VICTORIA — With the NDP approaching the second anniversary of its speculation tax, Finance Minister Carole James decided it was time to take a victory lap with the controversial measure.
“Province builds on successful first year of landmark tax,” declared the press release from her ministry this week.
There followed news that the government would again be revising the tax.
One change will kick a problem down the road and past the next election regarding application of the tax to strata properties.
Another change provides retroactive relief for isolated properties that are accessible only by water.
All in a day’s work regarding the much-revised tax, which has undergone more makeovers in its brief lifetime than some of Hollywood’s more ancient denizens.
But no need to go that far afield to insult the tax.
As I looked over the latest cut-and-paste job, I was reminded how the tax has been trash-talked by the NDP’s partner in power-sharing, Green party leader Andrew Weaver.
From day one, Weaver disputed the NDP claim that it was a tax on speculation. Rather he saw it as a vacancy tax, much like the Vancouver empty homes tax which predated it.
It was Weaver, too, who first insinuated that the half-baked measure was less a product of the professionals in the ministry of finance, than academic ideologues who’d bent the ear of the finance minister herself.
Quote: “A dog’s breakfast … a horrible tax. We hate this tax. My job is to get the NDP to recognize it is a stupid tax and get rid of it.”
Weaver never did persuade them and eventually he and the Greens voted for the tax. But he did secure a reduction in the rate for Canadians from other provinces. The government also took his suggestion and changed the title to “the speculation and vacancy tax.”
Still, there was James Tuesday, defending the tax in terms that only a parent could love.
“The tax is working as it was designed to do,” she insisted. “Capturing speculators, foreign owners and people who own vacant homes.”
But one of the main rationales for the tax was as a spur to free up property for the rental housing market.
Owners could escape the tax by renting out their secondary, recreational and otherwise vacant properties. James herself made that point in proclaiming the tax a success back in September.
“The tax provides an opportunity to encourage people to rent out their homes, to encourage people not to leave them vacant,” she told reporters in releasing data on the first year under the tax.
“So it’s not simply the number of people who pay the tax that is the important indicator to look at. It’s also the indicator of people who may be motivated to rent out their empty property, which then becomes a home for someone rather than sitting empty.”
That was an “important piece” of the rationale for the tax, according to James, and it was embedded in the defence of the tax from the outset.
So, how is that working out? How many properties that were once vacant are now rented out by their owners to avoid the tax?
“We don’t have that information right now,” James admitted Tuesday. But rest assured, the New Democrats will be pulling together the data one of these days.
“You’ve heard me say often that part of the reason and part of the work that will be done is gathering good quality data on housing. We’ll be able to gather more on that now that the tax is in place.”
The tax was promised in the NDP election platform, announced with the provincial budget on Feb. 20, 2018 and enacted in that fall’s session of the legislature.
But “right now” she still doesn’t have anything to back up one of the prime reasons for the tax, namely that it would increase the rental housing stock.
Yet the city of Vancouver has already provided some preliminary indications of the impact that the empty homes tax is having on the rental market.
Back in February, the city reported that under the first full year the tax was in place, the number of properties listed as vacant had declined from 1,085 to 922. Moreover, 87 of the 163 properties formerly listed as vacant were now rented out.
Perhaps there’s a clue as to why the New Democrats are in no rush to rustle up the data for their tax — a mere 87 properties added to the rental market would barely cause a ripple in the vacancy rate.
But the empty homes tax did score results as a source of revenue. It is raising almost $40 million a year, according to the latest report from the city.
The NDP’s speculation and vacancy tax is likewise proving to be a cash cow for the New Democrats, raising $115 million in the first fiscal year.
Moreover, as James underscored this week, for foreign owners and satellite families, the rate is quadrupling – to two per cent, from half a percentage point in the introductory year.
The increase is expected to swell the provincial treasury by $185 million a year, or more than half a billion dollars over the three-year fiscal plan. Now that’s success! As they say around the cabinet table.
As for the impact on rental housing, the New Democrats will get back to us with those numbers one of these days.
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