B.C. expands speculation tax on vacant homes to 6 more regions

British Columbia is expanding the speculation tax on homeowners who keep their properties vacant to six more municipalities starting next year.

The B.C. government first introduced the taxin 2018.

Currently, any homeowner with a vacant residence will pay 0.5 per cent of their property's assessed value under the tax, with the tax jumping to twoper cent for foreign homeowners.

The tax applies to most municipalities in the Lower Mainland and southern Vancouver Island, as well as Kelowna, West Kelowna, Nanaimo and the District of Lantzville.

Now, the provincial government says it will expand itto Lions Bay and Squamish, as well asthe Vancouver Island communities of North Cowichan, Duncan, Ladysmithand Lake Cowichan.

"People in these communities have been vocal. They've been vocal about the intense housing pressures that they are facing, including speculation and near zero vacancy rates," said B.C. Finance Minister Selina Robinson on Wednesday. "This expansion will help prevent speculation from moving from one community to another in a region."

Robinson called affordable housing a "generational challenge"and said the speculation tax was working as intended to introduce homes back into the rental supply.

"The speculation and vacancy tax turned thousands of empty units into homes," she said. "It reduced speculation and kept prices lower than they would have been without the tax."

A report commissioned by the B.C. government in June shows that the speculation and vacancy tax (SVTA) affected Vancouver homeowners, bringing approximately 18,000 new condo units into the rental market from 2018 to 2020.

The tax changes go into effect starting in January 2023. The government says residents of the six additional municipalities will have to declare their extra properties in January 2024.

The province says that 99 per cent of British Columbians are not subject to the tax. In addition, numerous exemptions are on the books, including for primary residences and homes with long-term tenants.

'One tool in the toolbox'

The speculation tax is a unique type of tax in B.C. a provincial tax that applies only to residents of specific municipalities.

The province has said it aimsto target urban areas with near-zero vacancy rates with the tax tohelp with affordability struggles.

When asked by reporters why the tax was not expanding to otherareas likeWhistler and the Gulf Islands Robinson said certain areas had "unique challenges."

"We're monitoring this very closely and are incrementally looking at how to best use this tax," she said. "This is one tool in the toolbox we're going to continue to monitor how things play out in vacation areas."

In a statement, B.C. Green Party MLA Adam Olsen said he was disappointed that the Southern Gulf Islands were not included in the tax expansionand would be asking Robinson why that was not the case.

More non-profit housing needed, economist says

Alex Hemingway, a senior economist with the Canadian Centre for Policy Alternatives, said expanding the speculation tax was a logical step for the province.

"There would be a strong case to expand it anywhere where we're seeing that type of shortage of rental housing, rising rents and low vacancy rates," he told CBC News.

Hemingway said that the foreign buyer's tax and the speculation tax should be accompanied by funding for more non-profit housing and incentivizing municipalities to zone for more affordable housing.

"We need to unpack that full set of tools and start building as much housing as we can in this province with it, with an emphasis on public and not-for-profit housing," he said.

Another taxation step the province could take to alleviate the housing crisis, according to Hemingway, is expanding the property tax structure.

Currently, residential properties valued at over $3 millionare taxed at two per cent beyond the property's value.

"[The government] should expand the approach," he said. "So that it's not only levied on individual properties separately but on the total value of the property owned by any given owner.

"We could be progressively taxing out large landowners in the province who have enjoyed massive increases in land wealth over the past couple of decades."