Everyone loses under the proposed B.C. government speculation tax intended to deal with the issue of housing affordability.
B.C. homeowners lose as the number of home-sellers increases, the number of home-buyers decreases and their property values decline. This situation creates significant market uncertainty, pushing most buyers to the sidelines while others wait until the value reaches a speculator’s bottom. The market has “speculators” every time a market is out of balance, either too low or too high.
All home-buyers lose when the equity requirements for financing increase, eliminating most first-time buyers and others from the market, thus creating pricing uncertainty.
All renters lose as rents climb and buyers wait to enter the homeownership market.
Residential developers lose as potential buyers evaporate and the number of sellers increases. The corresponding decline in house prices will make it nearly impossible to secure the necessary presales for financing a new project.
B.C. business owners lose as construction and other jobs are lost, tourism drops and investor confidence erodes, creating another speculator’s market for distressed business sales in the coming years.
The B.C. and Canadian economies lose because of the restrictions and harm to a free Canadian national and international economy. This government policy of populism, restriction, penalties and market interference puts the B.C. economy back on the “No Invest List,” much as it was over 20 years ago when similar non-market, unworkable and poorly advised policies were implemented. The overall negative consequences are much worse than the immediate and local stresses caused by these discriminating and costly penalties.
Intellectual, entrepreneurial and cultural communities lose because these punitive taxes offend and turn away world-class thinkers, intellectuals, entertainers, among other progressive and profitable enterprises. They do not want their assets and hard-working earnings overtaxed, because there are many great places in the world where their investment is welcome.
Everyone loses, including future B.C. politicians who will be stuck fixing the dire consequences of the speculation tax.
As Victoria’s director of planning, Jonathan Tinney, stated in an article for the Times Colonist in August 2017, supply is the real solution to housing affordability. Housing and finance leaders must come together and revitalize municipal zoning and permitting policies to cut costs and increase land and housing supply. Supply and demand are, and have always been, the enduring economic solution.
Studies show that the cost of obtaining municipal approvals is approximately $85,000 per unit. Some projects, such as Bayview Place, cost even more per unit because of lengthy zoning and permitting approval processes. As well, restrictive zoning that unnecessarily limits tower height and density reduces the ability for premium pricing of higher-floor units to subsidize pricing of lower-floor units. These practices affect the consumer cost for all housing, especially affordable housing.
Everyone loses when our economy suffers, and in particular when an ill-considered tax affects everyone negatively. Let’s get back to the basics of good economic policy and come together with practical and realistic solutions that address housing affordability.
Kenneth Wm. Mariash, Sr., the master planner of Bayview Place, is an architect, investor, developer and contractor with more than 50 years of industry experience. Mariash has completed studies in art, math and physics, and an undergraduate degree in business and economics, along with an MBA. He has been actively involved in economic studies, seminars and discussions with many Canadian and U.S. universities such as Wharton, UCLA, Chicago and Ivy League schools.