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Carson Binda: B.C. must solve its housing crisis with hammers, not taxes

The speculation tax doesn’t lead to more affordable homes, writes Carson Binda
Instead of extending B.C.'s speculation and vacancy tax to summer homes and cottages, B.C. should eliminate multimillion-dollar investments in corporate projects by Massive Canada and E-One Moli, argues the CTF's Carson Binda

Every so often you need to point out something so obvious it seems silly to even say. But here we go: You don’t make homes cheaper by hiking taxes.

British Columbia is expanding its speculation tax to 13 new municipalities next year. If the provincial government wants to tackle unaffordable home prices, that’s a big leap in the wrong direction.

With this change, the government is applying the tax-take to 59 communities in B.C.

That will hurt tourism as families are forced to offload their summer homes on the island, or cottages in the interior.

Some of the communities on the government hit list, like Lake Country or Qualicum Beach, are prime cottage country. Every summer they see tourists coming from across the province to get a few weeks of rest, while injecting cash into local shops and restaurants.

Think about the diner bustling with out-of-towners staying at the family cottage over the Canada Day long-weekend. Forcing families to sell their cottages to avoid being hit with exorbitant tax bills is going to make it harder for those restaurants, bars and local shops to keep their doors open.

Combined with the recent ban on short-term rentals like Airbnb, that’s a big hit to small-town tourism. And it’s another example of government virtue signalling to voters in the Lower Mainland and Victoria, while ignoring the needs of communities up-island and in the interior.

Premier David Eby didn’t even bother to ask impacted communities before ramming through his new tax.

“It is extremely disappointing that this action has been taken with zero consultation,” said Penticton Mayor Julius Bloomfield.

Bloomfield also cited the “unintended consequences for our local economy,” like reduced revenues at restaurants, stores and bars that cater to tourists. The mayor of Parksville also claimed his community wasn’t consulted on the changes.

Ignoring local concerns while ramming through a tax on the family cottage isn’t a good look for the provincial government.

Families who have lived in their homes for decades have also been hit with the speculation tax. It’s a convoluted system that often leaves little to no room for appeal once the government decides you owe it the tax.

The speculation tax doesn’t lead to more affordable homes. Since the tax was introduced in 2018, home prices have increased by around $250,000 in Victoria and almost $200,000 in Vancouver.

The issue isn’t a lack of taxes. Onerous government regulations are driving up prices.

“A single-detached home in Vancouver cost homebuyers nearly $1.3 million more than what it would physically cost to build in a market without barriers to supply,” according to a C.D. Howe Institute report published this year.

Politicians need to reduce barriers to supply – not tax cottages.

The government should be reducing the red tape and taxes that make it so expensive for new homes to be built in B.C.

And if Finance Minister Katrine Conroy is worried about the deficit, she should look for places to save money instead of imposing new taxes that make homes more expensive.

The speculation tax is expected to take $90 million away from British Columbians next year. That’s the same amount of money the B.C. government is spending on corporate welfare for Massive Canada and E-One Moli. If the government scrapped corporate welfare to those two companies alone, it could totally rebate the speculation tax on cottages for the next year.

If the Eby government wants to make homes more affordable, then it needs to remove its taxes and work with municipalities to cut red tape.

Hammers and nails build homes, not tax hikes.

Carson Binda is the British Columbia director for the Canadian Taxpayers Federation.