A land value capture tax lets us dream big
Innovative idea can help ease housing crisis, say Christine Boyle and Brandon Yan.
Amid out-of-control speculation and rent increases more than twice the rate of inflation, Vancouver is in a housing affordability crisis. It’s time for transformative solutions that get to the heart of the problem. We believe a land value capture tax is one of those solutions.
As Vancouver grows — and as governments and communities continue to create public and private improvements to infrastructure (e.g. improved transit service, increases to density, new businesses and cultural events) — the value of land is likely to increase further, keeping housing affordability elusive.
So far it is largely individual landowners and developers who have benefited from these immense gains in land wealth. We believe these land gains — often created by the public — should benefit everyone. A land value capture policy will discourage speculation while raising funds to build social and affordable housing and make significant improvements to our public transit system.
Land value taxes work by “capturing,” or taxing, part of the windfall acquired through zoning changes, infrastructure improvements, and other local areas enhancements. OneCity proposes a two-fold approach to Windfall Power, our made-in-Vancouver land value tax.
First, the City of Vancouver, in collaboration with TransLink, has the power to apply a land value tax to areas impacted by transit improvements. Once elected, the new city council should immediately work to create a land value taxation plan for areas around the Broadway Subway. Revenue could be earmarked to improve transit services and fund future transit projects.
Second, the City of Vancouver should work with the province to create a made-in-Vancouver land value capture tax. This new system could replace much of the city’s reliance on Community Amenity Contribution contracts, providing greater clarity and transparency, and helping rebuild residents’ trust in how City Hall negotiates with developers.
There are a number of details that will need to be figured out with input from experts, including when and how the increase gets collected so that costs do not get downloaded onto renters. These details matter.
However, B.C. Assessment, our world-class provincial property assessment agency, already holds the data needed to effectively implement and administer this type of land value tax. The money raised should be directed toward providing social and affordable housing to support those struggling most under the housing crisis.
OneCity imagines a Vancouver where every neighbourhood is for everyone — where all parts of the city have apartments, social and supportive housing, multiplexes, and co-ops.
However, given who has profited most from development in Vancouver over the years, concerns exist about up-zoning functioning as a windfall for large developers and those fortunate enough to own property. A land value capture policy will ensure a significant part of these windfalls from transformative zoning changes are redirected towards the public good.
Done well, land value capture will decrease speculation, slowing the astronomical rise in land costs that drive our affordability crisis. While achieving that goal, it will also raise necessary funds to build truly affordable housing for low and moderate income residents and provide an improved public transit system. Both are important outcomes in getting where we need to be.
It’s time for progressive, pragmatic solutions to Vancouver’s housing crisis. A Windfall Power land value tax can be a powerful tool to redistribute wealth in our city. This election, let us dream big.
Vaughn Palmer will return August 14.
Done well, land value capture will decrease speculation, slowing the astronomical rise in land costs that drive our affordability crisis.