Regular PT commenter Thomas asked to have this analysis he wrote of the ‘speculation tax’ posted on Price Tags, to provide a more complete overview of his thinking, with some specific examples.
So here it is.
by Thomas Beyer
There is much debate these days about the new so called “speculation tax” in BC which levies 1% onto Canadians and 2% on foreigners who own houses or condos in BC that are not rented 6+ months. It also levies a 20% foreign buyer tax and expands the taxable region from MetroVancouver to 4 others regions (Victoria area, Nanaimo, Kelowna including West Kelowna and Fraser Valley).
The purpose is to allegedly improve affordability in BC – by reducing demand. To me, it is really an #EnvyTax to buy votes that will do little, if any, to increase affordability. Who really benefits if a home in West Vancouver drops from $4 million to $3.5 million due to these new taxes, or if a golf course condo on Bear Mountain that is vacant for eight months of the year is now sold in the market and drops from $800,000 to $725,000?
The predicable result: These new taxes merely cause many Albertans (and some foreigners) to sell, causing a short-term sell off in markets like Kelowna or Victoria, with a result of much less supply in the coming years and a negative impact on local retailers, restaurants and the construction industry. Add enforcement costs and the much envisioned additional several hundred million in taxes will likely not appear, as investors are not dumb. How ? Rentals are easy to fake to family members or friends, and it is easy to create local income taxes paid for a Canadian spouse of a non-resident foreign investor that owns multi-million dollar properties in the Lower Mainland.
Also keep in mind many immigrants [me included] come here because they can buy property, including land and many love large lots or large houses, not just tiny condos. It is part of the appeal to immigrate to Canada. Have a drive through Richmond, Surrey, Vancouver Island, Sunshine Coast or Fraser Valley for ample proof of that theory.Not everyone wants a small shoebox in the sky. Many want land. That puts an upwards price on land. Many immigrants come with money, and many more have connections from back home to friends, family and business associates with money.