Scru­ti­niz­ing hous­ing tax rev­enue may af­fect af­ford­abil­ity

The Province - - Homes - Bob de Wit Bob de Wit is CEO of the Greater Van­cou­ver Home Builders’ As­so­ci­a­tion. Email bob@gvhba.org

It’s no se­cret that gov­ern­ments at all lev­els rely heav­ily on real es­tate as a source of tax rev­enue to pay for the ser­vices and ameni­ties we all ap­pre­ci­ate and ex­pect in our lives. A re­port, re­cently pub­lished by economists War­ren Lovely and Marc Pin­son­neault called (Cash) Cow Tip­ping? puts the fig­ure at a whop­ping $120 bil­lion per year.

Well, you say: So what? Don’t we need all the ser­vices and good­ies these rev­enues pro­vide? The quick an­swer is yes, of course, those rev­enues are im­por­tant.

But it’s also true that if we scru­ti­nized them a lit­tle more closely — and per­haps re­duced them — we might find ways to make homes more af­ford­able for buy­ers, es­pe­cially first-time buy­ers, be­cause ul­ti­mately, taxes on hous­ing in what­ever form are ul­ti­mately paid for by the home­buyer. Let’s break it down a bit.

Fed­eral and pro­vin­cial taxes on hous­ing re­lated to in­come and con­sump­tion taxes — es­pe­cially GST — amount to roughly $75 bil­lion per year. Mu­nic­i­pal prop­erty taxes come to $45 bil­lion.

Ap­prox­i­mately 25 per cent of the cost of con­struc­tion of new low-rise homes goes to var­i­ous lev­els of govern­ment, ac­cord­ing to a 2013 re­port by Al­tus Group for the Toronto mar­ket. The fig­ure for high­rise homes is a bit lower, but still stun­ning at 22 per cent. In their cal­cu­la­tions, Al­tus in­cluded govern­ment-im­posed costs such as land trans­fer taxes, com­mu­nity amenity charges, de­vel­op­ment cost charges, per­mit­ting fees and so on. Although Al­tus hasn’t done a sim­i­lar re­port for Van­cou­ver, our build­ing en­vi­ron­ment is rel­a­tively sim­i­lar, and if any­thing, the costs may well be higher here. The moral of the story? First, con­sider that most of the taxes dis­cussed are “hid­den” — many or most home­own­ers don’t ap­pre­ci­ate they’re pay­ing them or how sig­nif­i­cant they are. A rel­a­tively small re­duc­tion could make a big dif­fer­ence for many home­own­ers, es­pe­cially first-time home buy­ers.

Fi­nally, as a home­owner, don’t for­get how im­por­tant you are as a source of rev­enue to govern­ment. Con­sider how you can en­cour­age your elected rep­re­sen­ta­tives to shave a few points of their ex­trac­tion from your home to make a liv­ing in our great coun­try slightly more af­ford­able.

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