A proposal by a Vancouver city council candidate to introduce a so-called mansion tax wouldn't pour as much revenue back into affordable housing as predicted, says an expert on housing markets.
Jean Swanson, an independent candidate running in the Oct. 14 byelection, has proposed two new property tax brackets.
The first would be an extra one per cent tax on properties assessed at more than $5 million, and the second a two per cent tax on properties valued at more than $10 million.
- Vancouver real estate market unfazed by foreign buyers' tax one year later
- Metro Vancouver says property tax system antiquated
She says the tax could earn the city $174 million in annual revenue, which it could redistribute toward affordable housing.
Swanson says she would prioritize modular housing units for the homeless, followed by social and co-op housing.
Josh Gordon, an assistant professor in public policy at Simon Fraser University, believes the tax would actually cause property values to depreciate.
"The amount of tax you would actually get in the end would be substantially less," Gordon told host Rick Cluff on The Early Edition.
"This is more of a populist measure that doesn't really address the affordability issue."
'Solid moral logic'
A total of 5,356 residential properties in Vancouver were valued at more than $5 million in the 2017 assessment, according to a data analysis by Andy Yan, director of the City Program at Simon Fraser University.
More than 500 of those properties were condos.
Swanson has partly based her scheme on an income tax introduced by Seattle earlier this year, in which residents who earn more than $250,000 a year are levied a 2.25 per cent tax on income.
Gordon agrees with taxing more expensive properties but presented an alternative scheme at this week's Union of B.C. Municipalities convention.
He wants to see a progressive property surtax that would be offset by income taxes.
That surtax would only be applied to the value of a property that exceeds a certain threshold. Gordon proposes a lower threshold than the one suggested by Swanson — such as an assessed value of $800,000 — and the tax rate would get progressively higher for more valuable homes.
The surtax would target property owners who don't earn income in Canada, similar to the two per cent speculation tax the NDP government proposed in this year's election.
The tax would make Vancouver homes less attractive for international investors and help drive down prices, Gordon said.
"If you want to live comfortably and live in a house that's appreciating in value over time — and that's being paid for by everyone else's taxes — then you should pay your fair share," he said.
"It has a very solid moral logic to it."
With files from CBC's The Early Edition