Almost two-thirds of those who pay the new housing speculation tax will be British Columbians, Finance Minister Carole James admitted Wednesday.
B.C. residents who own several homes will be disproportionally hit. About 20,000 of the 32,000 homes subject to the new tax will be owned by British Columbians and not foreigners or residents of other provinces, James revealed during a debate on her ministry’s spending plans in the legislature.
The homes are in all areas where the tax applies — the Capital Regional District (excluding the Gulf Islands), Nanaimo-Lantzville, Metro Vancouver, Kelowna, West Kelowna, Abbotsford, Chilliwack and Mission.
The revelation brought immediate condemnation from the Liberal Opposition, who said a speculation tax that mostly hits B.C. residents should really be called an “asset tax.”
“It’s a very interesting choice calling this a speculation tax to try and deal with housing issues,” said the Liberal finance critic, Shirley Bond. “No one in this room is disagreeing that we have a housing crisis. What we’re disagreeing with is this minister has labelled a tax a speculation tax, which could be much more accurately described as an asset tax.
“These are British Columbians who have purchased a second home. Does that qualify them as a speculator? I don’t think so.”
But James offered no apologies, saying those regions are in the midst of an affordable housing and rental crisis and the purpose of the tax is to get people with vacant homes to rent them out or sell them.
‘We believe they can contribute a little bit more,” said James. “They have the right, if they wish, to pay the speculation tax but they also have the ability to rent their place out.”
Owners are exempt from the tax if they rent their properties for at least six months of each year. There’s also a tax credit for B.C. residents with homes valued under $400,000.
Though more British Columbians than foreign residents will be hit by the tax, they will overall pay less, James said. Of the $201 million the speculation tax is expected to generate annually for the province, $140 million is projected to come from foreign or out-of-province owners, and roughly $60 million from British Columbians, she said. That’s because B.C. residents will pay a rate of 0.5 per cent, compared to one per cent for Canadians from outside B.C. and two per cent for non-Canadians.
James said B.C. owners who buy more than one home and leave it vacant are, in fact, speculating on the rising cost of housing and hurting their communities. The speculation tax was part of a suite of changes introduced in February’s provincial budget.
Bond countered that these B.C. owners are simply hard-working British Columbians who could afford more than one property.
“The individuals who struggle to find housing work hard in their communities as well,” said James. “There are individuals who could’t even dream of having one home never mind an additional home they leave vacant.”