Speculation tax creating homes, says province, but reception has been cool in Vernon/Coldstream

Housing creator or tax grab?

While local reception to the expansion of B.C.'s speculation and vacancy tax has been less than warm, the province says more than $81 million was raised in 2022 to go back into affordable housing.

Vernon, Coldstream, Penticton, Summerland, Lake Country, Peachland, Salmon Arm, and Kamloops were among 13 new communities added to the tax last month.

"Across the country, the housing crisis is hurting people and communities. The speculation and vacancy tax is supporting more homes for people, so they can live where they work and where their children go to school," Minister of Finance Katrine Conroy said in a press release Monday.

"While some would cancel the speculation tax – giving a handout to speculators and turning homes back into empty condos – we know that people can't afford that."

However, the expansion was slammed as a tax grab by Vernon councillors.

“Let's call a spade a spade, this is nothing more than just a way to tax somebody to fill the coffers, and I think that's just a wrong premise,” Coun. Kari Gares said at Vernon council's last meeting.

“It's just a tax grab is what I think it is. It’s just 'well, we’re gonna get more money from (it), we'll use the housing crisis as an explanation and bingo, here we go,'" said Coun. Akbal Mund.

Gares, a mortgage broker, said the tax had unintended consequences when first introduced because investors chose to buy in places without the tax. So, somewhere without the tax, like Vernon, had its housing market driven up, something she said could happen this time in neighbouring municipalities such as Armstrong.

Coun. Brian Quiring called it a "double whammy" on top of recently introduced short-term rental regulations.

Coldstream Mayor Ruth Hoyte said she supports the province's Home for People plan, but doubts the tax will have much impact in her municipality.

"It won't affect most people ... I suspect it won't free up a lot of homes for rent in Coldstream," she said.

Hoyte said vacation or short-term rental homes often tend to be high-dollar lakefront homes that would be out of reach of the vast majority of renters.

The expanded 0.5% tax on the assessed value of vacant second homes (2% for non-residents of Canada) was first introduced in 2018 and already applies in many cities across B.C., including nearby Kelowna and West-Kelowna.

Homeowners in the added communities will need to declare for the first time in January 2025, based on how they used their property in 2024.

Of the $81 million collected last year, $68 million was paid by non-B.C. residents, including foreign owners, the province says.

Principal residences and residences occupied by a tenant are the top two exemptions, growing by more than 30,000 from 2021 to 2022, suggesting that the tax is increasing long-term housing, the province adds.

It suggests the tax has helped create more than 20,000 housing units in Metro Vancouver alone since 2018.

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