B.C.'s NDP government has struck a deal with its power-sharing partners, the B.C. Greens, to tweak the new speculation tax and assure its passage into law.
ROB SHAW (VANCOUVER SUN) VICTORIA — Finance Minister Carole James saved her government’s marquee housing tax from defeat Thursday by agreeing to change several details to mollify the B.C. Greens.
Green Leader Andrew Weaver announced he will support the NDP’s speculation tax, in return for changes that include cutting the tax rate for Albertans and other out-of-province Canadian owners and requiring require tax revenue be spent on affordable housing projects in communities where the tax is received.
“We’ve come to a good place where the key aspects of the concerns have been addressed — not all of them, but the key aspects have been addressed recognizing we would have done things differently but we have shared values,” said Weaver.
But Weaver quickly found himself on the defensive because he’d failed to achieve a promised opt-out clause for mayors who worry the tax could harm economic development and housing construction in their communities. Instead, Weaver secured annual meetings among the mayors and James.
“The Green caucus wanted to allow municipalities to opt out, but that wasn’t acceptable in my opinion,” said James. “So we’ve come to a compromise, where mayors will have the opportunity to bring forward the impacts on their communities directly once a year in a formal meeting.”
That will be useless, said some mayors, because meetings with James so far have failed to influence her decisions.
“We meet with (Finance Ministry officials) all the time, so I guess I’m a bit perplexed,” said Kelowna Mayor Colin Bansran. “They didn’t listen, so I’m not really sure what regularly scheduled meetings would do to make them change course.”
“We’re disappointed in Mr. Weaver, quite frankly,” added West Kelowna Mayor Doug Findlater. “I’d met with him at UBCM and I thought he was going to hold out for much more.”
The Opposition Liberals piled on criticism, describing the changes as “a half-baked compromise” that “sold out” local communities.
“What the leader of the Green party did was let down all the people who were counting on him,” said Liberal finance critic Shirley Bond. “What he got today is an embarrassment.”
The changes are the third rewrite of the speculation tax since the tax was announced in February’s budget.
James exempted Gulf Island properties from the tax in March, and reduced the tax rate from two per cent to 0.5 per cent for B.C. residents.
The version of the tax she put forward this week contained new exemptions for developers working on housing projects, and for people suffering medical emergencies, employment changes and marriage breakups.
The final version of the speculation tax will include the amendments offered Weaver.
One of those cuts the tax rate for out-of-province Canadian owners of second homes in B.C. from one per cent to 0.5 per cent. It means an Albertan will pay the same speculation tax rate as a British Columbian with a second home. Foreigners will still be taxed at two per cent of assessed property value.
The speculation tax will apply to those who own multiple properties in Metro Vancouver, the Capital Regional District (excluding the Gulf Islands and the Strait of Juan de Fuca), Kelowna, West Kelowna, Nanaimo-Lantzville, Abbotsford, Chilliwack and Mission.
Owners are exempt if they rent their properties out for at least six months a year. And there is also a tax credit for B.C. residents with second homes valued under $400,000.
The changes will mean government’s revenue expectations from the speculation tax drop from $200 million to $170 million a year, said James.
Oak Bay mayor Nils Jensen, who has warned anger over the tax could bring down the NDP government, said Thursday he thought the changes were positive and fixed many of the problems.
“Their consultation idea for every year is somewhat positive, but I would have thought they would have done that in advance,” he said. “Be that as it may, on balance the overall amendments are very positive and supportable.”
Jensen said the changes will allow mayors to bring actual figures on the impact of the speculation tax to the finance minister annually. But he acknowledged there will be “divided opinions” among mayors.
“I think the mayors who had the impact on the overall economy as their concern will not be happy with this at all,” said Jensen.
Weaver said the changes to the speculation tax represented a compromise that was workable for both the NDP and Greens. He pushed back on the suggestion the Greens could have extracted more from the NDP by threatening to withdraw their support for the minority government.
“We want this government work,” said Weaver. “We believe our role in opposition is to make legislation better, not to force elections every six months, and we’re working our darndest with government to make sure legislation is improved for the betterment of British Columbians in a way we can live with. And we think many of the concerns that were brought to us, are dealt with.”
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