Kelowna city council plans to officially respond to the provincial government about B.C.’s new Speculation Tax—it’s just not sure how to word the letter.
So, on Monday, at its regular weekly meeting, council asked staff to craft the wording and report back at Tuesday night’s public hearing.
On Monday, council felt the proposed response recommended by city staff was not strong enough and did not focus on the Speculation Tax. Instead, it lumped it in with changes to the expanded Foreign Buyers and the Luxury Taxes, both of which now include property transactions in the Central Okanagan.
According to city staff, the two latter taxes will not have much of an impact here.
The Speculation Tax on the other hand—which is only applicable to Kelowna and West Kelowna in the B.C. Interior—will have a “significant” qualitative impact, according to the report prepared for council.
Instead of recommendations concerning the new tax, council said it wants it clear first and foremost that it does not want the tax at all.
The most vociferous councillor to express that was Brad Sieben, who said he personally took offence to the B.C. government imposing the tax on Kelowna with no consultation.
The city staff recommendation proposed asking the government to apply real estate taxes equally across the province, replace what the city sees as more of a “vacant home tax” with a transaction tax on the “flipping” property, provide more information about exemptions to the tax and provide revenue from any new tax back to the city.
But Sieben said he would rather see Kelowna state straight up it is opposed to the tax.
“I fundamentally don’t support the tax at all and believe it shouldn’t be there at all,” he said.
Mayor Colin Basran agreed the city’s response to the provincial government should focus on the Speculation Tax and start with the premise of getting rid of it before offering options if it is to stay.
Council also authorized a letter calling for meetings between Basran, Premier John Horgan, Finance Minister Carole James and Housing Minister Selena Robinson to discuss Kelowna’s concerns.
The staff report says the tax could affect the city’s economy if people from elsewhere who own property here sell and do not come back.
And, it could hurt the city’s reputation as a open and welcoming place, planner James Moore told council Monday.
Meanwhile, West Kelowna city staff presented a similar report to that city’s council last week. And it said an estimated 600 homes there could be affected by the new tax, which Victoria says is aimed at out-of-province owners whose properties are not long-term rentals.
The province sees the tax as a way to help bring property prices down and make more housing available.
But it is the tax’s “unintended consequences” that could hurt the two cities that concerns Kelowna and West Kelowna most, particularly a drop in revenue from development that helps pay for municipal infrastructure. Both cities say future development, their housing markets and even sectors like construction and tourism could be hurt.
Announced suddenly in the Feb. 20 provincial budget, the Speculation Tax is only applicable to Metro Vancouver, the Fraser Valley the Capital and Nanaimo Regional Districts on Vancouver Island, Kelowna and West Kelowna.
The tax would equate to a $5 per $1,000 of assessed value levied on affected property this year and a $20 per $1,000 of assessed value next year.
B.C. residents with second properties in Kelowna and West Kelowna would also be affected, but the government says it will introduce a personal income tax credit to offset the tax on them.
West Kelowna city staff, in their report to council, said based on the scant information currently available from Victoria, it appears many British Columbians do not earn enough to realize the full amount of the proposed tax credit.
In related news, the Central Okanagan’s three MLAs will host a public panel discussion on the Speculation Tax, as well as the new Employer Health Tax, March 25 at the Parkinson Recreation Centre in Kelowna from 3 to 5 p.m. The panel will be made up of accountants. B.C. Liberal leader Andrew Wilkinson will also speak at the meeting.
The Employer Health Tax, to be levied on businesses with payrolls in excess of $500,000, is aimed at recuperating some of the revenue the government will lose when it eliminates Medical Service Plan premiums for British Columbians in 2020.
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