Tax on sizzling real estate sales boosts B.C. budget surplus
Property transfer tax brought in $605 million more than expected
Tax revenue from B.C.'s sizzling housing market helped the province post a $730 million surplus during the last fiscal year, the province's finance minister has confirmed.
"It is clear that property transfer tax revenues are up," said de Jong on Thursday in Victoria.
In total the property transfer tax brought in $1.53 billion for the government, $605 million more than budgeted, said de Jong.
That's an increase of 44 per cent over the previous year, and it all went a long way toward helping the government table the $730 million surplus, he noted.
With home sales in Metro Vancouver continuing to climb, de Jong added that so far this year the tax has been a "significant amount" higher than forecasted and new numbers are expected to be released in September.
"I have indicated that trend is continuing beyond the levels we thought prudent to plan for," he said.
The unpopular tax is charged anytime someone buys or changes the titles on a residential or commercial property in B.C. Exceptions are made for qualified first-time home-buyers and some transfers within a family.
The tax rate is one percent on the first $200,000 and two per cent on the remaining value, based on the fair market value of the property at the time of the transfer.
Across the province the total value of commercial and residential real estate sold in 2015-16 was $93.67 billion. Of that total residential sales accounted for $79 billion, and commercial sales accounted for $14 billion.
Expect more changes soon
The tax windfall has the province contemplating ways to put the money back into the economy targeted at affordability.
What those changes are will be announced when MLAs return to Victoria for a rare summer legislative sitting to address both the City of Vancouver's request for an empty home tax and affordability on the whole.
"Starting on Monday you will get a better sense of some of what the government believes is appropriate in terms of assisting. Clearly we have some choices we can make due to increased revenues," added de Jong.
Those choices include earmarking money to increase the housing supply. De Jong has attributed a lot of the housing crisis to the fact that people want to buy in Metro Vancouver but there are not enough homes for everyone.
But the finance minister was cautious about relying too heavily on the property transfer tax growth for future planning.
"I do think we need to be conscious about making assumptions in different areas of the economy. I do think we need to be conscious that these returns will continue in perpetuity, but I don't think they will," added de Jong.
On top of property tax increases, final public accounting for the year showed an additional $2.4 billion to core services like health, education and the natural resource sectors.
Overall revenues increase by $1.5 billion, or 3.2 per cent, on the back of higher than expected tax revenues.
The province also announced changes to executive compensation.
After a four-year wage freeze for public sector managers and executives the government is "now in a position to give public sector employers more flexibility to manage compensation."