Regional mayors reject Vancouver’s vacancy tax, propose non-resident tax

Theglobeandmail.com
July 19, 2016
By Frances Bula and Ian Bailey

Mayors in cities neighbouring Vancouver say its vacancy tax aimed at reining in housing prices will be a bureaucratic nightmare and they won’t impose it, leading to concerns there will be a patchwork of regulations across the region.

Instead, regional mayors say, it would be easier to administer a non-resident tax that would directly tackle the issue of foreign investment.

Next Monday, the B.C. government is recalling the legislature for a brief, rare summer sitting to amend provincial law to give Vancouver the authority to impose the tax after Mayor Gregor Robertson lobbied hard for the solution.

But the regional mayors say they want the legislature to instead give them the ability to impose a non-resident tax.

West Vancouver Mayor Michael Smith is leading the charge on asking the province for that authority. “That kind of tax is pretty common around the world,” said Mr. Smith, who pays exactly that kind of tax on his vacation home in Hawaii. “We’re lobbying the provincial government to give us that right [to tax] anybody that doesn’t stipulate their home is their principal residence.”

Mr. Smith’s tax proposal would apply to many more owners. Anyone using a property as an investment, whether rented or vacant, would be taxed, as would any non-Canadian citizen, living in the home or not.

Mayors from North Vancouver, Burnaby, Coquitlam and Surrey – all places that are seeing varying levels of foreign investment and vacant homes – agree that Mr. Smith’s proposal is simpler and more effective.

B.C. Community Minister Peter Fassbender said he wouldn’t comment on which might be better.

The division of opinion is creating some confusion as, like Vancouver, Victoria has asked for the power to impose a vacancy tax. But Victoria Mayor Lisa Helps also said she would like to see municipalities adopt the same tax tools to avoid a “very complicated” array of systems across the province.

“I don’t think it can be free rein handed over to municipalities to develop whatever taxing tools they want. That would really create havoc,” she said.

Coquitlam Mayor Richard Stewart calls the Vancouver vacancy tax “unenforceable.” And, he added, “my issue is not with vacant units, which help subsidize city expenses. But there’s no question we need to take on this issue of foreign capital.”

Burnaby Mayor Derek Corrigan said Mr. Smith’s idea is “much more transparent.” It focuses on people who are not Canadian citizens or who are investors.

“It addresses the issue of foreign ownership. It says ‘You can buy here, but you will have to pay much more in taxes,’” said Mr. Corrigan.

A recent snapshot of foreign buying, released by the province two weeks ago, showed that foreign investors bought almost 11 per cent of Burnaby homes.

District of North Vancouver Mayor Richard Walton said small municipalities like his just don’t have the bureaucracy Vancouver does to track down and tax the owners of vacant houses.

“The vacancy tax throws the onus on local governments,” he said. “And what do you do – send a bylaw officer to every door and have to talk to someone who doesn’t speak English and ask how many days a year they are there?”

He agreed Mr. Smith’s idea was more practical: “It’s a policy piece that needs to be somewhat punitive, that says, ‘If you want to invest here, invest in commercial, not in residential.’”

Mr. Walton said something needs to be done to prevent the local housing supply from being sapped by people who are buying homes as investments.

Surrey Mayor Linda Hepner said vacant homes and foreign investment aren’t a burning issue in her community yet, although there are pockets of south Surrey and Fraser Heights where svacancies are becoming an issue.

But she said if she felt the need for action and had the choice, she’d choose the non-resident tax. “The vacancy tax … I think it will be very tough,” she said.

Mr. Smith envisions his plan would impose a new tax on two groups: People who are not Canadian citizens, whether they are living in the house they own or not; or people who are investors, Canadian or not, who own a house but don’t live in it.

Immigrants who are living in houses they own would not pay the tax, as he describes it.

Richmond Mayor Malcolm Brodie said he is still unsure if either a vacancy tax or a non-resident tax is practical. He and his council are waiting to see how things turn out in Vancouver, even though his municipality showed up as the one with the highest level of foreign buyers - 14 per cent of all sales - in the province’s data.