The Speculation Tax That Isn’t

BC outlaws the urban pied-à-terre


I have a running battle with a realtor friend who is adamantly against the Foreign Buyers Tax introduced by the previous Liberal government to deal with offshore speculation of residential real estate. At the time, the tax added 15% to all real estate purchases in Vancouver made by non-Canadians. My friend claimed that the tax specifically targeted Chinese buyers and was just as racist as the “Head Tax” that penalized Chinese immigrants a century ago.

My argument was (and still is) that if you are a Canadian citizen or a permanent resident, you have made a commitment to Canada and should be able to buy and sell real estate like any other Canadian. But if you’re from New York, Shanghai or Moscow and you buy Vancouver or Victoria real estate because holding and flipping it will make you a bigger profit than gold stocks or pork bellies, then you're here to speculate and you should pay the Foreign Buyers Tax, just like they do in Hong Kong and Singapore.

In March, the new NDP government brought in the “Speculation Tax” to supposedly enhance affordable housing by taxing properties that were not the owner’s primary residence, and which were not being occupied by a tenant while the owner was away.

A provincial government website, (replete with “class warfare” rhetoric), spins it this way: for too long, this housing crisis was allowed to escalate and it’s hurting working families, renters, seniors, students and others.... With this new tax, we’re telling speculators to free up the homes they are keeping empty so they can be used by British Columbians desperate for housing or be ready to start paying more. In other words, make the rich pay, even if they are Canadians using a second home as a summer cabin or a pied-à-terre.

When first introduced, the tax forced urban homeowners to live in their home, rent it out, or pay the tax. You couldn’t have a second “vacation” home. If you did, you were deemed a speculator and the tax would apply. Exemptions were subsequently made because of an outcry from those who owned a vacation home in addition to their principal residences. But this exemption was limited to “a place at the lake or on the islands,” unicorns, Elvis and Vancouver condos worth less than $400,000.

Thus, if you lived in Vancouver but owned a two million dollar “cabin” in the Gulf Islands you are a morally superior person because you are not hurting working families, students, or seniors, so you don’t have to pay the tax. But if you live in Langley and bought a small condo in Vancouver that you use on weekends as a pied-à-terre instead of something on Salt Spring, and it’s now worth more than $400,000, you’re an evil speculator and must either live there full-time or rent it out to avoid the tax.

Shockingly, there are actually people who own Vancouver condos who are not speculators! Maybe they bought their condo because their commute from Langley is an hour or more each way and they use it two or three days a week. Or maybe they live in New West but own a Vancouver condo to use as a pied-à-terre on weekends to enjoy Stanley Park or Vancouver’s urban amenities the same way others might use their cabin on Shawnigan Lake or on Salt Spring. They aren’t foreign flippers “hurting working families, students or seniors.” They are vacation home owners who chose to buy their “cabin” in downtown Vancouver instead of on Salt Spring. If they aren’t speculating, why should they be treated differently than Salt Spring vacation home owners? You would think a Speculation Tax would actually target speculators and not law-abiding Canadians who made different choices with their recreational property dollars than those who own million-dollar properties on the Gulf Islands.

Some call the Speculation Tax “Champagne Socialism.” It's not. It’s “Salt Spring Socialism” with a dose of Orwell. You see, in BC, everyone is equal, but some are more equal than others, especially if their second home is in the Gulf Islands.

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