Analysis

After 5 weeks, B.C. government had enough speculation over speculation tax

On Tuesday, everyone owning a vacation home in the Gulf Islands were told they wouldn't be paying the government's new speculation tax.

To some, it was a case of listening to the public; to others, it was something that needlessly raised anxiety

Properties in B.C.'s southern Gulf Islands that aren't rented out or a person's primary residence will no longer be taxed, according to Finance Minister Carole James. (Kristin Nelson/CBC)

On Tuesday, everyone owning a vacation home in the Gulf Islands were told that they wouldn't be paying the government's new speculation tax. 

So were people with secondary homes in Parksville, Qualicum Beach, and about a dozen other jurisdictions. 

And every B.C. resident still subject to the new levy found out their bill would be reduced by 75 per cent — from two per cent of a home's assessed value to 0.5 per cent.  

If you're affected by these changes, you might think they're pretty significant. 

If you're Josh Gottlieb, one of the UBC professors who drafted a 2016 position paper for the government that helped inspire the speculation tax, you might have a different way of describing it.

"Pretty modest," he said, speaking with guest host Dan Burritt on CBC Almanac. "And overall, relatively reasonable. I don't think they're going to have a big impact on whether it's effective."

What followed was a decidedly mixed reaction from listeners who phoned in; no surprise given the mix of tax policy and open-line radio.

But there's a reason the speculation tax has become a lightning rod on radio shows and newspaper columns, for weeks on end: fear over what might happen can be more galvanizing than what will happen. 

'Quite a bit of drama'

Within minutes of the speculation tax being announced in February's budget, reporters peppered Finance Minister Carole James and other government officials with how it would work for B.C. families with vacation homes in the affected areas. 

James said details of what properties the tax would apply to would come after listening to the public 

But there were two problems with that approach.

One, the government's original public fact sheet on the matter clearly said a resident that owned a vacation property in an affected zone would face the tax, with only a tax credit to "help offset" the costs. 

Second, on most other big policy issues, the government has engaged in public consultation to workshop ideas before bringing a proposal to the public.

Add in the fact virtually no new legislation was introduced by the government in the weeks after the budget, and it meant a significant amount of time — one could argue a disproportionate amount — was spent litigating the concerns of people with secondary homes whose stories were arguably more diverse, and often more sympathetic, than your typical equity-rich, cash-poor homeowner on Vancouver's west side. 

Plus, many of the stories were in parts of the province traditionally more inclined to support NDP politicians. 

"It caused quite a bit of drama in our communities and certainly the government would probably agree that they wouldn't want to do that again," said Peter Luckham, chair of the South Pender Island Local Trust Committee, who said he was happy with the changes.

More changes to come?

The political impact of the changes is minimal: a provincial election isn't likely until mid-2019 at the earliest and the places angriest about the speculation tax are in the Central Okanagan, which have never elected an NDP MLA. 

However, it's not known whether the government will still receive the $200 million it said would be collected from the tax when fully implemented or whether it will make yet more changes in the future.

In fact, James has said it could expand to other urban areas. Meanwhile, the municipalities of West Kelowna, Kelowna and Nanaimo have vowed to continue fighting it.

"Trying to develop public policy on the fly never goes well, and that's exactly what's going on here," said Nanaimo Mayor Bill McKay.

But Gottlieb had a different take on the matter.

"Trial and error, that's how policy should be designed ... if they have to change it down the line, then so be it. But one should learn from experience," he said. 

So far, the government has probably learned that keeping people in the lurch for weeks on their tax bills might be an experience not worth repeating. 

About the Author

Justin McElroy

@j_mcelroy

Justin is a reporter for CBC Vancouver, covering political stories throughout British Columbia.

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