We have all received our property tax notices by now, and although we appreciate the services, I'm sure we all wonder how we'll continue to afford to live in the Lower Mainland, let alone our children.
It is not just property taxes; it's also the cost of housing and land. Peter Ladner's column in Business in Vancouver on June 17, 2014 talked about Vancouver (meaning the Metro Vancouver area) as being "the most expensive housing market in North America," as quoted from The New Yorker. Ladner's column goes further to quote Landcor Data Group's finding in 2008 and 2010 that between 46 per cent and 74 per cent of people buying condos over $2 million and homes over $3 million were persons identified as affluent investors from 89 other countries. The valuations are higher here because of Vancouver's role as a "hedge city" for global investors looking for a clean, livable, safe and climateprotected place to park their money. "There aren't many of those places," Bing Thom Architects planner Andy Yan told the New Yorker. "So let's raise the parking fees."
Foreign ownership is happening in other countries as well, and many are taking steps to mitigate the subsequent rise in values. Britain has introduced a "stamp of duty" of up to 15 per cent on purchases of more than £2 million by foreign buyers through corporations. Next year, they will be bringing in a new capital gains tax on property owned by foreign property investors. Paris, New York, Hong Kong and several Canadian provinces have similar methods to differentiate between resident and non-resident property purchasers.
The BC Chamber of Commerce recently passed a resolution called Property Transfer Tax reform: Affordable housing is good for the Economy. The paper details the history of property transfer tax, which was introduced in 1987 when the average home price in Vancouver was just over $100,000. It was designed to have most of the land transfer tax burden on luxury home buyers. Now, 96 per cent of Greater Vancouver's property purchases are above $200,000. "BC's land transfer tax has the dubious distinction of being the highest land transfer tax in the country and the upper end of the tax that was originally intended to affect only five per cent of buyers now affects virtually everyone who purchases a home." The transfer tax on a modest $350,000 home in Alberta (cash purchase) is $120; in Saskatchewan it's $1,050; in Ontario it's $3,725. However, in BC, it is $5,000. The resolution calls for increasing the Property Transfer Tax rate for foreign purchasers while bringing in a new Primary Residence Grant. The total money collected would remain neutral.
Right now, BC's Land Transfer Tax money goes entirely into the provincial coffers. There is little incentive for the province to change its taxation methods as it is not affected directly like cities such as Richmond, Vancouver and Burnaby with our unaffordable housing and no way within our mandates to make changes. Many other provinces, however, have various ways they share this land transfer tax with their cities.
It is time, not only for Property Tax Reform, but also for an appropriate share of this revenue to go to cities to help offset some of the costs downloaded onto them, particularly to help make housing more affordable for all of us who make BC our home.
