Speculation tax will take a bite out of economy, report says

If tax goes through, it’s goodbye West Kelowna, say some property owners

West Kelowna property owners could collectively pay more than $10 million to the provincial government if the new speculation tax is implemented as planned, city ofÀcials say.

The tax could trigger a downturn in the construction industry, depress all real estate values, and cause serious economic impacts, city ofÀcials say.

“The announcement of this tax has caused a great deal of uncertainty and concern in the community,” city manager Jim ZafÀno wrote in a report that went to West Kelowna city council on Tuesday.

“The tax has the potential to negatively impact the City of West Kelowna’s development cost charges, revenues, tax incomes and economy,” ZafÀno wrote.

The speculation tax could apply on as many as 600 homes in West Kelowna, the city’s Ànance department estimates.

ZafÀno’s report to council is accompanied by more than 200 pages of letters from West Kelowna property owners who are against the implementation of the tax, which is targeted mainly at out-of-province owners of properties in B.C. that are left empty for most of the year.

Letter-writers warn they will likely sell their properties rather than pay the tax, Áooding the market with listings that will depress all home values. They also describe the tax as fundamentally unfair and possibly illegal in its unequal treatment of other Canadians.

The speculation tax is an example of “protectionism and small-mindedness,” Joy Playford wrote in her letter to the city.

“Goodbye and good luck, West Kelowna!” wrotes Cathy Olson, a resident of the Northwest Territories who says she will sell her home in West Kelowna if the tax goes through.

“We have owned our house in West Kelowna, rented it during the winter, for 15 years and open our wallets every summer for a few months to spend our hard-earned money in your restaurants, wineries, stores, tour companies, museums, etc.,” Olson said.

Nas Abboud, who lives about four months a year in a second home he has owned in West Kelowna since 2012, writes: “I am shocked to hear about this tax that may lead me to selling the house I thought would be my retirement home.

“I am not a millionaire. I can’t afford a tax that leaves most no choice but to sell.”

Next year, the owner of a $600,000 home on which the speculation tax is applied will have to pay an additional $12,000 in taxes, on top of regular property taxes.

In the Okanagan, the tax will apply in West Kelowna and Kelowna.

“The imposition of the speculation tax will have a devastating negative impact on the Kelowna area as non-residents pull up stakes and move their vacation and investment dollars to more friendly jurisdictions,” Larry Krause writes from Calgary.

In his report, ZafÀno recommended West Kelowna council ask the city not be included in the communities where the speculation tax will apply.

He also suggests council ask the government consider a different type of speculation tax, one which applies only when a property is sold relatively soon after purchase.