This article by Peter Ladner in Business In Vancouver is a compendium of ideas for dealing with Monster A of the two-headed monster that is Vancouver real estate.
- Monster A: foreign investment, the product of globalization and flight of capital.
- Monster B: low and stagnant wages for those who work and live in Vancouver.
He rightly points at local and provincial elected officials, who in my opinion are reluctant to forego rising income from the price boom, and even more reluctant to tamper broadly with residential capital gains (often minimally taxed) and risk pissing off voters.
In particular, Mr. Ladner discusses the ideas proposed January 18, 2016 in the B.C. Housing Affordability Fund (BCHAF) paper floated by a large group of SFU and UBC’s Sauder School economists. The proposed fund’s intention is to increase property tax and distribute the proceeds back to residents, except not to those who own Vancouver residential property without participating in the economy or life here.
The BCHAF will be funded by a new 1.5% property surcharge on residential real estate. The revenues will then be distributed as lump-sum payments to all Canadian tax filers in any area included. The tax would target owners of vacant properties and those with limited economic or social ties to Canada. All other owners will be exempt.
From the footnotes: . . . The estimated share of units in the City of Vancouver not occupied by usual residents is greater than it is in other Canadian cities. We assume that this difference in rates reflects investor held units subject to the proposed surcharge. For our calculations we assume these rates are 7.5% for condominium units and 2% among other housing units. If we assume that this rate is the same for both high and low value units, then using B.C. Assessment data and 2015 assessment values, incremental property tax paying into the BCHAF from the City of Vancouver alone would amount to $90 million per year.