Letter: Kelowna candidates speak on B.C.’s planned speculation tax

Letter: Kelowna candidates speak on B.C.’s planned speculation tax

Candidates were surveyed

Candidates for political office in Kelowna were surveyed on their impressions of the planned speculation tax. Bob Schewe is clear on what he likes and doesn’t like. He doesn’t like the tax-grabbing NDP government. He approves of property speculation – it’s “their business,” he says of the speculators, implying it’s none of ours. And he has no problem with the idea of the City of Kelowna attempting to obstruct the provincial government on this issue. The former bylaw officer has until now appeared to be a very strict law-and-order type. His survey response may change the minds of some voters.

Colin Basran’s carefully worded survey response mentions housing affordability and homelessness, but somehow fails to mention the elephant in the room: housing availability. A low rate of availability is obviously related to homelessness, and a low rate of availability is exactly what’s led to the speculation tax, which taxes the owners of vacant homes, encouraging them to put them on the rental market.

Many critics of the tax have taken issue with its name. Basran said in his survey response that the tax doesn’t actually address speculation in real estate. But the B.C. government’s definition of “speculation” seems to fit. According to the Ministry of Finance Tax Information Sheet, “when a property owner holds onto vacant homes and benefits from rising property value, that is speculation. This behaviour is taking homes out of the housing market, driving vacancy rates lower, and making it harder for British Columbians to find a place to live.”

True, the planned speculation tax doesn’t address all forms of speculation – for instance, it doesn’t address rapid speculative resale, the highly profitable ‘flipping’ activity that’s so well liked by wealthy investors and the real estate industry. But it clearly does address the type of commodity investment that involves hanging onto an empty home until market conditions are auspicious for high-profit resale.

Back in March, Basran said that rather than a vacancy-based speculation tax, a flipping tax would have a greater impact on stopping the rise in property prices. The Capital News noted at the time that the approach was also supported by the Union of B.C. Municipalities. But Basran – himself a former real estate agent – doesn’t appear to be chasing a flipping tax. He was at the annual UBCM meeting in Whistler a few weeks ago. He’s on record only for having led another charge against the speculation tax.

In his survey response, Basran called for a full economic analysis of the speculation tax and for using “good data before pushing through policy.” It begs the question: what data did he use in order to conclude that “already, vital sectors of Kelowna’s economy – particularly construction and tourism – are suffering” from the planned but not-yet-implemented tax? It’s not a moot question. How can you measure the results of something that does not yet exist?

What does exist is the data generated by the Central Okanagan Economic Development Commission’s 2017 survey of 200 Kelowna businesses. The survey found that over 90 per cent of respondents had trouble attracting and retaining labour due to the tight rental market. What we know is that the low rental vacancy rate has had a significant negative effect on the local economy.

In addition, there’s the Canadian Mortgage and Housing Commission data that shows a 0.2 per cent rental vacancy rate for the primary rental market in Kelowna, and the 2016 census data that shows that 23 per cent of Kelowna’s downtown homes and 17 per cent of Lower Mission homes were vacant. What we know is that homes should not sit empty while people need homes to live in.

Basran touts the UBCM report ‘A Home for Everyone’ as providing “well-researched, data-based recommendations to manage actual speculative housing activity, rather than simply taxing homes that are vacant or used occasionally.” True enough, the report recommends that the provincial and federal governments introduce fiscal and taxation tools to encourage the use of residential property to provide housing, and discourage speculation, flipping, commodity investment and other “market distortions” that contribute toward high housing costs. Moreover, it recommends that local governments regulate short-term rentals to discourage that particular type of speculative demand.

But the report also draws attention to a 2017 UBCM resolution that called on the B.C. government to allow local governments to introduce a surtax on vacant residential properties to encourage occupancy. In 2018, the loudest voice sat the UBCM meeting were not against a vacancy tax per se. Instead, they wanted local governments to be able to collect the levy and use the revenues for non-market housing.

Lastly, Basran said in his survey response that “council has limited ability to affect change related to land-use and the development approval processing” in order to ensure housing affordability and prevent homelessness. But his hands are not tied in relation to an initiative called for in the UBCM report, and approved earlier this year by the provincial government, to allow municipalities to require some or all units of new residential buildings to be devoted to long-term rentals. This is called rental tenure zoning, and when I brought up the possibility of adopting it for use at a recent council meeting, Basran made no reply, while Coun. Gail Given shoved it off as a possibility that might only be considered long down the road.

