B.C. government gives broad exemptions to controversial speculation tax
Cabins and other vacation homes in rural areas will be exempt and British Columbians will pay a reduced rate
The B.C. government has made a number of changes to its proposed speculation tax which will reduce both the number of British Columbians paying the tax and the amount they'll pay.
The tax, first announced during February's budget, was to be assessed at 0.5 per cent of a vacant property's assessed value this year and two per cent in 2019.
On Tuesday, B.C. Finance Minister Carole James announced the tax would remain at 0.5 per cent for properties owned by B.C. residents but would now only rise to one per cent for out-of-province Canadian residents and still remain at two per cent for foreign investors.
The NDP government also said the tax would no longer apply to properties in the Gulf Islands, Parksville, Qualicum Beach or rural Fraser Valley.
The tax will still apply in the following areas:
- Metro Vancouver, Chilliwack, Abbotsford and Mission (excluding Bowen Island).
- The Capital Regional District (excluding the Gulf Islands).
- The municipalities of Nanaimo, Lantzville, Kelowna and West Kelowna.
The government said a tax credit would make homes worth less than $400,000 exempt for British Columbians only, along with those rented for more than six months of the year.
"We took the responsible approach, which was to take the time… and work through the details," said James.
Criticism against levy
In response to repeated questions, the finance minister said the government was listening to British Columbians and would be providing more details about exemptions before the tax was passed into law this fall. She also acknowledged the feedback when announcing the changes.
"There is no question that I have heard from a range of people organizations and businesses," she said, adding that some "raised constructive suggestions."
James said the government is still forecasting $200 million in revenue from the tax, because the original numbers from the finance department were conservative.
Official Opposition and B.C. Liberal Party Leader Andrew Wilkinson criticized both the changes to the tax, and the estimates about the revenue it would generate.
"We're very concerned the NDP are making up taxes by trial and error… there's no clear pictures of where the money's going to come from," he said, adding that he believed the government should have increased the capital gains tax if they wanted to deter speculation.
The Green Party, however, applauded the changes.
"I'm glad that the government has recognized that this tax doesn't make sense for rural areas like the Gulf Islands. The diversity of concerns in my riding demonstrates the need for a nuanced approach to the housing crisis," said Adam Olsen, MLA for Saanich North and the Islands.
'It's bizarre, the whole situation'
Among those who had been wondering whether the tax will affect them is Wolfgang Strigel, who has owned a cottage on Passage Island for 35 years.
Located between Bowen Island and West Vancouver, the tiny island has less than 30 cabins and has no electricity or water system. But it's part of Metro Vancouver, meaning anyone owning property there currently stood to have it taxed unless it was their primary residence.
"Our property values will drop to the bottom because nobody in their right mind would buy a cottage with that kind of a tax burden, especially when other islands next to ours — like Gambier — are exempt," said Strigel, who says he visits the island once a month.
James said Passage Island would now be exempt — something that will come as a relief to Strigel.
"I think it was probably an oversight to include Passage Island in this tax, because it doesn't make any sense," he said.