Tuesday, February 20, 2018

Budget Day Part 2: Vancouver Courier February 20, 2018

Budget 2018: How the budget addressed expectations.
     Since the NDP government was formed last May with the support of the Green Party, there has been considerable pressure on the government to address the severe housing affordability crisis affecting so many people across the province.
     The premier and housing minister have repeatedly told us that housing is their number one priority, and to wait for the 2018 budget to hear their comprehensive strategy to address both housing demand and supply.
     Today, Carole James rose in the house to present the budget. While it addresses a broad range of issues, it did indeed focus on housing affordability with a 30-point plan.
     No doubt many will say it did not go far enough. However, in my opinion, the budget does offer a broad range of specific actions and intentions, which could help improve housing affordability over time, provided there is a better balance between demand and supply.
     The following compares what was announced today with past promises and expectations.
Managing demand: BC residents have been demanding higher taxes for foreign buyers, higher speculation taxes, and a more widespread application of an Empty Home Tax like that put in place by the City of Vancouver.
     They also demanded greater transparency when it comes to who buys, owns and sells property, so that applicable taxes can be charged and collected.
     The government did not disappoint. Today’s budget includes the following measures:
          Taxing speculators: To crack down on speculators, the government will introduce an annual speculation tax, starting in B.C.'s urban areas, to tax foreign and domestic purchases. The tax will apply to property owners who don't pay income tax in BC, including those who leave units vacant. This tax appears similar to the highly publicized proposal by UBC and SFU academics.
           Increasing the Foreign Buyers Tax: To curb demand, (and generate revenues), the government is increasing the Additional Property Transfer Tax (also known as the Foreign Buyers’ Tax), from 15% to 20%. Currently this tax only applies in Metro Vancouver. However, it will be extended to the Fraser Valley, Nanaimo, and Capital and Central Okanagan Regional Districts. 
·         Taking Action to End Hidden Ownership: To counter tax fraud, the government is changing tax laws to verify the information provided on Property Transfer Tax and Income Tax forms. 
·         Moving to Stop Tax Evasion in Pre-sale Condo Assignments: To collect capital gains tax payable on pre-sale assignments, the government proposes to pass legislation requiring developers to collect and report comprehensive information about those assigning pre-sale agreements. The government will also coordinate its audit and enforcement system with the federal government. 
·         Strengthening Auditing and Enforcement Powers To address concerns about the source of funds flowing into real estate markets, the government will require additional information on beneficial ownership on the Property Transfer Tax form. It will also establish a registry of beneficial ownership in B.C. that will be publicly available and shared with law enforcement and tax auditors. 
Increasing supply: During the election campaign, the NDP promised to build 114,000 affordable, rental, non-profit, co-op and regular housing units over 10 years. However, since forming government in July, it has not provided details on how this would be accomplished.  Today’s budget contains a myriad of funding measures to increase supply, especially for those in greatest need. They include recommitting to the delivery of 114,000 affordable homes over the next 10 years through partnerships. The total cost is estimated between six and seven billion dollars.
·        34,000 units in 3 years: The province will build almost 34,000 of the 114,000 units over the next three years, including units for mixed-income social housing, new beds for students at colleges and universities, and units dedicated for people who are homeless.
·         14,000 Rental Units for the Missing Middle: Of the total number of units, the province is investing $378 million over three years in rental housing to improve housing choices for middle income seniors and families.
·         Building 2,500 new Supportive Homes for People Struggling with Homelessness: Within this total, the province is promising an additional 2,500 new homes with 24/7 support for people who are homeless or at risk of homelessness. This is in addition to the funding of 1,300 modular homes previously announced.
·         Increasing Property Transfer Tax: To generate additional funds for affordable housing, the government is increasing the Property Transfer Tax on properties valued over $3 million. Currently the tax above $2 million is 3%.  Now the tax will be increased to 5 per cent for that portion of the purchase price above $3 million.
·              Funds will also be available to assist non-profits with the renovation of existing projects.
                 A new HousingHub office at BC Housing will foster partnerships between governments, non-profits, and the private sector to build the 114,000 homes over the next ten years. 
Increased affordability for renters: During the election campaign, the NDP promised renters a $400 a year grant which would somewhat mirror the grant provided to homeowners. The budget does not include any specific reference to this grant. 
     However, it is noteworthy that during the Minister of Finance’s presentation to media in lock-up, she said that the government would review “an interesting idea” to improve the fairness of the Homeowner Grant program to provide support for renters. As some Courier readers may recall, I have long suggested this program be ended or means tested, by making the grant a taxable benefit. 
The budget does include enhanced assistance for low income renters under two programs:
  • Rental Assistance Program -- known as RAP. Low-income working families will see their average payment increase by approximately $800 per year
  • Shelter-Aid for Elderly Renters -- known as SAFER. The seniors who receive SAFER will see their average payment increase by more than $930 per year.
Broader use of Hotel Room Tax: Since affordable housing is a major challenge to attract workers in many communities that rely on the tourism sector, the government will give local governments the flexibility to use their hotel room tax revenue to build housing.
     Some of the other measures set out in the 30-point plan include:
  •     empowering strata corporations to levy increased fines to short-term rental rule-breaker
  •    ‘reaching out’ to the federal government to explore ways governments can overcome cost barriers to develop new purpose-built rental projects. These include GST payments which a developer can avoid when building a condominium project. 
  •  working closely with municipalities ‘to eliminate barriers to affordable housing and develop new tools, such as rental zoning.’
As someone who participated in the consultation program leading up to today, this budget addresses many of the concerns that have repeatedly been expressed. However, as the Minister of Finance noted, it has taken a long time to reach the affordability crisis we are in today.
     Given the severity of the problem, it is going to take a long time before we will see any significant improvement in the level of housing affordability in the Lower Mainland. However, this budget is a good start, especially for those in greatest need.
Twitter @michaelgeller

1 comment:

llค่ล้O lล่u said...

e also got the Brucejack ramp up production figures