Tax-based policies intended to ease British Columbia’s housing crisis will generate significant new revenue for the provincial government while having little effect on home prices, according to a new report that says B.C. should instead address regulatory barriers to creating more housing supply.
Report author James Tansey, executive director of the Centre for Social Innovation and Impact Investing and an associate professor at the University of B.C.’s Sauder School of Business, said the government’s own projections suggest increases in the property-transfer and foreign-buyers taxes, and the new taxes on vacant and expensive homes, will not reduce housing prices.
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“If you look at the foreign-buyers tax, which has been raised to 20 per cent [from 5 per cent], if that policy was expected to be effective, the assumption is that [government] would have reduced their revenue over the next three years,” Dr. Tansey said of the projections. “Instead, it grows by 21 per cent [by 2021].”
The property-transfer tax, which has been increased to 5 per cent on homes that cost more than $3-million, is projected to generate $81-million each year from 2018 to 2021. The taxes on empty homes and homes assessed at more than $3-million, meanwhile, are expected to bring in about $200-million each annually.