Leading Edge: Lessons learned from B.C.

During the federal election, advocates of taxing the sale of principal homes, were in the news. Globe and Mail columnist, Andrew Coyne, wrote, “As with most such proposals to take away someone’s tax break, the bigger the blowback,the better the idea.” Former Canada Mortgage and Housing Corporation CEO, Evan Siddall, also raised the issue in a recent CTV interview.

When did the absence of another government tax on private property become a “break?” A “break” implies the government has an inherent rightto Canadians’ private property. A taxon personal property, especially a home, is not a government right. It is an imposition on our financial security, privacy and freedom. Taxing a principal residence ignores the fact that homeowners already pay GST, provincial sales tax for construction, property transfer tax, building permit fees, development cost charges, amenity fees, speculation tax on family cottages (in B.C.), and decades worth of property taxes. In addition, there is a capital gains tax on selling homes, other than a personal residence. Taxes on housing already generate billions of dollars for three levels of government. But it’s never enough. The real issue is governments cannot control their spending.

Now, Toronto councillor, Mike Colle, is asking the Ontario government to launch a speculation tax “as a way of slowing things down.” He should pay attention to B.C., where we continue to experience record low supply and rising prices despite a speculation tax launched several years ago. The speculation tax and B.C.’s myriad of other taxes, including the foreign buyers tax and school tax (really a land tax), have done zero to address housing affordability in Canada’s highest-priced province. If anything, these taxes contribute to housing supply shortages and higher prices, in addition to eroding Canadians’ rights and freedoms.

That said, many are starting to conclude the solution to high prices is supply. During the federal election, candidates promised to build millions of homes. Of course, they did not understand rezoning permission is first needed from municipalities. The federal government has no authority over municipalities, which report to the provinces. If the obstructions were addressed, builders would build the homes. Why spend billions of taxpayers’ money? But at least it is the start of admitting there is a supply problem. Even a recent Globe and Mail editorial admitted, “The real answer, the difficult answer, the long-term answer, is supply – everything from more rentals and more homes for purchase to a much-needed expansion of affordable housing.”

Politicians in Ontario and other provinces should pay attention to a recent remark by B.C. Housing Minister, David Eby, at a recent housing conference. “It’s fine to say that you are not interested in bringing more people into your community, but when you have thousands of people arriving in your community, through federal immigration policies and in-migration from other provinces, you need to match your official community plan with growth and with zoning.” He promised to “withhold funding for programs if a municipality refuses to work on the supply challenge.”

So the B.C. government has finally admitted housing shortage are caused by obstructive municipal councils. Taxes such as the speculation tax and a tax on principal homes do nothing to address housing affordability. Rising housing prices are mostly caused by municipalities choking supply in the face of rapid population growth created by a large Millennial demographic starting families, plus a 55 percent increase in immigration by the federal government. Eby’s promise to withhold municipal funding is a step in the right direction, but we also need mandatory regional planning, deadlines on development applications and a halt to the annual rising costs of new building regulations, amenity fees and speculation taxes. And no new tax on principal homes.

It’s a lesson for the rest of the country, especially the Maritimes, Saskatchewan and Manitoba where prices are rising but still reasonably affordable relative to British Columbia. Avoid B.C.’s litany of failed tax policies and instead boost supply by holding municipalities accountable. Apparently, the B.C. government just figured that out. Now action is needed.

Casey Edge is executive director of the Victoria Residential Builders Association