VICTORIA — B.C.’s finance minister will unveil new exemptions and rebates for the foreign buyer tax on Metro Vancouver real estate this week.
International citizens with work permits, who pay taxes in B.C., won’t have to pay the foreign buyer surcharge. That’s a bid to recruit high-tech workers from the United States. And foreign nationals who were hit with the 15 per cent foreign buyer tax on their real estate, but then months later become Canadian citizens, could get a rebate.
But if you think the changes are an acknowledgment from the Liberals that the bombshell tax on foreigners last year was crafted too hastily, reached too far, had too many unintended consequences, or did too little to fix home prices in the region — well, think again.
“The tax on foreign purchasers in British Columbia has done exactly what the government and what citizens hoped it would do, and that is slow down the tremendous growth in the cost of housing in the Lower Mainland,” declared Premier Christy Clark in the legislature last week.
“We did it. The NDP opposed it. It turned out that it did exactly what we expected it would do.”
“I know the foreign tax was not popular with developers,” she added later in the house. “But I do know that it’s popular with British Columbians … It’s been popular because it works.”
In other words, unfurl a “Mission Accomplished” banner.
Yet, despite the premier’s enthusiastic rhetoric, the housing affordability crisis appears still very much alive in the Lower Mainland.
The foreign buyer tax served to vent the public’s frustration with a small subset of the problem — mainly, wealthy offshore Chinese investors who didn’t pay taxes here — but it doesn’t appear to have addressed the root of the issues that drove two years of skyrocketing home prices.
Whether that actually matters in the minds of voters on May 9 is an open question.
This week’s tax exemptions will mark one of the last tweaks to the government’s suite of housing reforms before it heads into the election campaign. After first refusing to intervene a year ago, the Liberals have since stripped Realtors of their self-policing powers, pledged $500 million in new affordable housing construction, banned shadow flipping of properties, created a government-backed down payment loan program, and offered municipalities cash incentives to clear a backlog of approvals for housing projects.
The overall goal, the premier has said, is that “home ownership must stay within the reach of the middle class.”
But on that promise, she’s failed, said NDP critic David Eby.
“I don’t know what planet the premier is on if she thinks she’s dealt with housing affordability in Metro Vancouver,” said Eby.
“The prices for housing are just as out of reach for people as they were before the foreign buyer tax. What she’s done successfully is stall the market.
“We should have been having these discussions about the housing market more than two years ago. During those two years that government was in total denial about what was happening on our housing market, the average detached home went up $600,000. And that’s put those homes out of the reach of literally thousands of families.”
The tax plunged the number of foreign purchasers from 13.2 per cent of total sales in June, to four per cent in December. Parts of the market have cooled, mainly high end detached homes. But overall sales prices haven’t fallen as dramatically. In fact, condo prices continue to increase.
There’s no shortage of additional tax reforms the province could pursue to “finally get serious about Metro Vancouver’s housing crisis,” as my colleague Douglas Todd outlined recently. Ottawa’s tightened mortgage rules have also likely had an impact.
Yet politically, 57 days before an election, Clark’s Liberals are likely pretty happy with where they sit on the housing issue.
A problem that looked like a year ago could define the campaign has diffused to the point the Opposition NDP barely mentioned it during the spring session, instead focusing its attacks on Liberal fundraising.
Ontario is now considering following B.C.’s lead with its own foreign buyer tax.
“There was a lot of anger and politically, yes, it stopped that anger,” said Anne McMullin, president of the Urban Development Institute. “We were all blaming this kind of bogeyman.”
B.C. should instead be focusing on faster local development approvals, better land-use density and other reforms to boost supply of housing, said McMullin.
“We don’t tax our way out of the affordability issue,” she said.
Better solutions for voters to consider May 9 are much more complex than just taxing foreigners, said University of B.C. business professor Thomas Davidoff.
“To the extent the foreign buyer tax doesn’t get us to affordability, and it doesn’t look like it is going us there, you have to think about things like up-zoning, which is politically nuanced,” he said.
The province should force municipalities to rezone single family neighbourhoods for higher density townhomes, condos and apartments, said Davidoff.
“But nobody running for office wants to say, ‘Hey we are going to force municipalities to up-zone,'” said Davidoff. “That’s the political challenge.”
Courtesy of the Vancouver Sun