The moves came in the wake of revelations of an obscure loophole that has allowed real estate brokers to transfer properties repeatedly -- tax-free and off the books -- before a house has even sold, ratcheting up prices.
More deeply, however, the crisis has been years in the making, as incomes have stagnated compared to ballooning urban real estate prices, putting homeownership completely out of reach of many families.
"Is there anything more reflective of who we are as Canadians than the dream of owning a home, and the ability to make that dream a reality?" Finance Minister Mike de Jong mused. "For many B.C. families, that reality has become harder to achieve in recent years as home prices have continued to rise."
But some critics saw de Jong's adjustment to the transfer tax as little more than a reactive response to stave off voters' burgeoning anger on the issue and preserve a vital provincial revenue stream.
Others argued that his proposed solutions would be both ineffective and irrelevant for those Vancouverites most in need of assistance: the majority who rent, low-income earners in social housing, and working families who may even share de Jong's rhetorical dream of their own home.
"I did not hear in the B.C. budget a real admission that we have a massive unaffordability problem, of which housing is a key component," said Paul Kershaw, University of B.C. professor of population and public health.
Instead, Kershaw described it as a budget for people who are already financially qualified homeowners, not for people struggling for adequate accommodation they can afford.
"The provincial budget reflects that if you've been in the housing market, it's working pretty darn well for you," he said.
Kershaw, founder of the millennial advocacy organization Generation Squeeze, said it was particularly troubling that Tuesday's budget effectively penalized younger citizens compared to their elders who own homes at higher rates.
'We punish work and reward investment': economist
"What they did, really, was at best a drop in the bucket," said Tom Davidoff, an economist at the University of B.C.'s Sauder School of Business. "It's pretty clear that over the last year we had a massive inflow of money into the market that put housing for anyone working or living here out of reach; even renting is becoming pretty dicey.
"If you want Lower Mainland to be a place for people to live and work, that has to be addressed."
Davidoff was one of three Sauder economists who penned a proposal earlier this year for B.C. to institute a 1.5 per cent property tax surcharge for real estate owners who don't otherwise make a contribution, participate in, or have links to the local economy -- or, if not a taxpaying resident here, don't rent out their vacant units.
Perhaps most enticingly for British Columbians aghast at skyrocketing prices and the behaviour of realtors, the benefits of the proposed surcharge would flow directly into local taxpayers' pockets.
Additional offshoots, Davidoff argued, included creating an incentive for absentee owners to lease out their units and boost local rental supply. It would force property speculators to pay their fair share of investment profits, and the proceeds of the surcharge would be forwarded to local residents.
"It's really not a mystery why there's so much money pouring in here," he said. "The way our tax code works, we punish work and reward investment in real estate. We have high sales and income taxes, and low property taxes -- that's a choice, it's not a free market. It's not like I'm some kind of screaming communist.
"Why would a voter support a government that punishes work but rewards people who don't live and work here because of bargain basement property tax rates? If money is to come in, it should build housing for people who live and work here," Davidoff said.
Since it was published, the letter proposing a BC Housing Affordability Fund has garnered endorsement signatures from 50 economists.
"I've been delighted by the response," Davidoff said, "but just because economists have an idea doesn't mean anybody will listen!"
This budget may not be the government's last word on the subject. Davidoff said that behind the scenes, the province has shown more interest in the economists' proposal.
"I'd like to applaud them for their receptivity to it," he said. "They're willing to continue the discussion."
Time running out: Kershaw
Kershaw agreed that taxation reform is one of the key areas where the province could “put the brake on the forces driving housing prices in an upward direction."
But if the Clark government plans a change, he suggested, it's running out of time before next year's provincial election. "I had expected this to be a year-before-the-election budget," he said, "where they start actually using their coffers to showcase to the population that they're tackling the problems now."
He chalked up Victoria's reluctance to take dramatic action to the fact, as the budget also revealed, that property taxes were the government's fastest growing income stream last year. And while the government pledged last week to investigate real estate industry practices, Kershaw believes more meaningful change will come from voters themselves.
The broad movement for affordable housing -- long restricted to very low-income earners, the homeless and under-housed -- has gained new recruits over the past year among working families and moderate-earning millennials who find themselves priced out of their own communities.
Groups like Generation Squeeze offered their support for a new class of unlikely activists with last summer's #DontHave1Million rallies. A truer test of the movement's power will arrive in 2017, Kershaw predicts: in the next provincial elections.
"Politics isn't broken in this country," he says. "It still responds to those who organize and show up."
Original Article
Source: thetyee.ca/
Author: David P. Ball
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