make changes to this policy, to ensure that their voices are also being heard — and the needs of communities?
Hon. Carole James
Thank you to the member. Yes, I’ve been hearing from local governments as well. So if there are others, I’m happy to do that outreach. We’ve been hearing from a number of individuals, and they’ve been providing their feedback around suggestions, around approaches. All of that, as I said, has been on our table as part of the implementation plan. So I appreciate it, and if there are other contacts that the member wants to pass along, please feel free. This is our opportunity — and details to come.
It appears to me that you have been listening too much to the real estate agents on the Gulf Islands who are declaring the sky will be falling and this tax will hurt our economy. Please don’t be persuaded to weaken the regulation. Salt Spring Island needs it as much as anywhere. In fact on a per capita basis we have twice the empty homes that Vancouver has!
Anyone who owns a home here and does not live here as a primary resident or rent it out full time, has taken a house out of the available pool. It really doesn’t not matter if the motivation is pure speculation, or the motivation is to vacation here for a week or few. The result is the same. One less density for the permanent members of the community. Unless such densities are made up in new supply, which we have not seen on this island in any meaningful quantities, then it is a drag on our economic and social fabric and the cause of rising prices and rising cost of living that is displacing people. If houses are dropped by out-of-province speculators but picked up by in-province cottagers, the proposed tax will come to no effect! A cottager who buys a home and keeps it for their own very temporary enjoyment is contributing to the housing crisis. Yes, this has been going on for a long time, but so what? That is why it is called CHANGE. It was fine when there was not a housing crisis, but now it is no longer beneficial to this community. Time for a Change.
Economically, Salt Spring Island has little to worry about (I can’t speak to the outer islands) if the cottagers are pressured to sell or to rent to a full-time resident. In either case we will be trading a week to a couple months of part-time economic activity for year-round economic activity. We need more economic activity in the long winter months, not in the summer, when one can barely get a parking space in Ganges. Also, speculators selling homes will reduce the cost of rents and the cost of living, and increase the quality of life. This is basic economics, but not to real estate agents who merely look to their commissions- and also the guilt at having sold overpriced homes that are likely to go down substantially with this Ponzi scheme comes to an end.
Adam: What we don’t need is “Ready, Fire, Aim”.
Perhaps if we had good data and were collecting already imposed taxes (income and capital gains taxes) we would be better able to formulate effective government policies.
My “modest proposal” is here:
https://pricetags.wordpress.com/2018/02/21/a-modest-proposal-on-b-c-real-estate-and-taxation/
My post was written before we knew about the “Speculation Tax” in the BC 2018 Budget. Much has been said about the term “Speculation”, in particular as it applies to other Canadians. I have been concerned about the use of this highly charged word – but perhaps it is the right word to use.
Turns out it is a “speculation” tax – Speculation by the government.
Definition #1 applies, not #2.
From Google’s dictionary:
“1. the forming of a theory or conjecture without firm evidence.
2. investment in stocks, property, or other ventures in the hope of gain but with the risk of loss.”
Thank you Adam for speaking a little truth to power, if I may characterize your questions in that manner. My wife and I are a retired couple who own a small apartment in Sidney. We were both working people (I worked for the Government of Alberta and my wife worked as a nursing instructor in an edmonton college). We did not purchase our Sidney property to speculate in the local real estate market. Indeed, the first three years we owned it its assessed value fell each year, LoL. We live several months of the year in Sidney in order to spend time with our close family members on the Island. While our children and grandchildren reside in Alberta, both my wife and I have brothers who live in Victoria and Sidney, both sets of our parents live on the Island as well and we all cherish the time we can spend to gather when are here from Edmonton. Working people like ourselves did not cause the real estate crisis in Vancouver, as you say, and we are far from being speculators. But we could never afford to pay the proposed new “speculators” tax and so would be terribly hurt by it should it come to pass. As well, my wife is receiving cancer treatment here in Alberta and it is not reasonable to expect us to move to BC to avoid this proposed tax. Please speak up for retired folks like us who bought our modest property in Sidney to be closer to our BC family members and the beautiful Saanich area.
The family cabin on galiano was bought in 1972 however I’m now a speculator even if it’s removed if we tax Americans and other Canadians who we been telling to come to bc the Gulf islands economy will hurt plus foreigners will never trust bc again in Vancouver a wealthy land owner will write a rental forum saying a friend or a friend’s kid lives on the property .this is a tax on owners not a tenant who killed rent but not even stay on the property .
For those people who say “people who can afford second homes should pay more”, I say I do already.
For every dollar I make, I’m paying approximately half that to taxes, far more than the average. Is that fair?
If I sell my Salt Spring property it won’t be to someone who rents it out, it wouldn’t make sense financially.
The gulf islands will be losers, and the winner will be Donald Trump’s San Juan Islands.