Turnips and Ice Cream: Speculation Tax Hooey from Simon Fraser University

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.

12 Replies to “Turnips and Ice Cream: Speculation Tax Hooey from Simon Fraser University”

  1. Dr. Les, BRAVO ! you hit the nail on the head. One has to wonder if these left wing “no name” back room academics have been paid to pen their sorry scribbles. Gordon’s diatribe, which you so correctly point out, is so full of holes and lies, I frankly can’t fathom for the life of me how it made it to print. Let’s hope the majority of B.C. voters see his comments for what they are; pure drivel.

    1. Thanks, Marcia. I’m having a hard time getting my head around the “81% approval” number, as I know British Columbians are smarter than that. The Vancouver Sun’s publication of pieces like this in “support” of the tax but with more logical holes than a block of Swiss cheese is shameful. Hopefully common sense will prevail…

  2. Best to ignore these careless academics, seeking publicity. Modern media rely on them for content filler.

    It’s not policy, just low info politics.

    1. It is disgraceful for our government to call this a “speculation tax” It is nothing of the sort! It does not address the problem of speculation nor the appetite of foreigners who purchase box seats in the “Canadian Club” which remains wide open in part due to the generous immigration rules that govern foreign students studying in Canada.

      This government is simply manipulating its citizens, exploiting class envy, in order to garner support for their expansion of property tax – its all naked propaganda – so distressing for us to be treated this way.

      Most of those who will pay this tax will be decent hard working Canadians who are easy tax targets because they are now stigmatized by a tax roll number.

      It’s even more disturbing for us to realize that public policy is being created by the buffoons at our universities who have no practical concept of how society functions, let alone an economy, but are happy to bludgeon the citizenry with their misguided interventions.

      Show me public policy that actually increases the value of our citizen’s lives without taking away from one group to give to others…I would stand up and cheer – but these academic policy fascists are biased against material achievement – bordering on racism. “make the rich pay” – how would that sound if you replaced the work “rich” with the name of any ethnic group…..not good. And the “rich” DO pay.

      We need to reign in the arrogant influence of our universities and similar groups in shaping our public policy, there are many sources of clearer unbiased thinking – namely those who create value in our society and most of all, the brave everyday Canadians who have resisted brainwashing by the right or left.

      Mr. Gordon is the last guy who should be telling the citizenry how to think.

  3. Excellent article. Thanks. We are just now looking at the ramifications of the ridiculous need to rent out for six months and the new residential tenancy act that forbids fixed term agreements. The one major exception being to remove the tenant on the day after the 6 month period and then move in for a period of time. In other words if you comply with the 6 month requirement but cannot make arrangements to use you property immediately thereafter, you have to continue the lease until you occupy the premises and be at the mercy of the tenant.

    This unfair and unequal treatment of fellow Canadians needs to be looked at by the Human Rights Tribunal as non BC residents are being discriminated against as a distinct and significant class.

  4. Great insight Ed – the frustration with “Academics” and “Legals” is that their search for relevance in an overly saturated field clouds their reality. It matters not whether their thoughts are of practical relevance or enlightening, but rather that they generate a spotlight for themselves. The inner drive is to be “talked about” within their “community” of like-minded individuals. Isolationism has been their downfall for decades. “Look at me” is of utmost importance in elevating their self-worth. Feeding off the public trough with no requirement for authentication of their thoughts breeds contempt for all other lines of thinking.

  5. This is one of the best artifices I have seen on the subject. Thanks for clearing the air on many issues. I really hope that the residents of BC will see thru this very very poorly though out apparent solution to a problem and run this NDP government out of office. It has become apparent very quickly that they do not have a clue on how to run a province.

  6. Dr. Les, A heartfelt thank you from an Albertan who owns property in BC. A great and well thought out article. Even though our area is now exempt we still completely oppose this unfair tax. If the problem is affordable housing then supply the housing. Set up a small provincial tax to cover the cost if need be. What could be simpler.

