Saanich speculates on exemption from real estate tax

Saanich will formally ask the provincial government to opt out of a tax designed to curb real estate speculation as part of efforts to make housing more affordable. But Saanich will also ask the province for a meeting to explain its opposition as part of a larger discussion about the speculation tax.

Council Monday voted 5-4 to send a letter to the province that is asking for an exemption from the tax. Mayor Richard Atwell joined Couns. Susan Brice, Karen Harper, Vicki Sanders and Leif Wergeland in support of the exemption. Couns. Judy Brownoff, Fred Haynes, Colin Plant and Dean Murdock opposed it.

“We need to be convinced [of the speculation tax],” said Atwell. “And until we are convinced, this is our position.”

Critics of the exemption letter, however, pointed out that it might not accomplish anything.

“I think we can do better than sending a letter,” said Coun. Fred Haynes. “Surely Saanich is mature enough to speak with the provincial government.”

After some considerable back-and-forth, council eventually passed a second separate motion, requesting a meeting with the province. Murdock, who had earlier opposed sending the letter requesting the exemption, questioned this decision.

Murdock said that council should own its close vote, adding that he would be “embarrassed” to meet with provincial staff after making a “knee-jerk” decision shaped by provincial politics and rhetoric. Political decision-making functions better with information, he said. “And there was none for what we just did.”

Saanich considered the item after Wergeland had filed a notice of motion earlier this month.

“I believe the province needs to re-think the ramifications of this tax,” he said. This tax will not create more housing, he said. Increasing the supply of housing — not this tax — will help solve the housing situation, he said.

Input prior to the vote revealed public support for it — at least among the audience members who spoke Monday. According to an unofficial count, nine out of 11 speakers favoured Saanich’s request for an exemption.

Several speakers denounced the tax as a “tax grab” and predicted that it would undermine local economic activity.

“The speculation tax may start another period of economic decline,” said Casey Edge, executive director of the Victoria Residential Builders Association.

Cheryl Woolley, president-elect of the Victoria Real Estate Board, said the speculation tax will not only hurt the region’s real estate, but also other sectors of the economy, including the service sector.

Others denounced the tax as discriminatory towards not only Canadians from outside of British Columbia, but foreigners, with one speaker comparing it to the so-called ‘head tax’ that Chinese immigrants had to pay between 1885 and 1923.

But council also heard from critics of the proposed exemption. Former Saanich councillor candidate and local activist Nathalie Chambers questioned the proposed exemption in light of Saanich’s housing crisis, and Teale Phelps Bondaroff questioned why Saanich wants an exemption from the tax, when the wording of the motion actually acknowledges an absence of data. On one hand, the motion claims that the tax is hurting housing affordability. On the other hand, it concedes that Saanich lacks concrete statistics.

“The premise of your motion might be flawed,” he said, a point echoed by Haynes, Plant and Murdock in their opposition. Wergeland, however, challenged them to convince him about the benefits of the speculation tax.

The provincial government first announced the tax as part of its 2018 budget. The tax applies to most of Metro Vancouver, the Capital Regional District (excluding the Gulf Islands and Juan de Fuca Electoral Area), Kelowna-West Kelowna, Nanaimo-Lantzville (excluding Protection Island), Abbotsford, Chilliwack, and Mission. Most islands are excluded.

It requires B.C. residents to pay a tax of 0.5 per cent on second or vacation homes valued at $400,000 or above if their owners do not rent them out for at least six months of the year, for periods of at least 30 days. The provincial government exempt homes under $400,000 to ensure the tax that does not capture most cabins.

Canadians from outside the province will have to pay 0.5 per cent this year and one per cent thereafter. Non-Canadian residents will have to pay 0.5 per cent this year and two per cent thereafter, as under the initial iteration of the tax, which enjoys some support among social scientists.

B.C. income taxpayers who are paying the 0.5 per cent annual tax remain be eligible for a credit to offset their speculation tax bill, and the provincial government has said 99 per cent of residents will not pay the tax.

But the tax has received criticism and a coalition of affected communities and industries have joined forces to lobby the provincial government, and more importantly, public opinion, to rescind the tax.

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