Jordan Bateman

Death, taxes and foreign investment

In British Columbia, as history shows, some things are a certainty.

It was a bleak time for the Vancouver middle class. Money was pouring into the red hot housing market from Asian investors and pricing everyday people out of the market.

The premier heard their cries. Flashing a trademark grin, the premier announced a major tax increase.

“Foreign investors, many speculatively, (are) driving up home prices beyond the reach of British Columbians,” the premier explained. “These people paid no tax and most (have) never paid a B.C. tax of any kind… these welcome newcomers should also contribute to the needs of the province and this should be done through some sort of ‘property transfer tax.’ ”

No, this wasn’t Christy Clark on July 25, 2016. This was 1987. And the smiling premier was Bill Vander Zalm.

Those quotes, pulled from Vander Zalm’s two books written long before the current real estate boom, remind us of how these problems keep coming back. The property transfer tax was originally created to apply only to the top five per cent of properties. But that luxury tax, under the watch of both NDP and Liberal governments, quickly became a tax on everyone.

Clark’s new foreign investor tax is riddled with loopholes. It doesn’t address the problem of the Quebec Immigrant Investor Program, which allows foreign millionaires to buy their way into Canadian permanent residency status. Any investor with a family member with permanent residence or citizenship could simply buy property through them. In Australia, a similar tax was hamstrung by numbered companies and other creative dodges.

Even if it does work, it could simply move these investors to Victoria, Nanaimo, Kelowna, Whistler or Fraser Valley estates, driving up home prices for people there.

Targeted taxes, as we saw with Vander Zalm’s 1980s property transfer tax, often become everyone’s taxes.

Moreover, you can bet wealthy investors will use their cadre of lawyers, accountants and tax experts to find ways around it. In response, government will try and close those loopholes. This will inevitably cause the tax to spread to other people. The bureaucracy will grow and the government will become dependent on whatever revenue it does manage to catch. And housing will still be out of reach for many families.

The B.C. Liberals’ housing plan ignores a major hurdle to making homes more affordable: supply. Last week’s announcement doesn’t speed up municipal bureaucracy, which is currently choking three-and-half years’ worth of construction starts. Nor does it force mayors and councils to look at their ridiculous housing tax regimes.

In fact, it makes it even worse. By going along with Mayor Gregor Robertson’s ill-conceived vacancy tax (another key piece of the plan announced by Clark), the B.C. Liberals have ensured Vancouver property taxpayers will be on the hook for collecting an expensive, unworkable tax.

Today, if you believe polls, these tax measures have public support. There’s no tax quite as popular as a tax on someone else. But will the people still be on board once the bills come in for collecting the Vancouver vacancy tax, or when the foreign investment tax has to morph to catch the money coming into the country? Or if housing prices are unaffected? Or if housing prices plunge and Canadian homeowners owe more than their home is worth?

No doubt, some years from now, some other smiling premier will try another tax to protect British Columbians from skyrocketing housing prices.

In B.C., the more things change, the more things stay the same.

 

Jordan Bateman

B.C. Director

Canadian Taxpayers Federation

Just Posted

Surrey district cop station closed by sewer backup

People seeking criminal records checks and other services can get help at any of the other stations

Giant-Hawk name swap for Major Midget League hockey teams

League leaders last year, Valley West squad starts season on the road this weekend

ELECTION QUESTIONS: How do candidates form their opinions on transit in Surrey?

Who is on the right side of Surrey’s transit debate? That’s for voters to decide come Oct. 20.

Surrey wants BNSF to slow Crescent trains

Mayor Linda Hepner said ‘it’s the least we can do’

Rail-safety forum planned for White Rock this Friday

Event to include municipal, federal, provincial governments

64 cats seized from ‘bad situation’ now in BC SPCA care

The surrender is part of an ongoing animal cruelty investigation with BC SPCA Special Constable

Are you feeling lazy? That’s OK – it’s just science

UBC study shows that humans are hardwired to prefer being sloth-like

LETTER: Who do we blame for the tragedy of Marissa Shen’s death?

The B.C. girl was killed in a Burnaby park last July

Competition tribunal to hear B.C.-based case on airline food starting in October

The competition commissioner argued Vancouver airport authority had exploited its market position

Trudeau says Canada wants to see ‘movement’ before signing revised NAFTA deal

Foreign Affairs Minister Chrystia Freeland is back in Washington in search of a way to bridge divide

Seek compromise with U.S. on cannabis at border, lawyers urge Ottawa

U.S. Customs and Border Protection agency sent tremors through Canada’s burgeoning cannabis sector

Young people need us to act on climate change, McKenna tells G7 ministers

Catherine McKenna led off the three-day Halifax gathering Wednesday

UPDATE: Man arrested in shooting on Abbotsford street near Aldergrove

Nobody injured in shooting, which is not believed to be related to gang conflicts

5 to start your day

B.C. parents sue after toddler dies in unlicensed daycare, vehicle explodes in Pitt Meadows and more

Most Read