Homeowner’s grant makes no sense

The B.C. homeowner grant might make people feel good, but it doesn’t make a lot of financial sense. A tax break for more than 90 per cent of the homeowners in the province? Why not just lower income taxes by a corresponding amount and save all the paperwork?

But the grant is a longstanding B.C. tradition, and it’s not going anywhere.

Perhaps it is merely coincidence that the threshold for the grant has been raised as a provincial election approaches, but as long-serving Victoria newspaper columnist Jim Hume frequently points out, it started out as an election-season bribe to taxpayers 60 years ago, and no government since has had the courage to eliminate it.

“It was roundly (and rightly) condemned at the time as a flagrant attempt to ‘buy votes for $50,’” Hume wrote in 2004, “but no succeeding government has dared scrap or even dilute the program.”

The grant was introduced in 1957 by the Social Credit government of W.A.C. Bennett to ease the sting of rising property taxes.

It started out as a $50 grant for homes up to a certain value, on the premise that people who owned higher-priced homes could afford to pay the full tax bill.

The amount and the threshold have risen incrementally, and recently, Finance Minister Mike de Jong announced that the threshold for receiving the basic $570 rebate will now be $1.6 million, up $400,000 from last year.

That was in response to concerns from homeowners who feared losing the rebate as real-estate prices have skyrocketed.

The threshold increase means 91.5 per cent of homes across the province, will qualify for the grant.

That means people whose highpriced homes disqualify them from the grant are subsidizing their neighbours, which makes it a sort of progressive tax.

But it also means people who can’t afford to own a home are also chipping in to pay their neighbours’ property taxes. That’s unfair.

The grant program will cost the province $821 million this year.

It would seem to make more sense to give that money directly to municipalities for programs and services that would benefit everyone.

Or the province could reduce the income tax rate, leaving the money in taxpayers’ pockets instead of taking it out and putting it back in.

But trifling with the grant is a dangerous political move.

De Jong said he mused during the 1996 election campaign about replacing the homeowner grant with something more efficient “and it didn’t go over very well.” The BC Liberals lost the election. Few politicians talk these days about eliminating the grant — the NDP also favours it.

So the politicians will continue to hand out the grant, and the taxpayers, even knowing they are being bribed with their own money, will continue to take it.

— Victoria Times Colonist