The renters of Kelowna need better answers than any so far given. Unfortunately, Bobby Kennedy’s tirade breaks no new ground. As an opponent of the speculation tax, he says “this initiative put forward by the NDP government is an example of how government often disregards what is truly best for the citizens and our province in order to carry out political agendas that benefit their party first, and foremost, regardless of the cost to the people.”

Kennedy clearly hasn’t done his homework. An attachment to the City of Kelowna’s March 19 report on the speculation tax repeated the findings of an Insights West poll showing that 75 per cent of those who voted for the BC Liberals in 2017 were in favour of the tax, while 79 per cent of those who voted Green and 90 per cent of those who voted NDP were also in favour. 85 per cent of renters and 82 per cent of homeowners were in favour of the speculation tax. In other words, the tax meets the political agenda of most British Columbians, regardless of who they vote for or whether they rent or own.

Speaking of home ownership, Kennedy said it’s “something people should be celebrated for and not punished. If someone is fortunate enough to buy multiple properties, then not only do I respect their position as an investor, I respect their position as someone who can provide shelter to the many people who just simply are not in the position to be a homeowner.” For what it’s worth, the theory he espouses seems to be about righteous and benevolent capitalists and those who have failed to take the right “steps,” ending up in a helpless heap.

As the UBCM meeting was underway in Whistler, finance minister Carole James did not equivocate on the speculation tax. “There’s a housing crisis in British Columbia,” she said. “The public wants us to address it. It’s going ahead.” Despite this bold assertion, and despite the previous efforts of himself and other local opponents to get it off the table, Tom Dyas thinks Kelowna has not been heard. He thinks if he is mayor, he will be heard, and that’s because, he said in his survey response, he has friends in high places: “Over the years of my involvement, I have built many strong relationships with both provincial and federal government policy makers and politicians. I have earned the respect and trust required to effect change by leveraging these relationships.” Get ready for force, Victoria and Ottawa, should this strongman be elected to office.

My analysis of the responses of the mayoral candidates will shed light on many of the responses of the council candidates. Amarjit Singh Lalli’s stands apart from others in how it considers the effects of the tax. “It is doing very little for affordability,” he said, despite the tax having not yet been implemented. He also insists that “housing starts are down 29 per cent.” Statistics at Canada Mortgage and Housing Corporation show that housing starts in August were slightly higher at 307 than they were the previous August when there were 298. The year-to-date housing starts for 2018 are certainly lower than YTD-2017, but that may be because time was invested in completing builds. Adding upstarts and completions, YTD-2018 has seen 2,404, whereas YTD-2017 saw 2,364. I would argue that candidates for office should not need to be told that accuracy matters.

Loyal Wooldridge’s response is unique in how it points out that the city “isn’t actually responsible for providing housing.” Strictly speaking, he’s right. No one expects the city to take money out of the policing or public infrastructure budgets, for example, in order to build affordable housing. That said, Wooldridge might want to look at pages 34-39 of ‘A Home for Everyone,’ which describe how local governments have created regional growth strategies, official community plans, and neighbourhood level plans that incorporate concrete affordable housing strategies by using the large array of tools available to them.

His response also stands out for how it asks us to feel “sad” about how the speculation tax targets vacancy and assets, causing rich investors with multiple homes to cash out of the market because they refuse to consider paying tax on their empty homes. It’s not likely that the renters of Kelowna or the vast majority of British Columbians would experience crocodile tears over the probable effectiveness of the proposed tax.

Brad Sieben’s response stands out for how it considers Andrew Weaver an ally in the battle to axe the tax: “advocating to sympathetic MLAs (including Green Party leader Andrew Weaver) with vigour must be continued. Good progress was made at (recent) UBCM and some hope was provided in the commentary from Weaver.” True, Weaver does not think British Columbians and other Canadians who “happen to have a second place” should be taxed. He huffs and puffs about how the tax is “a vacancy tax — it is not a speculation tax,” but he doesn’t mind taxing vacancy as long as local governments craft the legislation and the revenues go toward non-market housing.

And that’s a wrap.

Dianne Varga