West Kelowna warns of tax ‘cri­sis’

Mayor to push Hor­gan to ex­clude com­mu­nity from spec­u­la­tion levy


The mu­nic­i­pal­ity of West Kelowna has joined a grow­ing back­lash against the B.C. gov­ern­ment’s real es­tate spec­u­la­tion tax, de­mand­ing it be left out of the mea­sure.

On Tues­day, West Kelowna’s coun­cil voted unan­i­mously for Mayor Doug Find­later to meet Premier John Hor­gan and B.C. Green party Leader An­drew Weaver to push for the Okana­gan com­mu­nity to be ex­cluded from the tax.

“We’re very con­cerned about the over­all eco­nomic im­pact,” Find­later said. “We are fun­da­men­tally con­cerned this would push prop­erty val­ues be­low the amount of eq­uity peo­ple have in their homes. It’s a po­ten­tial fi­nan­cial cri­sis.”

West Kelowna has a large num­ber of part-time res­i­dents who would be im­pacted by the new an­nual levy, which tar­gets un­oc­cu­pied homes and sec­ondary homes owned by peo­ple not pay­ing in­come tax in B.C. It would start at 0.5 per cent in 2018 and in­crease to two per cent in 2019.

Find­later fears that many fac­ing thou­sands of dol­lars in new taxes could be forced to sell their homes, caus­ing a glut in the mar­ket.

“The irony of this is, if they go through with it, the only peo­ple who will be able to af­ford re­ally ex­pen­sive places are the re­ally wealthy, who would buy them up at a fire sale price,” he said. “Peo­ple who picked up a mod­est place on the lake 20 years ago and kept it in the fam­ily are not go­ing to be able to af­ford to keep them.”

West Kelowna, which in­cor­po­rated 10 years ago, has a pop­u­la­tion of 35,000. It’s been try­ing to ur­ban­ize and de­vel­op­ment has been a boon to the grow­ing com­mu­nity, the mayor said.

The shock waves from the tax, even be­fore its im­ple­men­ta­tion, can al­ready be felt, Find­later said. Banks are shy­ing away from lend­ing to de­vel­op­ers, he said, and peo­ple ap­ply­ing for res­i­den­tial mort­gages might also be af­fected.

“We do want a de­ci­sion on this very soon be­cause of the dam­age this is al­ready do­ing,” he said. “There is clearly a cri­sis in con­fi­dence about the fu­ture over what the prov­ince may do.”

The mu­nic­i­pal­ity re­ceived 239 emails from part-time res­i­dents, recre­ational prop­erty own­ers and de­vel­op­ers along with anec­dotes from own­ers who es­ti­mate tax in­creases of $20,000 or $30,000. The mu­nic­i­pal­ity be­lieves the spec­u­la­tion tax in West Kelowna will add about $10 mil­lion to Vic­to­ria’s cof­fers.

If the prov­ince doesn’t bow to the re­quest, Find­later wants the prov­ince to pre­pare a re­port es­ti­mat­ing the eco­nomic im­pact of the tax mea­sure, which West Kelowna ex­pects will have un­in­tended con­se­quences for some non-res­i­dent prop­erty own­ers.

The spec­u­la­tion tax, an­nounced in last month’s bud­get, ap­plies to the Lower Main­land, Vic­to­ria, the Nanaimo re­gion, Kelowna and West Kelowna.

Other mu­nic­i­pal lead­ers, in­clud­ing in Kelowna and Parksville, have pub­licly ex­pressed con­cern over the im­pact of the tax on their lo­cal economies.

The spec­u­la­tion tax is meant to curb spec­u­la­tion by out-of-prov­ince flip­pers in the real es­tate mar­ket, but also ap­pears to cap­ture B.C. res­i­dents or Cana­di­ans who own sec­ond homes or va­ca­tion homes.

In re­cent days, both Hor­gan and Fi­nance Min­is­ter Ca­role James made state­ments hint­ing at pos­si­ble ex­emp­tions.

But dur­ing ques­tion pe­riod Tues­day, James pro­vided no clar­ity, say­ing the tax is a work in progress and that more de­tails will come in the spring with leg­is­la­tion ex­pected in the fall.

“The de­tails will be out on the spec­u­la­tion tax,” she told the leg­is­la­ture.

With such a bold new mea­sure, it is par­tic­u­larly im­por­tant to pro­vide these prin­ci­ples well in ad­vance of leg­is­la­tion.

Re­spond­ing to West Kelowna coun­cil’s de­ci­sion, James said the NDP gov­ern­ment is tak­ing “bold ac­tion” to ad­dress an af­ford­abil­ity cri­sis that in­cludes the Kelowna metro area, where the va­cancy rate is 0.2 per cent.

“With such a bold new mea­sure, it is par­tic­u­larly im­por­tant to pro­vide these prin­ci­ples well in ad­vance of leg­is­la­tion and, as in­di­cated at the launch of bud­get 2018, we are tak­ing the ap­pro­pri­ate time to en­sure that the tax is as ef­fec­tive and tar­geted as pos­si­ble,” James said in a state­ment.

Dur­ing a scrum ear­lier in the af­ter­noon, Hor­gan said any pos­si­ble tweaks to the spec­u­la­tion tax have been fac­tored into the bud­get.

The bud­get’s rev­enue fore­casts “are con­ser­va­tive al­ready, by de­sign, and we have very gen­er­ous (con­tin­gency funds and fore­cast al­lowances) that will make up for any short­fall as we move the tax to its fi­nal form this fall,” he said.


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