Sens­ing op­por­tu­nity, Lib­er­als tout a tax on condo pre­sales to re­store af­ford­abil­ity

Vancouver Sun - - FRONT PAGE - DOU­GLAS TODD

The hous­ing cri­sis was the No. 1 is­sue for Metro Van­cou­ver res­i­dents in the pro­vin­cial elec­tion of May 9, 2017.

And even though the hous­ing mar­ket has changed in many ways, in­clud­ing be­cause of COVID-19, it's still a hot sub­ject for vot­ers.

A Septem­ber poll by An­gus Reid shows the B.C. NDP get­ting high marks on how they're han­dling health care, the econ­omy and the pan­demic, but lower rat­ings from Metro Van­cou­verites on the on­go­ing hous­ing crunch.

That's dif­fer­ent from two years ago when the NDP won over­whelm­ing sup­port, ac­cord­ing to An­gus Reid, for strength­en­ing the for­eign buy­ers tax to 20 per cent, for promis­ing to col­lect in­for­ma­tion on the real iden­tity of home buy­ers and for bring­ing in the “spec­u­la­tion” tax on un­oc­cu­pied dwellings.

Sens­ing an open­ing, B.C. Lib­eral Leader An­drew Wilkin­son has come out of the cam­paign gates declar­ing the NDP's spec­u­la­tion and va­cancy tax is “phoney” and claim­ing it doesn't ad­dress spec­u­la­tion.

Wilkin­son, the MLA for Van­cou­ver- Quilchena, would kill the sur­charge on homes and con­dos that peo­ple leave va­cant more than six months of the year and re­place it with an ex­tra tax on prof­its from condo pre­sales.

David Eby, the at­tor­ney gen­eral who rep­re­sents the ad­ja­cent west-side rid­ing of Van­cou­ver-Point Grey, stands be­hind the hous­ing poli­cies he has been in­stru­men­tal in press­ing for since at least 2014 and, once elected, ce­ment­ing into place.

Eby claimed this week the B.C. Lib­er­als only brought in the 15 per cent for­eign buy­ers tax in 2016 be­cause they were forced to by vot­ers out­raged to find them­selves in a city ranked among the most un­af­ford­able in the world, with a huge gap be­tween lo­cal wages and house prices.

“The Lib­er­als were in de­nial about what was hap­pen­ing in our hous­ing mar­ket for so long. And that's be­cause they're so closely tied with devel­op­ers who have catered to the in­ter­na­tional mar­ket and made for­tunes sell­ing func­tion­ally use­less con­dos for peo­ple on the in­ter­na­tional mar­ket,” he said.

“We're try­ing to put a crimp in that business. We're try­ing to build houses for lo­cal fam­i­lies who live and work here, wher­ever they come from,” said Eby.

The NDP, he said, has no in­ten­tion of get­ting rid of the for­eign buy­ers tax.

And it turns out nei­ther do the B.C. Lib­er­als, whose hous­ing critic, Todd Stone, said Thurs­day his party would re­tain it.

But Stone ar­gued the spec­u­la­tion and va­cancy tax, which the NDP says is de­signed to en­cour­age in­vestors hold­ing va­cant prop­er­ties to rent them out, is “ac­tu­ally a wealth tax and un­fairly taxes Bri­tish Columbians and Cana­di­ans” who are among the one per cent of home­own­ers who end up hav­ing to pay it.

The spec­u­la­tion tax dis­cour­ages hous­ing devel­op­ers, Stone said, since it adds to a “mul­ti­tude of other taxes and reg­u­la­tory hur­dles.”

Condo pre­sales, he said, “are al­ready way down.”

The B.C. Lib­er­als will soon re­lease their hous­ing plat­form, Stone said, and it will em­pha­size “re­ally boost­ing sup­ply” to cre­ate af­ford­abil­ity. “We're not build­ing hous­ing fast enough.”

The NDP and Lib­eral politi­cians made their pitches at the same time that COVID-19 has re­duced by about half the num­ber of do­mes­tic and for­eign stu­dents com­ing to Metro Van­cou­ver uni­ver­si­ties, col­leges and lan­guage schools. That's made it a bit harder for some land­lords to find ten­ants.

Eby, how­ever, un­der­lines that the cur­rent sit­u­a­tion is tem­po­rary since a full com­ple­ment of stu­dents will re­turn soon, with Fri­day's news that start­ing Oct. 20 in­ter­na­tional stu­dents will be al­lowed to re­turn to their cam­puses if they're at­tend­ing a des­ig­nated learning in­sti­tu­tion that has a strict COVID-19 safety plan in place.

The spec­u­la­tion and va­cancy tax may not be ideal, Eby says, but it was “cred­ited by the Canada Mort­gage and Hous­ing Cor­po­ra­tion with bring­ing 11,000 rental units onto the mar­ket. That's a huge im­pact. I was talk­ing to one of my con­stituents who said there were four houses that used to be va­cant on his street that now have fam­i­lies in them.”

The data shows Eby that in­vestors, many of whom don't pay sig­nif­i­cant in­come taxes in B.C., are still driv­ing up pres­sure on Metro home prices. Since hous­ing prices are only down mod­er­ately from 2018 in Metro Van­cou­ver and go­ing through an un­pre­dicted jump here and around the world dur­ing the pan­demic be­cause of low in­ter­est rates, Eby ac­knowl­edged “we've still got work to do.”

Stone, how­ever, be­lieves it would sim­ply be more ef­fec­tive to re­strict spec­u­la­tion by slap­ping a 50 per cent tax on the flip­ping of pre­sale con­dos, which is “lit­er­ally sell­ing the piece of pa­per” that con­sti­tutes a sales con­tract on a dwelling that hasn't even been con­structed yet.

There is a less-dis­cussed advantage of the spec­u­la­tion tax form, how­ever, Eby said. It makes it pos­si­ble to catch peo­ple “who are ly­ing on their dec­la­ra­tions that this is their pri­mary res­i­dence.”

That cru­cial in­for­ma­tion, said Eby, who launched a pub­lic in­quiry into money laun­der­ing, is now avail­able to Rev­enue Canada for au­dits “and is help­ing red-flag peo­ple who are spend­ing more than they're declar­ing on their in­come tax.”

For his part, Eby also looks for­ward to the spring launch of the ben­e­fi­cial own­er­ship reg­istry, which he con­sid­ers “quite a big deal, be­cause it means you'll ac­tu­ally have to de­clare who the real hu­man is who owns the prop­erty.”

The ben­e­fi­cial own­er­ship reg­istry will not only sat­isfy what Eby called “sala­cious in­ter­est from the U.S. press about who owns the con­dos in the Trump Tower,” it will aid Cana­dian and in­ter­na­tional tax in­ves­ti­ga­tors, jour­nal­ists and law en­force­ment of­fi­cials.

This is a piece of leg­is­la­tion on which the two par­ties agree, with Stone say­ing the own­er­ship reg­istry is a “very sen­si­ble pol­icy” that will help law­mak­ers “know what's re­ally go­ing on in B.C. real es­tate.”


David Eby, at­tor­ney gen­eral and MLA for Van­cou­ver-Point Grey since 2013, was in­stru­men­tal in the de­vel­op­ment of the spec­u­la­tion and va­cancy tax.

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