Shifting the tax burden: proposed changes to property transfer tax
If you've bought a home in Metro Vancouver in recent years, you've probably felt the sting of the Property Transfer Tax. But the B.C. Chamber of Commerce thinks it has a solution to ease some of that tax pain and it involves shifting the tax burden from British Columbians to deep-pocketed foreign investors.
Currently, home buyers pay one per cent on the first $200,000 of a home's sale price and two per cent on the rest.
The Chamber wants to shift the tax burden, with a new proposal that would have B.C. residents pay one per cent of the entire purchase price and foreign investors pay two per cent.
“It basically says if you are not a resident of B.C. and Canada and you are a property owner, you will pay more in effect than those who are residents of British Columbia," said John Winter, BC Chamber of Commerce CEO.
Under the new proposal, the Chamber says the B.C. government would still collect the same amount of money, close to $1 billion a year.
However, the B.C. Finance Minister is not buying it. Mike de Jong says the province wants and needs foreign investment.
"I think that's the best way to chase people away,” said de Jong, "People have choices, and we can decide in British Columbia to welcome the world, to welcome investment and the jobs it creates, or we can chase people away. I know which strategy I prefer."
B.C.’s property transfer tax is the highest home tax in Canada, brought in by former premier Bill Vander Zalm when the average price of a home in Vancouver was just under $150,000.
The B.C. Chamber of Commerce is not the only organization trying to force changes to the 27-year-old tax. The Real Estate Board of Greater Vancouver wants to see the PTT threshold raised from $200,000 to a more realistic $525,000.
"I'd like to see British Columbians have a fairer tax, one that's based on not what the conditions were in 1987 but the conditions of today," said Ray Harris, president of the REBGV.
The chief economist for the B.C. Real Estate Association also has some ideas on how to make the PTT fairer. Cameron Muir suggests indexing the tax to some sort of inflationary measure, so British Columbians don’t have to pay more and more as prices rise.
The B.C government has recently changed the PTT threshold to ease the burden for first time home buyers and the Finance Minister has told CTV News, he's now looking at finding additional relief for all buyers.
"Probably the thresholds are the more effective and realistic way to do that and we're looking at that now as part of the budgeting process for next year," said de Jong.
Still, the Clark government is hoping to deliver another balanced budget and reducing the PTT would mean reducing the cash flow into general revenues.