30 May 2018
The Hon. Carole James
Minister of Finance & Deputy Premier Room 153
Victoria, BC V8V 1X4
New taxes in our community
I write per Council resolution, on behalf of the Village of Lions Bay.
1. We are still not certain whether Lions Bay as a member of MVRD is subject to the speculation tax1: we have received verbal indication both ways. But we are already certain that in Lions Bay this tax would not achieve any increase in long-term rental stock. Our absentee owners who want to rent their properties out are already doing so; those who don’t will either pay the tax, or sell. One wonders whether any tax is going to change such a fundamental driver. More importantly municipally, this tax conflicts with our plans for rental housing, for volunteer firefighters, newcomers, young families, and valued pioneers. Our new Zoning Bylaw, carefully honed to local conditions, restricts use of housing stock for short term rentals, formalizes secondary suites, provides for subdivision below minimum lot size, and allows carriage houses on qualifying lots. This tax interferes with our community’s approach, encouraging people to participate rather than penalising them if they don’t.
Lions Bay’s average 2018 residential assessment is $1,718,463. If Lions Bay is indeed subject to the speculation tax, such an average property owned by a typical US summer resident would pay the province $8,592 for this tax in 2018 and $34,369 in 2019. It can be argued that a tax is a fee for value received. A fee to change behaviour is a fine. This one is ludicrous, and makes Lions Bay (and all affected communities) undesirable to a wide range of bona fide buyers, who certainly hope for gain on their investment, but who are not pejorative speculators. In Lions Bay this tax may collapse the local market, and will have no effect on rental housing. More broadly, this tax may calm speculation briefly, but it will not reduce the money laundering that is presumably its driver (since
1 Whereby vacant residential properties in select areas that are not rented out in increments of at least 30 days for at least 3 months (2019, 6 months), require payment of 0.5% on the property value, with a $2,000 credit for BC residents (2019, 2% for foreign investors and satellite families, 1% for Canadian citizens and permanent residents not in BC, and the 0.5% for those in BC).
those buyers are not sensitive to a few more cents on the dollar). If the tax prevails in Lions Bay, we respectfully request that it be transferred to us to run our municipality, for example to fund the staff housing we need.
The surtax2 on properties over $3 mil., which is not in fact a school tax, would impact 39 of our 572 taxable residential parcels in 2018, raising a further $119,884 or 8.3 percent on Lions Bay’s current total 2018 municipal property tax. Put another way, municipal property tax on the parcels in question is $234,434, and the reason we’re not arbitrarily squeezing another $119,884 from them –even if we had the legislative power -- is because it would be patently unfair. You doubtless have heard from far and wide of house-rich but cash-poor homeowners, but it’s worse than that. It’sdisingenuous to tell people they have the option to defer taxation to their estate. Whether the cash is paid now or later is irrelevant—this is an asset tax. It is capricious, divisive, inequitable and unprincipled. If government constitutionally believes that taxpayers should pay it regardless, we request that be transferred to us to run our own municipality, starting with a well-scoped $30 mil. shortfall in past infrastructure investment.
On this topic, can we now be allowed to indicate on future municipal tax bills that the “school tax”line items no longer bears any relationship to school funding? Can we in fact label it what it is, a“Provincial Property Tax?”
I’ll add our voice to the long-term widespread dislike of the property transfer tax, even before the latest increases3. This recurring cash grab is simply not worthy of a province that prides itself on equity and progressive thinking.
Finally, the Employer Health Tax will cost Lions Bay municipality an extra estimated $10,264 in 2019, according to our understanding of the rules so far. I note the proposed double-dip for a few years, and also that since we already have little in the way of services to cut, we would fund it with a 0.7 percent tax increase, a textbook download. We respectfully request that municipalities be exempt.
CONCLUSION & ASKS
As measures to cool the housing market, the proposed fees seem to already be working at the high end of the market, perhaps all too well. As to polls showing “widespread support” to “improve housing affordability,” I contend that respondents simply haven’t understood that these are only asset taxes, and that while they will certainly raise revenue from the asset rich, they will have little impact on the affordable housing market. Making that impact is the job of local governments that understand their communities. Taking this money out of the community is not helping us do that.
We respectfully request that you review these changes for arbitrariness and unintended consequences, and if they stand, to pay monies raised to the municipalities producing them.
2 0.2% of assessed value on residential properties assessed over $3 mil. plus 0.4% of the portion over $4-mil.
3 Over and above the now 20% foreign buyer tax, a further tax of 5% of the transaction over $3 mil., on top of the existing 3% from $2 mil. to 3 mil., 2% between $200,000 and $2 mil, and 1% of the price under $200,000.
Further, may we suggest that a more effective approach to raising the revenue and having the desired long-term effect on housing in BC, is to fix the money laundering, untaxed foreign capital, and local securities fraud, that underlies it all?
To consolidate here Lions Bay’s other recent representations to your Ministry, you may recall thedeputation at the last UBCM from Metro’s small underfunded municipalities, Lions Bay, Anmore,Belcarra and Bowen Island. You may also recall my view then of Lions Bay’s fiscal reality as a slow death spiral. To slow the spiral, we ask for your help on some of the points we raised then:
We asked that our taxpayers participate in the Rural & Northern Benefit, on the same grounds as current participants. If the rumour that has this programme ending is correct, our request is of course moot.
We asked for an uplift to the Small Communities Grant to compensate for the added fiscal challenge we face simply by being located in the MVRD:
to secure the expertise that all municipalities need, independent of their size: purchasing, engineering, finance, HR, bylaw enforcement, public safety, planning, building inspection, legal and more.
Ceding of a modicum of inbounds provincial land to provide a land bank patrimony, same as older municipalities received when they incorporated.
THE VILLAGE OF LIONS BAY
Karl Buhr, Mayor
Copies by email to Lions Bay’s MLA and MP, and to Councils of all MVRD, FVRD, CRD and NRD municipalities, and Kelowna and West Kelowna.