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Rob Shaw: Changing times shift focus of speculation tax from foreigners to fellow British Columbians

Nearly half of homebuyers hit by BC NDP’s speculation tax are British Columbians – a far cry from five years earlier, when 20 per cent of locals had to pay up
"Times have changed," says Finance Minister Katrine Conroy about the impacts of the BC NDP government's speculation tax.

British Columbians now account for almost half the people paying the BC NDP government’s speculation tax, as the tax continues its metamorphosis from a policy intended to penalize foreign buyers into one that mainly targets locals.

Roughly 44 per cent of all the people hit by the speculation and vacancy tax in 2022 were B.C. residents, according to the latest figures released by the Ministry of Finance this month. That jumps to 69 per cent when you add in Canadian owners from other provinces. 

This was not the original target when it was introduced in 2017, as I’ve written several times before.

“The vast majority of British Columbians will not be the intended target of this tax,” then finance minister Carole James said in 2017 when the tax was introduced. 

“Speculators are the intended target.”

The tax is now five years old. The latest data shows some remarkable trends have occurred during that half a decade.

In its first year, only 20 per cent of the people hit by the tax were British Columbians, and 42 per cent were foreign owners. Those figures have flipped five years later, to 44 per cent British Columbians and 13 per cent foreigners.

In one way, you can look at this as a remarkable success: The number of foreign owners paying the tax has dropped 76.8 per cent since 2018.

But during that same time, the number of B.C. residents paying the speculation tax has jumped 66.4 per cent.

So the tax compelled absentee foreigners to either sell or rent their properties to avoid a two per cent surcharge. But, for some reason, it subsequently encouraged British Columbians to buy up and leave investment properties vacant? 

It is an odd outcome for the speculation and vacancy tax, but the numbers are there in black and white. 

One contributing factor during those five years was the NDP government’s repeated decisions to expand the tax area considerably, capturing more and more communities in which British Columbians already owned cottages, vacation homes, and other second and third properties. 

As a result, British Columbians now outnumber foreigners by a rate of three to one on the tax.

Again, not quite what the NDP had in mind originally.

"People in smaller communities, those with cottages at the lake or on the islands, will not pay this tax,” James said in 2018.

“People with second homes outside of high-cost, designated urban areas will not pay the tax.”

I put that quote to current Finance Minister Katrine Conroy recently when she was announcing yet another expansion of the tax to tourism communities like Parksville, Qualicum Beach and Penticton, where many B.C. residents have vacation homes.

Conroy was less than sympathetic in her response.

“Well, times have changed,” she said. “Housing has become more unaffordable, and communities are asking for it.”

That’s not entirely true — Parksville, Qualicum and Penticton did not ask to be included in the speculation tax at all.

But the underlying sentiment is perhaps accurate. Times have changed. The housing affordability crisis is worse than ever. Public sympathies have shifted — there’s now much more acceptance now to go after locals too, if it can bring prices down.

The NDP has proven this recently by cracking down on Airbnb-style rental owners, many of whom are British Columbians using short-term rentals as a second income stream. 

“We continue to look at ways to build on the benefits of the speculation tax and to keep houses as homes for people and not revenue generators for speculators,” said Conroy.

Homes for people, not speculators. Even when it turns out the speculators are our friends, family, co-workers, neighbours and fellow British Columbians.

How the Targets of the Speculation Tax Have Changed Over Time

Types of People Paying BC Speculation Tax (2022) 

Rob Shaw has spent more than 15 years covering B.C. politics, now reporting for CHEK News and writing for Glacier Media. He is the co-author of the national bestselling book A Matter of Confidence, host of the weekly podcast Political Capital, and a regular guest on CBC Radio. [email protected]