British Columbia

Province rejects West Kelowna's second request to be exempt from speculation tax

West Kelowna Mayor Gord Milsom says the levy has pushed many homebuyers and property developers, along with the job opportunities they help create, to other communities in the region.

The levy is mostly paid by Canadians and not foreigners, says Mayor Gord Milsom

West Kelowna will not be exempt from the provincial speculation tax at this point, says B.C. Finance Minister Selina Robinson. (Jane Hoffman Group)

B.C.'s finance minister has rejected West Kelowna 's second request to opt out of the provincial speculation and vacancy tax.

West Kelowna Mayor Gord Milsom requested the tax exemption in a letter sent Jan. 14 to Selina Robinson and the B.C. Finance Ministry. 

"At this point they're not going to be exempted," Robinson said to Chris Walker, host of CBC's Daybreak South, on Wednesday. 

In his letter, Milsom said his council will continue to advocate for removing the levy from his municipality.

"The province continues to penalize our local residents and other Canadian taxpayers in the ministry's broad-sweeping effort to moderate the housing market and supply," Milsom wrote.

The mayor of the Central Okanagan city has been opposed to the tax since the province introduced it in 2019 to "target foreign and domestic speculators who own residences in B.C. but don't pay taxes here." 

West Kelowna Mayor Gord Milsom says the speculation tax collected from his municipality mostly comes from Canadians, not foreigners as claimed by the province. (City of West Kelowna)

The tax rate for foreign owners and satellite families is two per cent of the home's assessed value. Satellite families are defined by the B.C. government as "an individual or spousal unit where the majority of their total worldwide income for the year is not reported on a Canadian tax return."

The tax rate is 0.5 per cent for Canadians — living inside or outside B.C. — who aren't satellite family members. 

The property is exempt if it is declared as a primary residence.

Back in July 2019, when the first speculation tax payments were submitted, the province said the majority of taxpayers are non-Canadians who leave their homes empty for most of the year.

"That's not the case here in West Kelowna," Milsom said Tuesday on Daybreak South. "People come here by and large because they just … perhaps buy a second home and enjoy it as a vacation property or a pre-retirement property."

According to provincial data made public earlier this month, foreigners and satellite families paid 30 per cent of the $1.4 million speculation tax collected from West Kelowna for 2019. B.C. residents and other Canadians accounted for nearly 70 per cent of the total. 

In Vancouver for instance, foreigners and satellite families paid more than 84 per cent of the $24 million in speculation tax collected for 2019.

West Kelowna and its neighbouring Kelowna are the only two municipalities in the B.C. Interior targeted by the province as real estate hotspots with low housing vacancy rates.

Milsom says it's unfair that West Kelowna homeowners have to pay the speculation tax, which he claims has pushed many homebuyers and property developers — along with the job opportunities they help create — to other Okanagan communities. 

"I don't think it's a level playing field," he said.

The B.C. government reports that the speculation tax has boosted the number of available rental housing units in the region.

Robinson says she has promised provincial spending on affordable housing in the Central Okanagan.

"I have stood with both the mayors of Kelowna and West Kelowna as the former minister of housing, and they were very excited to see the investments come to their communities," she said.

B.C. Finance Minister Selina Robinson says the province will reinvest speculation tax revenue to West Kelowna. (Michael McArthur/CBC)

But Milsom says the tax revenue collected has not been reinvested in his municipality.

"There's not one social housing unit that I can look at and say that's … being reinvested from the speculation tax here within our community," he said.

Milsom said he will keep arguing to have the levy removed from his city. 

Tap the link below to hear Gord Milsom's interview on Daybreak South:

West Kelowna asks to opt out the speculation and vacancy tax 10:38

Tap the link below to hear Selina Robinson's interview on Daybreak South:

BC's Finance Minister says West Kelowna won't be excluded from the speculation and vacancy tax 9:38

With files from Daybreak South

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