It’s difficult for University of B.C. associate professor Paul Kershaw, founder of advocacy group Generation Squeeze, to understand the rationale behind giving “paper millionaires” $821 million worth of property tax grants.
“It’s not clear to me any longer why we’re talking about the Homeowner Grant. People are accruing so much wealth in their homes while they’re sleeping,” said Kershaw.
Meanwhile, anyone under 35 — whom Generation Squeeze advocates for — is faced with lower wages and double the housing costs, in Metro Vancouver, relative to their boomer parents in the 1970s.
Families are cramming into condos and children lack play space, said Kershaw, who can’t come to grips with the “doom and gloom” tone among homeowners who may lose their grant this year due to rising property value assessments that reflect sales prices.
The average assessed value of a detached home in Richmond is now about $1.7 million. Although the threshold for the $570 homeowner grant rose to $1.6 million, an estimated 14,000 households will still lose all or part of it, according to Landcor Data Corporation.
The broad complaints by homeowners over their property tax burden is, said Kershaw, a “weird dynamic that plays out in Metro Vancouver,” especially considering anyone over age 55 can defer their bill for a subprime loan at 0.7 per cent (non-compounding) interest.
Effectively, noted Kershaw, renters, who tend to be younger people, are forking out for provincial grants and tax deferrals to people who have millions in equity.
“The housing market has left earnings behind so much we need a fundamental rethink about raising revenue,” said Kershaw.
“Why are we not asking to cut income taxes and start taxing property more?” asked Kershaw. “Housing is treated so favourably for tax purposes,” he added.
Adding to the millennial’s sting is the contention that aging boomers have not paid for their fair share of future health costs. Kershaw points out boomers “prepaid” for retirement costs by being charged for the Canadian Pension Plan. Not so, for healthcare, however, where such costs and payments are tabulated yearly.
“Their bills will be passed on to their children,” said Kershaw.
UBC economist Tom Davidoff has also stated to media this week that the grant is poor economic policy.
Davidoff is also a firm proponent of increasing property taxes and decreasing income taxes. He said this could also help put downward pressure on property values, including curtailing foreign demand on residential properties.