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Squamish, Lions Bay, North Cowichan and Lake Cowichan are some of the municipalities where homeowners who leave their homes vacant will have to pay an additional tax.
Publication date:
July 20, 2022 • 4 hours ago • 3 minutes read • 26 comments Construction cranes tower over apartments near southeast Vancouver’s False Creek. Photo by DARRYL DYCK /The Canadian Press files
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BC expands scope of its speculation and vacancy tax.
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The tax, which aims to discourage housing speculation and vacant homes in major urban centers, will soon apply to North Cowichan, Duncan, Ladysmith and Lake Cowichan on Vancouver Island and to Lions Bay and Squamish in the Sea to Sky corridor.
Those new communities will be “shielded” from the tax starting in 2023, BC Finance Minister Selina Robinson said at a news conference Wednesday.
“People in these communities have been vocal about the intense housing pressures they face, including speculation and near-zero rental vacancy rates,” she said.
“After careful consideration and listening to people and community leaders about speculative real estate issues in their communities, we are expanding the tax to these additional areas that are facing severe housing pressures.”
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The tax was introduced in 2018 by the NDP government as a way to discourage housing speculation and empty homes. It also targets foreign owners and satellite families who have Canadian citizenship but earn their income outside of Canada.
The tax currently applies to owners of vacant homes in the metro Vancouver, Victoria, Nanaimo and Kelowna metropolitan areas. Foreign owners and satellite families pay a higher tax rate.
The move to extend the tax to smaller communities was based on an independent review that found those communities were experiencing housing pressures due to their exempt status and proximity to taxed communities, Robinson said.
“We’ve been watching this tax evolve,” she said. “Good analysis was done and recommendations were made as to where else this might need to be extended given the pressures being pushed out of the city centres.”
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However, the expansion did not extend to Whistler, a resort municipality north of Squamish with a well-known housing crisis.
Robinson said Whistler’s status as a vacation resort means it has “unique” housing challenges. The department is monitoring the housing market in Whistler and other resort communities and will use other tools to address their concerns, she added.
The ministry cited a recently published independent report which found that speculation and the vacancy tax are working as intended to keep house prices and rents down.
The report, authored by University of British Columbia professor Zur Somerville and analyst Jake Wetzel, said the tax helped put 20,000 apartments back on the long-term market in Metro Vancouver.
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It also added an estimated $231 million to state coffers between 2018 and 2020, with 68 percent of the revenue coming from foreign owners and satellite families.
BC Green MLAs Sonja Furstenau and Adam Olsen said they wrote to Robinson in February asking for the tax to be extended to their rides.
Green leader Fürstenau, who is also the MLA for Cowichan Valley, welcomed the tax but added it was not a silver bullet. “We need to increase the supply (especially of for-profit housing and cooperative housing), encourage municipalities to implement density zoning and much more,” she said in a statement.
Olsen, who represents Saanich North and the Islands, said he was disappointed the southern Gulf Islands were not included.
In response to NDP claims that Liberal Leader Kevin Falcon would repeal the tax if elected, Falcon accused the NDP of playing politics with the housing crisis.
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“I’ve been very clear that I’m not going to eliminate the tax and instead I’m going to review all the taxes that the NDP has put on housing,” Falcon said in a statement Wednesday. “The cost of renting and buying in British Columbia is higher than ever under the NDP and we need to look at measures that actually address speculation, which the NDP is not doing.”
Falcon said BC needs to look at other strategies to address the housing crisis, including increasing supply and reviewing the cumulative impact of housing taxes on affordability.
The Speculation and Vacancy Tax levies an additional two percent on the property’s assessed value for foreign owners and satellite families and an additional 0.5 percent for local residents.
Homeowners must complete a return each year to declare their residency status and how their property is used.
The tax will take effect in new communities in January 2023, meaning homeowners will have to declare their status for the first time in January 2024. Exemptions are available for primary residences, properties with long-term tenants and other circumstances.
chchan@postmedia.com
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