It’s time to bring an end to Home Owners Grant

Program makes no policy sense, writes Marvin Shaffer.

The B.C. Home Owners Grant has had remarkable staying power. Although widely criticized as a “thinly veiled vote-buying scheme”, the grant program will be extended this year with an increase in the threshold property value to $1.65 million. The program makes no policy sense and is expensive, budgeted to cost some $825 million. Nevertheless, no government since it was first introduced by W.A.C. Bennett in the 1950s, including the current one, has been willing to take it on.

Under the program, B.C. homeowners whose principal residence is valued at no more than the $1.65-million threshold can apply for a grant to reduce their property taxes. The annual grant in the Greater Vancouver, Fraser Valley and Capital regional districts is $570 — it is $770 for homeowners elsewhere in the province. Seniors get an additional $275, increasing their grant to $845, or $1,045, depending on where they live.

There has never been any public policy rationale for this program.

If the goal was to reduce the burden of property taxes on homeowners, the government could simply have reduced the so-called school tax it imposes on residential property owners. It doesn’t have to raise taxes so that it can then pay a grant to over 90 per cent of all households under a scheme that, among other things, has annoyingly unnecessary application and audit costs.

The grant does provide a fixed amount of relief to homeowners regardless of the value of their property (at least up to the $1.65-million threshold), but if that is an effort to be fair to all residents the program falls short of any standard measures of equity. The grant varies by region, inexplicably being higher where housing costs are generally much lower. And extra support is provided to seniors, even to those who have greatly benefited from escalating property prices, as opposed to the many young families that have been greatly hurt by those same escalating prices.

The fact is, the Home Owners Grant is not fair to all residents. In addition to the oddities in the differing size of grants by region and demographic groups, the program does not provide any support to renters, either directly or through property tax relief for owners of rental property. The current government has promised to address that failing with a new grant for renters, but even with that, the grant programs are fundamentally flawed. Neither the homeowners nor the new renters grant program as currently proposed is fairly and efficiently targeted to financial circumstances and need.

The combined annual budget for the two grant programs will total almost $1.1 billion this year. Despite that large commitment of funds, they will fail to meaningfully address the most important social policy issue B.C. faces — the crisis of housing affordability for so many of our residents. The grants will provide too little for those in greatest need and an unnecessary, even if welcome, amount for those not in need.

It is time for a markedly different approach. Meaningfully addressing the housing crisis will require a large amount of government resources. Certainly, politically popular foreign buyers and other such tax measures can be taken to reduce speculative and foreign demand for housing. But as housing policy analysts and advocates have argued for some time, what is desperately needed are government incentives and investments that support major increases in the supply of affordable rental units and other housing — supply that market forces alone are not providing.

There is also the need to expand income support and anti-poverty measures so that more individuals and families have the basic amount of resources needed to secure decent housing. As tax policy expert Rhys Kesselman has argued, a refundable tax credit targeted to low-income families, like the GST or child tax credit, would be far better in this regard than the homeowners grant.

And of course, there is the need to address the disgraceful extent of homelessness in cities and towns throughout the province. Major investments in basic housing and greatly expanded support services are urgently required.

The financial challenge for government will be great. And that, in turn, will require government to be ever more efficient in the programs and expenditures it is currently making. There is no justification for the $1.1 billion government is now budgeting for what was originally and continues to be a crassly political, poorly designed grant program. There is an immediate need for those funds to be better targeted and spent.