  7. I don’t know where to start — there is so much to share. But please read and know this important information. The SPECULATION TAX IS NOT YET LAW!! There is still time to stop this tax, or anything that might resemble this tax if it’s proposed under a different name but targeting the same group of non-resident homeowners. The proposed speculation tax, and, I’ll throw in the proposed employers health tax, are new taxes that the current NDP/Greens are planning to implement as law. Currently, these two taxes are not law. The steps to make them law start in the BC Legislature. So far, according to Liberal MLA Tracey Redies out of Whiterock-Surrey, she has not seen the bill that will introduce either or both of the speculation tax and the employers health tax. She does not know the way that the NDP/Greens are going to present these bills. These two new proposed taxes may be noted on one bill or on separate bills. Why do we all need to know this information? Because your MLA, or more likely a LIBERAL MLA can stop this tax. Ideally, all of the Liberal MLAs who are one of the BC property owners, should step up and announce they cannot vote on the speculation tax because of Rule 18. Why? Because, the government process to make a bill a law has rules. One of these rules, Rule 18, could stop the speculation tax from being implemented. The rule #18 of the government’s ‘Standing Orders’ states: “No member is entitled to vote upon any question in which he or she has a direct pecuniary interest, and the vote of any Member so interested shall be disallowed.” Pecuniary means monetary. In light of the disclosure statements of the 87 member of the legislative assembly (MLAs) who make up the ‘ House’ (FYI one MLA who is a Liberal was shorty after May 2017 election voted by peers to be the Speaker of the House [Mr. Plecas]). So, the disclosure statements are supposed to be available to the public, but they are hard to access, but Google the Tyee newspaper. Journalist Andrew Macleod has published every MLAs disclosure statement online. Please know that 37 MLAs are listed as owning BC properties that are not their primary residence. What does this mean? Well, when the time comes for the NDP to introduce the new bill in the House (the 86 remaining MLAs make up the two sides of the House in the BC Legislature), the 86 MLAs will need to vote. The 41 NDP + 3 Greens will vote together for 44 votes, unless a miracle happens, and Andrew Weaver (Green) and his two other MLAs vote against anything the NDP vote for… The Liberals total 42 when all are present (one was absent from the last vote to pass Bill 2 and has been recovering from an illness, not sure where the other Liberal MLA was). So, FYI, the vote to pass Bill 2 on March 14 resulted in a 44-40 to pass the third reading of Bill 2. Bill 2 was called the Budget Measures Implementation Act for 2018. Meaning, supposedly, everything that the finance minister introduced in the Feb 2018 budget was ‘supposedly’ implemented when Bill 2 passed. But guess what??? For some unknown reason, the new speculation tax was not part of Bill 2. Neither was the new employers health tax. Weird???? So, breathe a sigh of relief. Because, now this oversight, or some strategy that the NDP thought would benefit them may not. The gov’t rules state all new taxes need to be implemented by introducing a Bill that clearly states the tax so MLAs can vote on whether or not they agree with the bill. The bill will be debated on three occasions and then after each debate, the House will vote whether or not it should be passed. OK. This next part is where the bill could fail to pass: If just one MLA issues a ‘point of order’ to the speaker of the House, and, I’m not sure of when this ‘point of order’ has to occur, but the ‘point of order’ sort of says, ‘hey, wait a minute, Mr. Speaker, I know that so and so, and so and so, has a pecuniary interest in a BC property other than his/her primary residence. As per Rule 18 of the Standing Orders, this technicality means that the vote of each and all of the 37 MLAs who own a BC property other than their primary residence, must be dismissed from this vote to pass the 1st, 2nd, or 3rd reading of Bill such and such. Meaning, let’s do the math together: of the 44 NDP/Green MLAs, 23 MLAs own a BC property other than their primary residence = 21 allowed votes. of the 42 Liberal MLAs, only 14 own a BC property other than their primary residence, meaning 28 allowed votes. As long as the Speaker of the House listens to all of the MLAs from the liberal side who are citing rule 18 to disallow all votes where an MLA has a pecuniary interest in the question made to the house. The question is this: the NDP/Greens would like to implement a bill that will charge all non-resident homeowners and resident homeowners who own a BC property other than their primary residence a tax/levy. Can we? The Speaker will hopefully say ‘no, you cannot, because according to rule 18 your vote could be a conflict of interest’.

    1. Interesting, Alyssa.
      Wasn’t aware of Rule 18.
      I suppose the 37 members in question would indeed have a pecuniary interest in the bill, provided of course that the value of a member’s second B.C. residence: 1. is in an impacted area , and 2. is worth more than $400,000.
      So the math on the vote may not be as straightforward as you lay in out, depending on these metrics.
      Interesting thought, though, and may indeed be a factor.
      Of course, this is all going to be drowned out by the mother of all pipeline wars in coming days.

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