British Columbia

Changes to B.C.'s speculation tax earn mixed reviews

West Kelowna mayor says he's still fighting to get his city exempted from the tax, which he says will hurt the local economy.

West Kelowna mayor unhappy city wasn't exempted; but taxing property could lower other taxes, says economist

West Kelowna is still seeking to be excluded from the speculation tax. Several changes to the tax were announced Monday but the Okanagan city was not exempted. (Jane Hoffman Group)

The B.C. government's announced changes to the provincial speculation tax were not what the mayor of West Kelowna was hoping for.

Notably, some areas were excluded from the levy, but West Kelowna and Kelowna — which had asked for exclusions — were not.

"I am quite prepared to go back to Victoria and make an appeal on this," West Kelowna Mayor Doug Findlater said.

Findlater argues his city is a new municipality that has huge infrastructure needs and the speculation tax will drive away developers. That means less money for city coffers.

A week ago, he met with Finance Minister Carole James and asked to be excluded — but on Monday, James said West Kelowna will not be exempt.

"Kelowna and West Kelowna are two of those areas that are facing an affordability crisis," James said.

B.C. Finance Minister Carole James announced changes to the speculation tax Monday. (Justin McElroy/CBC)

Projects cancelled, builders say

The Canadian Home Builders' Association of B.C. said in a release they were pleased about some of the changes, but echoed the call for Kelowna and West Kelowna to be excluded.

"These areas are as much vacation destinations as they are urban centres," CEO Neil Moody said in the statement.

He says the group, which represents the construction industry, is already hearing of projects in those areas being cancelled because of the tax.

"These new projects would have created jobs for many in the Okanagan beyond just the homebuilding companies — glaziers, framers, product suppliers, manufacturers and more."

Taxing real estate wise: academic

UBC economist Tom Davidoff — who in 2016 proposed a tax on Lower Mainland homes whose owners don't pay income tax in the province — said the way the tax was seen as applying to someone's "cabin in the woods" caused much of the concern.

But in general, he says it makes sense to raise government revenues from B.C.'s red-hot real estate market.

"If people are lined up to build homes, taxing property doesn't do anything bad to the economy. It just raises revenue," he told On The Coast guest host Belle Puri.

"Use that revenue to cut income taxes, cut sales taxes. We could have a fantastic economy with low taxes."

But, he acknowledges, that idea is "politically, a heavier lift."

With files from Brady Strachan and CBC Radio One's On The Coast

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