VANCOUVER (NEWS 1130) – It’s no secret there is an affordability issue when it comes housing in Metro Vancouver, but a group of economists hopes to address the problem with a proposed surtax targeting foreign investors.
“We have a plan that is going to enhance affordability without harming local homeowners and, in fact, would benefit everybody who works and lives in BC,” says Thomas Davidoff, an associate professor with the Sauder School of Business at the University of British Columbia.
He and colleagues from UBC and Simon Fraser University are proposing a 1.5 per cent provincial surtax on homes, targeting owners of vacant properties or those with “limited participation” in the Canadian economy.
“Almost everybody who lives and works in British Columbia or rents out their home would be exempt,” Davidoff tells NEWS 1130. “The only people who would have to pay are those who don’t pay taxes here but own very expensive homes, or people who own a home and don’t occupy it or rent it out.”
Anyone on the Canadian Pension Plan would be exempt, along with anyone who has lived in their home a long time or who pays a reasonable amount of income tax.
“It’s really just a tax being paid by people who own housing here but leave it empty,” he says.
Based on current vacancy data, the researchers estimate the BC Housing Affordability Fund would raise a minimum $90 million per year in Vancouver alone.
How would that money be used?
“We think the simplest answer is to help locals. Income taxes are too high and property taxes are quite low in BC. As a result, people who work and live here but don’t own homes are really struggling. We think the simplest answer is just to give everybody who works in the affected communities an equal share of the revenue raised.”
So whether you are a homeowner struggling with payments or a renter trying to make ends meet, everyone would get an equal lump sum payment to help with the high cost of housing.
The economists are recommending a localized approach that would allow each municipality within the province to choose whether or not to implement the BCHAF.
As an added bonus, Davidoff says the reporting process for the surtax would also allow the government to accurately track how many homes are left vacant or owned by someone without any local ties to the economy.
“People have been curious to know. Some have said this is a very small problem, others are convinced every other home on the West Side of Vancouver would be subject to this tax. It would be really useful information for the province and, moreover, it would be culturally helpful because people would recognize that everybody who owns property in BC is contributing to the local economy.”