Speculation Tax a headache
By now, tax notices for the BC NDP’S Speculation Tax will be arriving in the mailboxes of every Surrey homeowner – from lifelong residents to new arrivals to B.C.’S fastest-growing city. The NDP government announced last week it would use negative-option billing to implement this new tax, meaning all homeowners in affected communities will be taxed as if they are speculators until they can prove that they are not. Ironically, government admits that of those receiving tax bills, a very small proportion of people will actually pay. On the heels of the winter holidays – and with anticipated property tax hikes on the horizon – an extra tax bill is likely the last thing Surrey residents want to see on their doorstep. But everyone will get one regardless.
Homeowners are not required to pay the Speculation Tax if they qualify for one of more than 30 exemptions – including if their home is their principal residence, if they rent out their home for at least six months of the year, or if they have been away for select personal reasons like medical treatment, a recent move into residential care, or spousal separation. In any of these situations, homeowners have to declare this often sensitive information to the government to avoid paying the hefty tax. And not only that, they will have to do so year after year. Homeowners who do not file an exemption by March 31, 2019 will be charged the full tax rate of 0.5 per cent on the assessed value of their property, and 2 per cent each year after that.
So where does this leave Surrey residents? At best, Surrey homeowners will spend around 20 minutes each applying for an exemption to this tax. With more than 180,000 households in Surrey, this process is estimated to take a minimum of 60,400 combined hours, or more than seven years. Because each individual homeowner needs to complete this process – even if one home has multiple owners, as is often the case with spouses or multi-generational families – this burden will undoubtedly be much higher. This estimate also doesn’t include time spent getting doctors’ notes or other documentation the government requires, which adds time to the process. While this complex and often confusing process will undeniably cost Surrey homeowners their time, there are other even more serious impacts. There will undoubtedly be homeowners who pay this tax unfairly – because they have been away and are unaware of this new tax or because, as non-speculators, they don’t believe the tax applies to them. Perhaps the most problematic part of all is that despite its name, this tax won’t do anything to stop speculation and make Surrey homes more affordable.
That’s because British Columbians will make up the majority of people paying this tax – not foreign speculators, as government claims. Thanks to a one-year exemption on newly purchased properties, home flippers won’t pay this tax – adding to the confusion surrounding it. But within this convoluted process, one thing is clear – this tax will cause a whole lot of headache for no real results.