B.C. government expands speculation tax to 13 more municipalities

The B.C. governmentis expanding its speculation tax to 13 new municipalities in a move it says will help deliver more housing to people living across the province.

Finance Minister Katrine Conroyand Housing Minister Ravi Kahlon made the announcement during a media event on National Housing Day on Wednesday.

The speculation and vacancy tax will be applied to the following municipalities:

• Vernon, Coldstream
• Penticton, Summerland
• Lake Country, Peachland
• Courtenay, Comox, Cumberland
• Parksville, Qualicum Beach
• Salmon Arm
• Kamloops

According to a release from the province,residential property owners in the new communities will need to declare for the first time in January 2025 based on how they used their property in 2024.

Exemptions include primary residences, properties with a long-term tenant, and life eventssuch as separation or divorce.

The B.C. government first introduced the tax in 2018 and it was initiallyexpanded to six more communitiesfor the 2023 tax year. The expansion announced Wednesday brings the total number of communities where the tax is applied to 59.

The speculation and vacancy tax rate is two per cent for people who don't pay the majority of their taxes in Canada, and 0.5 per centfor Canadian citizens or permanent residents who pay the majority of their taxes in the country.

"Homes are meant to be lived in by people in our communities, not used for speculation. While some would cancel the speculation tax giving a handout to speculators and turning homes back into empty condos we know that people can't afford that," said Kahlon in a statement Wednesday.

He said the government's recent legislation restricting short-term rental accommodations in B.C. is already showing increases in long-term rental listings in Kelowna and Victoria despite the law not taking affect until May 2024.

Conroy said Wednesday that Lake Country in the Okanagan Valleywas found to have the highest rate of empty homes when staff were researching what regions to expand the tax to. She also saidthe majority of municipal leaders who are affected by the expansionasked for it.

"That money is going right back into those communities to build affordable housing," said Conroy.

Conroy also said municipalities impacted by the expansion only learned about it Tuesday, because "it isa tax policy so we are pretty tight-lipped."

The OppositionB.C. Unitedhas yet to issue an official statement on the tax expansion.

'Brings back balance'

Courtenay Mayor Bob Wells issued a statement Wednesday saying he hopes the expanded policywill increase the Vancouver Island city's vacancy rate, which is less than one per cent, while over three per cent of private dwellings sat empty in 2022.

"The City of Courtenay takes housing accessibility and affordability in Courtenay seriously and sees the speculation tax as another tool to assist in making more housing available to residents," said Wells.

Blair Ireland, mayor of Lake Country north of Kelowna along Okanagan Lake said he was pleased hisdistrict municipality was now also under the tax scheme, as developers from Kelownahave been building second homes in his community.

"This kind of brings back balance to the region," he said.

"You go around and where's the kids, where's the shoppers, where's the people in the winter that the stores and businesses need to survive?"

'Unintended consequences'

In a statement, Penticton Mayor Julius Bloomfieldsaid while city council shares the province's goal of addressing the needs for more housing, the decision was made without any consultation with the city and is "extremely disappointing."

He said the news dropped while thecity is stilltrying to understand the consequences of changes to short-term rental regulationsthe B.C. NDP announced last month.

"We are very worried about the unintended consequences for our local economy by these actions," said Bloomfield.

The government says since the tax was first introduced, more than $313 millionhas been raised for affordable housing initiatives in the regional districts where it has been applied.

Conroy says independent data found the speculation tax helped increase the available rental stock in Metro Vancouver in 2020 by 20,000 units.