A controversial new tax aimed at curbing foreign speculation in British Columbia's red-hot housing market might actually hurt local homeowners more than anyone else, the province admitted Thursday.
According to the Ministry of Finance, about 32,000 properties are about to be hit with the so-called speculation tax on unrented second homes. Nearly two-thirds or about 20,000 of them are B.C.-owned.
Roughly 10,000 homes belong to foreign owners, while 2,000 are owned by Canadians from other provinces.
Liberal finance critic Shirley Bond called the numbers "disappointing" Thursday.
"From my perspective, this is an asset tax," she said. "After working very hard in this province and putting their resources into an asset, this government intends to focus on British Columbians."
The province, however, insists its target is speculators.
In March, Finance Minister Carole James said the levy is intended "to make sure that we get speculators who are using our housing market as a stock market out of the business."
On Thursday, she continued to say that 99 per cent of British Columbians won't pay.
"This tax is impacting people who have second or third or fourth homes in the least affordable communities in British Columbia," she said.
"We have to address the housing crisis. There are families in this province who have not even a hope of owning a home."
Locals who have to pay the fee will face a lower rate and receive a tax credit. That means they'll only pay a combined $60 million, while non-residents will pay $140 million, even though British Columbians make up more than 60 per cent of those taxed.
While those across the aisle acknowledge that speculation is a problem in the province, they say the tax isn't the way to solve it.
"It's time for the NDP to take a look at this and look at realistic, practical ways to actually deal with the actual speculators in this province," Bond said.
This isn't the first time that the levy has sparked controversy.
Weeks after it was introduced in the February budget, pushback from vacation communities across the province led the government to announce changes narrowing the scope of the tax, which applies to those who own a home they don't live in or rent out for a majority of the year.
As it stands, the tax will start at a base rate of 0.5 per cent of the property's assessed value in 2018. It will climb to 1 per cent for Canadians outside of B.C. and 2 per cent for foreign investors in 2019.
The levy will only apply to specific communities where the province says speculation is a significant problem.
- Metro Vancouver Regional District (excluding Bowen Island and parts of Electoral Area A that aren't in the University Endowment Lands)
- The Capital Regional District (excluding the Gulf Islands, Juan de Fuca, Willis Point, East Sooke Park and Matheson Lake Park)
- West Kelowna
- Nanaimo-Lantzville (excluding Newcastle, Protection and smaller islands in Departure Bay)
The tax is expected to become law this fall.
Article from CTV Vancouver - May 17th