The NDP’s “speculation tax” on real estate is really nothing of the sort when you consider who’s getting whacked with the new tax — and who isn’t.
Premier John Horgan promised during last year’s election to crack down on foreign property flippers who use the real-estate market like their own personal Monopoly game.
The NDP’s solution: A two-per-cent annual tax on properties purchased by buyers who do not pay income tax in the province, with the money used to build affordable housing for people who actually live and work here.
But the tax unveiled in the February budget goes after owners of empty homes, including vacation properties owned by British Columbians who pay income tax here.
How is someone who owns a cabin on a lake suddenly deemed to be a “property speculator” in the eyes of the government?
Horgan himself said the government wouldn’t target such people.
“If you have a home in Vancouver and a home in Penticton that you visit in the summer or to ski in the winter, that would not fall in with the out-of-province speculation tax,” Horgan said.
But the government is going after vacation properties, despite what Horgan said, sparking anger from owners who feel double-crossed.
“I inherited a cabin on a Gulf Island from my parents that we visit in the summer because you wouldn’t want to go there is the winter — it has no insulation,” a reader emailed me last week.
The tax does not apply if the secondary property is rented out full-time, but that’s not always possible.
“I wouldn’t be able to rent it out unless I spent a fortune to properly winterize it,” the reader said. “And I don’t want to rent it anyway. But now I’m a ‘speculator’ because my dad bought a cabin 30 years ago.”
Finance Minister Carole James explained the tax is designed to encourage people to rent homes out, rather than let them sit empty in low-vacancy rental markets.
But, if that’s case, why has the government only imposed the tax in certain regional districts including Metro Vancouver, Fraser Valley, Victoria, Kelowna, Kamloops and Nanaimo?
The tax does not apply in Whistler, which is full of vacation properties bought by rich absentee owners in a community struggling with a rental shortage.
James said the government is reviewing the tax and may announce changes by the fall, as Liberal Leader Andrew Wilkinson vows to fight the NDP’s “cabin tax.”
“It does nothing to curb real-estate speculation. Instead, it unfairly penalizes B.C. residents,” Wilkinson wrote in a fundraising pitch to Liberal members.
I suspect James will amend this broken-promise tax. But, in the meantime, I think the New Democrats are enjoying the spectacle of the Liberals defending the interests of those wealthy or fortunate enough to own vacation properties.