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B.C. cities call for tax changes to address housing affordability

Feb 1, 2018 | 2:32 PM

VANCOUVER — A group that represents municipalities in British Columbia is calling for significant tax and regulatory changes for a comprehensive approach to more affordable housing. 

The Union of B.C. Municipalities has issued a report containing 32 recommendations for provincial and federal governments based on research and best practices from across Canada and around the world.

Mayor Greg Moore of Port Coquitlam led the initiative for the union and said there are numerous reasons for the crisis in housing affordability that require a “multitude of solutions.”

“The frustrating part that I see is many individuals and associations come out and say, ‘Well if we just did (housing) supply then everything would be solved.’ Well it’s much more sophisticated than that,” he said. 

“It has to look at the continuum of housing. Rental plays an extremely important part in that, but so does the demand management side of it.”

Speculation by foreign and domestic investors has contributed to skyrocketing real estate prices in Metro Vancouver, which has had a spillover effect on other B.C. communities and into the rental market, he said.

Using taxes as a tool along with stronger regulations at the municipal level is a “winning combination” to fix a complex issue, Moore said.

To curb real estate speculation, the union wants the province to consider expanding its 15 per cent tax on foreign buyers in Metro Vancouver to include other areas, including Victoria, where markets have been heating up. It also wants a review to determine if 15 per cent rate is sufficient.

The strategy also calls for more transparency of who owns property in the province.

University of B.C. geography professor David Ley, who contributed to the report, said the United Kingdom provides a good example where regulatory changes now require reporting on who the owner is, preventing foreign investors from dodging taxes or laundering money.

“We want a declaration of who the actual owner is,” Ley said, adding that right now, property can be owned by trusts or companies, hiding the person behind the purchase.

Taxes are also being suggested to cut at the heart of the issue of profit-driven property flipping that has fuelled some B.C. markets over the last two decades, Ley said.

The strategy includes a sellers tax on those who sell within a few years of purchasing a property to profit on the hot market. It also calls for a more progressive tax system that hits luxury properties at a higher rate.

“What we need to recognize here is that we’re in a very abnormal situation in Vancouver, abnormal in the scale of the affordability crisis, and it does require determined response from government,” Ley said, adding a similar strategy could be helpful in Toronto where affordability has reached similar crisis levels.

The report also recommends using taxes as an incentive to encourage rental housing development by giving breaks to those building affordable units and providing more funding toward non-profit and co-op housing.

While supply is a problem, Ley said it’s too simplistic to expect that increasing the overall supply will be a solution because many units are being built every year.

“The problem is that those are not affordable units and they’re not targeted to a local market or at least to the local wage structure, they’re targeted to an investment market,” Ley said.

The strategy calls for tax breaks on developers building affordable units, and also giving municipalities power to create a progressive property tax system so that those types of developments are provided longer-term breaks.

Moore said giving municipalities more power to zone areas for rental developments would ensure that new buildings remain as rental stock.

The union has been in talks with the provincial government, and Moore said he hopes to see some of the recommendations included in the upcoming budget.

—Follow @Givetash on Twitter

Linda Givetash, The Canadian Press