A real estate speculation tax announced in the recent provincial budget is making some noise beyond the housing affordability crisis in the Lower Mainland, Southern Vancouver Island and the Okanagan.
Directors with the Regional District of East Kootenay grappled with the issue during a recent board meeting, and passed a motion to send a letter to provincial government asking for a speculation tax exemption to the area and for consultations with local municipalities.
“Our board wants to ensure that that tax does not come to our regional district — period,” said RDEK board chair Rob Gay.
Gay noted that the board is concerned about the potential for negative impacts of the tax such as scaring away investment from out-of-province sources like Alberta. The board chair says Albertan investors who purchase recreational property in southeast BC are not real estate speculators and are frequently using their properties, sometimes even permanently relocating to them.
“Our board wants to stress to the province that in our area, our second-homeowners are a valued and important part of our communities and we are gravely concerned about the impact this tax could have should it be expanded,” said Gay.
The RDEK’s letter to the province will be sent to both Premier John Horgan and Carole James, the minister of finance, explaining the board’s concerns and requesting consultation before any further changes. Additionally, correspondence will also be sent to the Association of Kootenay and Boundary Local Governments (AKBLG).
Kimberley mayor Don McCormick says the uncertainty of the tax and whether it will apply to the East Kootenay region is causing grief for potential investors.
While it’s no secret that housing affordability is a significant issue in other parts of the province, the speculation tax is not an appropriate tool for the East Kootenays, he continued
“I think there’s always danger in broad application of a solution in one area and expecting that it’s going to work in another,” McCormick said. “I think what we have here is unintended consequences on the part of the government and I think they need to think about that and make a clear statement on what the direction of this particular tax is.”
McCormick, who noted that Kimberley is facing a rental shortage in his community, said that housing issues can and should be solved through addressing supply and demand issues.
“We can talk about tinkering with the market all we want, but at the end of the day, we need more supply in the market place,” McCormick said. “That’s what we’re trying to focus on in Kimberley right now, is to encourage our developers and our builders to get in and take advantage of a very buoyant opportunity and regardless of what the province does, if we don’t increase the supply, the problem won’t be solved.”
While the discussion focused on opposition to the speculation tax, directors also debated tax policy and the options available to local governments for revenue generation and addressing vacant buildings.
Invermere mayor Gerry Taft suggested that the speculation tax should be framed more as a land tax or a vacancy tax.
Taft said multi-national corporations that are making record-breaking profits could afford to pay a higher rate of land tax on their commercial properties. He also suggested that taxes could be used as a tool to force owners of vacant commercial properties to lower their lease rates for potential tenants.
“I think, and I hope, going forward, that any further changes around the land tax regime in BC, I really hope that local governments are consulted and that there’s an opt-in, opt-out provision so that it’s not a top-down approach,” Taft said. “We’re not getting the province telling people ‘This is the way it is’
Rather, it’s the local communities and the elected officials can try to make decisions and respect the local communities and what people want to see in their own area.”