Speculation tax registration is important and doesn’t take as long as many believe
DOUGLAS TODD
The Vancouver Sun
I’m not a fan of filling out forms.
So I worried after commentators and politicians warned it could take 40 minutes to fill out what was being called a 14-page form for the B.C. government’s speculation and vacancy tax.
Headlines declared the forms are causing “devastation.”
When the tax notice arrived in our mailbox this week, marked “Action Required,” I was curious about how bad it was going to be.
I grabbed my smartphone and clicked on its stopwatch function.
Timer running, I opened the envelope, went to the website gov.bc.ca/spectax, read the instructions and steeled myself to enter a bureaucratic vortex.
In four minutes and 32 seconds I was done. I was notified by email our home was exempt from the tax, apparently like 99 per cent of homeowners in B.C. who the government cover letter says will not be affected.
Given the minor irritation of the process, which was not nearly as bad as filling out a corporation’s property-insurance form, it’s worth remembering the larger purposes of the speculation and empty homes tax, which last year three out of four British Columbians supported, according to the Angus Reid Institute.
A key goal of the tax, which applies in high-priced cities only, is to ease housing affordability crises by making more empty dwellings available to buy or rent.
The second aim, which the form’s questions specifically address, is to ensure well-off people who do not pay significant income tax in the province will at least contribute a modest amount through this new property-related tax.
Although financial specialists and politicians differ on the logistical details of an emptyhomes tax, most agree the problem of absentee owners and speculators is significant in Metro Vancouver, Greater Victoria, Nanaimo, Kelowna, Abbotsford, Mission and Chilliwack, even if some people don’t understand the phenomenon or have reasons to deny it.
So why all the excitement over filling out a government form?
It has not only been the pages of The Vancouver Sun that have been alive with often-angry debate over the government’s attempt to reduce the number of empty dwellings in cities undergoing a severe housing affordability and rental crunch.
B.C.’s tax will require offshore investors with mostly empty dwellings to pay a rate of two per cent, while Canadians whose primary residence is outside B.C. will pay one per cent.
Residents of B.C. will get off the lightest, paying 0.5 per cent while also being eligible for a $2,000 a year credit against what they pay in income tax.
While I felt I was just fulfilling a minor civic responsibility by filling out the empty-dwelling form, even academics, normally known for their cool heads, have been joining Green and Liberal politicians in pulling out the rhetorical stops.
SFU finance professor Andre Pavlov, who has long supported the principle of taxing absentee owners, last week wrote a piece for The Vancouver Sun accusing Victoria of messing up the process by sending out a “sacred letter” to homeowners with “vicious efficiency,” imposing a state “surveillance mechanism” on the people.
Pavlov wrote, raising the spectre of Big Brother, “The government is asking you to explain how many nights you sleep in your own bed.” Pavlov went on to repeat his argument (which is also that of the development industry) that the prime way to relieve housing unaffordability is to remove impediments to building more supply.
In contrast, the City of Vancouver reported this week that its original vacancy tax, which it initiated in 2017, is working. The number of vacant properties in Vancouver has fallen by 15 per cent in one year, says the city, and more than half of those previously empty homes have been returned to the rental market.
Addressing the often ignored goal of the speculation and vacancy tax, SFU public policy professor Josh Gordon supports that it targets wealthy “satellite families” that own vacant dwellings in B.C., which until last year were rising rapidly in price.
“What has been very revealing in the speculation-tax debate is the conspicuous silence of the critics about the part of the tax that applies to satellite families. These are often millionaire families that are paying next to nothing in income taxes since the income is earned abroad,” said Gordon, describing how satellite families typically maintain student children or spouses in B.C. while the breadwinners are taxed elsewhere.
“You’d assume that this is a situation that should be addressed, especially because of its impact on housing affordability. Yet there has been no mention of retaining that part of the tax by critics. Why haven’t the critics been pressed on this issue? Do they think that it doesn’t merit policy action?”
To be sure, there is a chance a small proportion of people will feel hard done by the speculation and vacancy tax because their anomalous, irregular living situations wind up placing them among the one per cent who will not be exempt.
A colleague, for instance, told me the tax was among the factors compelling him to sell his Metro house. His new relationship meant he was spending most of his time out of province.
Turns out he made a hefty profit in the sale.
And his house has been bought by a couple who are living in it.
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