Yesterday’s op-ed piece by Josh Gordon in the Vancouver Sun ("Speculation tax is essential for housing affordability") should be shredded and composted across the province as potent fertilizer to the spring growing season, so pure is the horse manure contained therein. Bumper crops would be assured.
Mr. Gordon, assistant professor in the School of Public Policy at Simon Fraser University, attempts a robust defense of the tax, a wrong-headed initiative germinated in the first place by fellow luminaries at the University of B.C. It makes one wonder whether the professors have been indulging overmuch in that famous B.C. bud. A short vacation from academic haze to the real world is overdue, I think.
The initial concerns and problems with the tax “have now been addressed”, claims Mr. Gordon, before he goes on to completely ignore the disproportionate effect of the speculation levy on fellow Canadians. Out-of-province Canadians with vacation homes in B.C. will be still be on the hook for a one percent annual levy on the assessed value of their property: for a $500,000 home, that means an extra five grand in taxes, each year, every year.
With fully 81% of British Columbians in support of the speculation tax it would seem to be a smash home-run as policy, a sure-fire political winner.
Maybe. But just because something seems initially “popular” doesn’t make it right, or even popular.
It’s all in the framing, and the question put to British Columbians frames the tax, wrongly, as a “speculation” tax. As B.C. Liberal leader Andrew Wilkinson rightly pointed out in the legislature:
“A speculator is someone who buys a property solely to flip it. A speculator is someone who parks offshore money in our real estate, hoping to protect themselves from the turmoil in global markets. A speculator is someone who uses bare trusts to avoid paying property transfer taxes, thereby allowing multiple sales and resales with no change in title.A speculator is not someone who pays taxes here and owns a vacation cottage. These folk are not trying to capitalize on our out-of-control housing market.”One might just as well have advanced this question to British Columbians, as its equivalent: “Do you think we should punish greedy people who are shamelessly earning big profits off the backs of hard-working British Columbians while contributing nothing to the provincial economy?” If that question garnered much less than 100% support I’d be gob-smacked. I’d say "yes", too.
That the dishonest “speculation” question garnered only 81% support tells me that 19% of British Columbians took the time to properly understand the proposal, and to appreciate that “speculation” has nothing to do with it – it’s a tax grab, pure and simple, a poisonous brew peddled as healing elixir.
And it’s going to cause trouble, eventually. If I surveyed my children as to “who wants ice cream” for dessert I’d expect unanimous approval. But if I were to serve up boiled turnips instead, I’d have some push-back, to put it mildly.
As Abraham Lincoln put it, “You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time.”
if B.C. citizens had been instead been asked the honest and accurate question: “Do you think we should go after fellow Canadians who stimulate the provincial economy and contribute significantly to the employment of hard-working British Columbians?”, the response would have been starkly different.
In support of the Horgan tax, Mr. Gordon offers this:
“A problem arises … when people can buy housing with income or wealth not generated locally, and yet are still able to use social services — education, health care, etc. — and infrastructure — roads, bridges, legal system, etc.
If property taxes are comparatively low, as they are in B.C., this allows such individuals to pay much less than their fair share of taxes. They can, in short, free ride on the contributions of others.”
Consider the heap of unmitigated rubbish contained in those few sentences:
First, health care costs incurred by out-of-province Canadians while they are in B.C. are remunerated by their home provinces via long-standing reciprocal agreement, at no cost to B.C. Of course, the doctors and nurses and clinical staff of B.C. are paid for their efforts, and that money stays in B.C. … I think I’d call that a win.
Secondly, out-of-province vacation-home owners educate their children in their home province, not in B.C, and make no demands on the B.C. educational system.
Thirdly, an Albertan (for example) who builds a vacation cottage in West Kelowna at a cost of $500,000 injects that $500,000 into the local economy (not to state the obvious, but apparently one needs to state the obvious to this government). That cash pays local architects, builders, painters, electricians, plumbers, excavators, municipal employees who approve the plans and issue the permits, and so on and so on – all of whom pay taxes on that income to the province of British Columbia, from Alberta-sourced revenue, to support those roads and bridges and infrastructure costs – this, in Mr. Gordon’s mind, constitutes “a free ride” by Albertans “on the contributions of others”. A master logician he is not – full professorship, I daresay, is not on the near horizon.
Add in annual property taxes and the myriad expenses paid locally and provincially to maintain those vacation homes and the Gordon rationale disappears entirely under an avalanche of healthy economic activity.
“Non-real estate related businesses will get squeezed or stifled”, he continues incoherently, and the “social fabric will fray”. Bang on: owners and employees of “non-real estate related businesses” like restaurants, golf courses, orchards, tourist attractions, wineries, and other businesses will get squeezed and stifled alright, as Albertans and other Canadians heed the prominent “You're Not Welcome” mat and take their cash and their business to friendlier domains: Mend your social fabric with your own darn money.
I was stiffly informed the other day that "thou doth protest too much”: that the protests around this are unnecessary “kerfuffle”, because impacted owners have simply to rent out their properties for six months per year, and problem solved, with additional revenue to boot. Right: to maintain viability, vacation home owners must, regardless of skill or inclination, become landlords; and each departure and return to use their properties for personal use must entail shuffling of personal belongings (bedding, photos, toiletries, computers, etc) in and out of their homes. And tenants in need of stable housing need only to sign leases allowing their eviction each time the owners come to town.
Regular tourists are next for the tax-hungry firing squad, I suspect. Even though most of the globe-trotters from Australia and Hong Kong and England and elsewhere don’t own any real estate in the province, they do use the roads and bridges and trample all over the trails and pathways and parks of Beautiful British Columbia: free-loading parasites, the lot of them. Special toll booths on the highways and byways to nab all invaders should solve that issue, with special medallions of exemption for B.C. residents. The Honourable Lisa Beare, Minister of Tourism, Arts, and Culture, shall have to make do with a shrunken “Ministry of Arts and Culture” as the blood drains out of a key economic artery.
And when the good people of B.C. become wise to the fact that boiled turnips have been served in place of promised ice cream, and as previously thriving cities like West Kelowna grapple with shrinking property tax bases and shuttered businesses and rising unemployment rates, the social fabric will fray indeed… and the credibility and popularity of John Horgan’s government will get creamed.
That, my friends, is called getting one’s just desserts.