With Vancouver having the lowest property tax rates nationwide, it’s high time for the provincial government to impose higher real estate taxes to offset outsized price growth, according to a markets observer.
In a recent thought piece for the Vancouver Sun, CCPA-BC public finance policy analyst Alex Hemingway noted that not even the recently implemented provincial school tax on high-end properties worth over $3 million is sufficient to offset the negative effects of the currently lax regime.
“The annual residential property tax rate in Vancouver — including municipal, regional and provincial portions — is a quarter of 1% of assessed value. That’s less than half the rate in Toronto and the eight other major Canadian cities compared in a recent report by Altus Group. Rates in Vancouver suburbs are also lower than in these cities,” Hemingway wrote.
“In concrete terms, property taxes on a $1-million property in Toronto were approximately $4,673 in 2017, while in Vancouver they were $2,555. After you factor in B.C.’s generous Home Owner Grant, the bill in Vancouver falls to $1,985.”
An expanded tax is an untapped war chest that the provincial government is still sitting on, Hemingway argued.
“With additional revenue, the city or province could budget for the creation of hundreds or even thousands of new social and co-op housing units each year. Adding more affordable units would put downward pressure on the price of other units in the broader market,” the economist stated.
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More importantly, such a tax would lead to “a mix of additional government revenue and lower property prices because the increased carrying cost would make real estate a less attractive investment, decreasing demand. These are both desirable outcomes and would ensure a larger share of the ‘land wealth rush’ is captured for the public good, something that hasn’t happened to date in Vancouver.”
To soften the blow to the market that such a tax expansion would inflict, Hemingway suggested implementation by gradations.
“Property tax rates should be structured progressively so that those at the highest end of the market pay the highest rate as the Canadian Centre for Policy Alternatives has recommended,” he explained. “The additional provincial school tax on properties over $3 million is an important step in this direction, but the B.C. government should also allow cities to use progressive rate structures as the City of Vancouver has requested.”