Speculation tax is hurting B.C. homeowners, economy
It’s called a speculation tax, but one must ask: Who are the speculators? That’s because B.C.’s new housing affordability measure on secondary homes is hurting homeowners and aspiring homeowners, along with local economies, rather than just speculators.
The tax, from the perspective of home builders, is hitting both tourism and non-tourism areas, both inside and outside the boundaries of its targeted jurisdictions. Canadian Home Builders’ Association, British Columbia has heard countless stories in recent months about cancelled contracts and lost jobs in Kelowna, Golden, Cranbrook, Vernon and more, as people choose to play it safe amid much uncertainty.
Stories such as one Alberta family that was planning on retiring in British Columbia in the next 10 years and wanted to transition slowly with a second family home in Kelowna, to build roots, before making the eventual move. That contract has been cancelled, and the family’s plans are now on hold, as they grapple to understand the implication of the tax.
One of the biggest questions is the uncertainty: People who might be able to afford a second home now fear that the tax rate or the boundaries of where it is and is not applied might one day change their affordability calculations.
We represent small and mediumsized companies that build and renovate homes and supply residential construction material in urban and rural areas of the province. They contribute significantly to their communities and local economies.
The latest economic data released by our national-level organization in Ottawa, the Canadian Home Builders’ Association, shows that our industry continues to be a significant generator of long-term wealth for Canadians and a major creator of jobs in B.C.
Overall, an estimated 199,249 jobs were created or maintained in the province last year due to new housing starts, renovations and repairs, up from 190,971 in 2016. On- and off-site jobs in this industry accounted for an estimated $11.9 billion in wages, up from $11.2 billion in 2016. The estimated value of construction work put in place by new-home builders and renovators increased to $25 billion in 2017, from $23.3 billion a year earlier. That’s no chump change. All Canadians should be concerned with this speculation tax, as it is a threat to any out-of-province citizen who aspires to own a home in B.C.
Many people live in Alberta or Ontario, for instance, and have cabins in British Columbia. They are not speculators, but citizens who work hard, contribute to the overall Canadian economy, pay taxes and want to play in B.C. Or, perhaps they live elsewhere and commute to an office in Vancouver. Why should they be penalized for owning a second home, such as a condo, in downtown Vancouver, if this is where they work and live during the week but it isn’t their “primary” residence?
In reality, there’s a big difference between a second property that’s vacant year-round, and one that is being lived in many times throughout the weeks and months of the year. As such, the provincial government needs to do more work to clarify who it really is targeting, as this is a measure that currently fails to make such a distinction.
A Canadian is a Canadian, and we would like to see the B.C. government recognize the interprovincial nature of our workforce.
Whenever a new home is built elsewhere, or not built at all, much is at stake for many. Most of our members are small businesses that build five to 10 homes per year. Many build even fewer.
Each contract allows their crews to stay busy year-round and support their local workforce. Each contract makes a difference. What doesn’t make a difference to rental accommodations in areas where they are most needed is a cancelled contract for a home or cabin in rural B.C.
There are still many questions to be answered surrounding the speculation tax before the legislation is read into law, likely this fall. We are all concerned about housing affordability, but without further tweaks, this is not how to get there.