B.C. NDP promise new tax on foreign speculators

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B.C.'s New Democrats are promising to impose a tax on property speculators who don't pay income tax in the province, which the party says will be more effective than a levy on foreign buyers introduced last year by the Liberal government.

The NDP tax, announced Thursday in the party's campaign platform, would put a 2-per-cent tax on homes of people whose tax returns indicate they pay little or no taxes in British Columbia. It would be implemented first in Metro Vancouver, where housing affordability has become a pressing concern, though other jurisdictions could opt in later, the party said.

The tax would be based on assessed property values and proceeds would go to a housing affordability fund.

"It's a very targeted tax toward people who are buying property here, or who own property here, but who aren't paying income tax here," NDP MLA David Eby said on Thursday.

"The issue is one of fairness," he added.

"If you're buying property, and you're benefiting from all the public services, and your property is going up in value, because of the good schools and hospitals and services here – that's fundamentally unfair," Mr. Eby said.

The influence of foreign money has long been a concern in the debate about how to rein in housing prices in Vancouver, where prices jumped by more than 40 per cent in a single year and where detached homes fetch well over $1-million.

The Liberal government's answer to those concerns was a 15-per-cent tax that applies to residential properties bought by people who aren't Canadian citizens or permanent residents.

The NDP's platform proposal echoes one made in January, 2016, by economists at the University of British Columbia's Sauder School of Business, the Vancouver School of Economics and Simon Fraser University.

The economists recommended a 1.5-per-cent property surcharge that would target owners of vacant properties or "those with limited participation in the Canadian economy," with proceeds going to a housing affordability fund.

The NDP would review the existing foreign-buyers tax to ensure it would not apply to people who live, work and pay taxes in British Columbia, Mr. Eby said.

In March, the government changed the tax to exempt several thousand international residents on provincial work permits and agreed to provide refunds to some people who had already paid the tax.

Those changes followed complaints that the tax on foreign buyers was hitting people who were living, working and paying taxes in B.C.

In announcing the changes, BC Liberal Leader Christy Clark said they were designed to make the Vancouver region more attractive to tech-sector professionals.

"I think a foreign-uyer tax in the era of [U.S. President Donald] Trump is particularly undesirable," said real estate economist Tom Davidoff of UBC's Sauder School of Business.

"I think we really ought to take the opportunity to eat Silicon Valley's lunch. … I think the Canadian way to do that would be to be friendly to immigrants, but also make housing more affordable. This approach has the option of being nice to immigrants but also making sure we can draw people to Vancouver to live and work here, because it's not too expensive."