June 11, 2016

Ladner On Real Estate

This article by Peter Ladner in Business In Vancouver is a compendium of ideas for dealing with Monster A of the two-headed monster that is Vancouver real estate.

  • Monster A:  foreign investment, the product of globalization and flight of capital.
  • Monster B:  low and stagnant wages for those who work and live in Vancouver.

He rightly points at local and provincial elected officials, who in my opinion are reluctant to forego rising income from the price boom, and even more reluctant to tamper broadly with residential capital gains (often minimally taxed) and risk pissing off voters.

In particular, Mr. Ladner discusses the ideas proposed January 18, 2016 in the B.C. Housing Affordability Fund (BCHAF) paper floated by a large group of SFU and UBC’s Sauder School economists.  The proposed fund’s intention is to increase property tax and distribute the proceeds back to residents, except not to those who own Vancouver residential property without participating in the economy or life here.

The BCHAF will be funded by a new 1.5% property surcharge on residential real estate. The revenues will then be distributed as lump-sum payments to all Canadian tax filers in any area included. The tax would target owners of vacant properties and those with limited economic or social ties to Canada. All other owners will be exempt.

From the footnotes:  . . .  The estimated share of units in the City of Vancouver not occupied by usual residents is greater than it is in other Canadian cities. We assume that this difference in rates reflects investor held units subject to the proposed surcharge. For our calculations we assume these rates are 7.5% for condominium units and 2% among other housing units. If we assume that this rate is the same for both high and low value units, then using B.C. Assessment data and 2015 assessment values, incremental property tax paying into the BCHAF from the City of Vancouver alone would amount to $90 million per year.

Posted in

Support

If you love this region and have a view to its future please subscribe, donate, or become a Patron.

Share on

Comments

  1. Many people agree that a tax would be a good idea, and $90 million is a nice lump of money to redistribute. But a 1.5% tax is not going to stop flight capital from coming here when the Canadian dollar goes up and down that much every week. Nor will a 1.5% tax reduce the cost of housing when people with flight capital are willing to pay up to 60% over asking for a property (I was in a bidding war like that and the successful bidder was 60% over asking and a million bucks above me.) If we really want to stop flight capital from pushing up the market, the tax has to be a lot higher than that.

  2. Does anyone seriously expect the Trudeau government to introduce a special tax, with a net-zero refunding bureaucracy, just for possibly interested municipalities in British Columbia? Justin and Gregor might be the very best of buddies but I doubt it will happen.

  3. Tax land to fund an income subsidy. In my most libertarian/Georgist moods I advocate for replacing the whole function of the state with just this. No other taxes, no other state services.

    The land-rich cash-poor can pay in equity. So at 1.5% a year, you could pay no tax for 66 years, and then the government would own your house.

  4. It is a good idea, but there are so many loopholes that would have to be anticipated and closed for it to be effective.

    On another note, while I certainly don’t agree with everything Peter writes, I wish he would consider running for the Greens either municipally or provincially to give voters a credible alternative to what is available now. There are few figures out there that could lend instant recognition and credibility to the Greens and he is one of them

  5. What about Monster Greedy that has sucked billions out of our economy for personal gain. How much housing could be built with all that cash. How much better would wages be if the all that cash wasn’t siphoned into the pockets of the 1%. Rich-butt-sniffing Business in Vancouver is a lapdog of the 1%.

    1. What monster ? A lot of cash has BEEN ADDED into BC and Vancouver ! We just chose to not tax it enough for whatever reason, by not enforcing existing tax laws nor by raising land transfer taxes, property taxes or capital gains taxes significantly on non-residents or non-income tax payers !

      1. I was not speaking of the good people who will make Vancouver their home (too bad they don’t want to live in trailer parks – you’d make a killing), but of those that have spent their lives here, economically enslaving Canadian citizens.

        BTW – it is considered PETULANT to write in CAPS, esp., with floating ! EXCLAMATION MARKS !

        1. Every buyer with cash requires a seller that receives the cash. Many winners here. Consider both sides of the coin. Who is enslaved ?

          Is a person that has lived in Vancouver 65 years more important / does she/he have more rights than one that has lived here only 25 or 5 ? Newcomers not welcome ? Or only in small numbers ? Immigrants without cash would be better ? Or just no foreign ownership whatsoever ?

    1. How can I pose questions to you – or others – without a question mark ? That is how we do it in the English language.

  6. There are conventions in punctuation, spelling, and grammar, that aid in comprehension. I am not a grammarian, or a punctuation nazi, and certainly make mistakes, so it is not my place to school people on how to write.

    One convention, however, that must be adhered to, unless you are e.e.cummings, is that ! and ? come at the end of a sentence, not a space later. It’s jarring.

    Verstehen ?

    1. Let’s get back to content not grammar.

      Space before ! or ? looks better to me.

      You have anything substantial to add to my questions ?

  7. Don’t forget Monster C, which is a total unwillingness on the part of local government to allow ground-oriented housing (like rowhouses, walkups, brownstones, etc) across the vast majority of a chunk of Canada’s most expensive residential real-estate. Would be nice if at least some of Monster A’s capital was put into increasing the housing supply and not just bidding up values on single-detached…

Subscribe to Viewpoint Vancouver

Get breaking news and fresh views, direct to your inbox.

Join 7,284 other subscribers

Show your Support

Check our Patreon page for stylish coffee mugs, private city tours, and more – or, make a one-time or recurring donation. Thank you for helping shape this place we love.

Popular Articles

See All

All Articles