A new so-called “Speculation Tax” was announced by British Columbia’s Finance Minister Carole James and the NDP Government on Feb. 20th. It is a so-called speculation tax because it is, in all practical terms, a vacation home or secondary residence tax. The tax rate is a punishing two per cent, annually, on the assessed value of a property owner’s family vacation property or second home.
The tax in its present form applies to Metro Vancouver, the cities of Kelowna and West Kelowna, Nanaimo Region, the Capital Region and the various Gulf Islands. The City of Kelowna has denounced this tax as “punitive” and that it sends a message to out-of-province Canadian buyers that they are not welcome in Kelowna. Similarly, West Kelowna and the Nanaimo Regional district have demanded an exemption from the province’s latest tax grab on homeowners in their respective jurisdictions.
The stated reasons and justifications for this tax from James and the NDP? To create a downturn in the housing market and a decline in prices, even if that means existing homeowners are left underwater on their mortgages.
The minister of finance wants hard-working homeowners and families in B.C. to be underwater on their mortgages, and for what end?
We are already witnessing the negative impacts of this tax hitting the Okanagan particularly hard. The chief administrative officer of West Kelowna has recently been quoted on the issue:
“I can see that there will be some foreclosures if this continues,” and that “just the news that this may happen or is going to happen has scared off a lot of developers” regarding the impact of the tax on a community dependent on development to finance critical infrastructure and services. The mayor of Kelowna said the tax could have “dire unintended consequences” for his community.
Meanwhile, the minister of finance has acknowledged that her ministry has not done any modeling on the economic and market impacts of this ill-conceived tax. Minister James is playing fast and loose with the livelihoods, homes and family finances of B.C. – without a basic understanding of the dire unintended consequences of this latest tax grab.
Luckily, this policy ineptness does not apply to homeowners in Squamish. However, it is surprising to learn that our current Mayor – with the support of Councillor Jason Blackman-Wulff – has written to the Finance Minister asking why Squamish wasn’t included in this off-the-cuff tax scheme. Is the mayor now playing fast and loose with the home equity of Squamish homeowners?
It would seem so.
[Editor’s note: Mayor Patricia Heintzman’s office says the letter highlighted Squamish’s housing issues and asked the Minister’s rationale for not including Squamish in the tax. It was not a request Squamish be included. The next step is furhter discussion of the tax with council. ]