BC has a high rate of foreign ownership. Why? Wealthy people in unstable regimes want to buy here; we have a history of 'selling passports or residency' to wealthy families; and our current tax system subsidizes foreign ownership. The tax called the Speculation and Vacancy Tax (SVT) is aimed at limiting speculation, not necessarily taxing “speculators”.
Read this article for more information The Speculation and Vacancy Tax: An Explainer Josh Gordon School of Public Policy, Simon Fraser University March 4, 2019. A few points from the article are noted here.
CRA allows a wealthy person to access all of the social services and public amenities as the high-earning local individual, but not pay income taxes. They can file as a non-tax resident, even if their family resides here. This is the so called “satellite family” situation. Gordon, in his article, states that we can address this issue in the tax system by imposing a property surtax on families who have most of their income earned abroad. The speculation component of the SVT seeks to address a tax avoidance problem.
However, there are many exemptions and foreign owners and satellite families are able to avoid a speculation tax liability if they rent out their properties to an arms-length tenant, in whole or in part. The SVT aims to encourage unused housing units into the rental market with vacancy taxes. For many, housing sitting empty, especially as speculative investments, in the midst of a housing crisis is unacceptable.
So, “Why don’t we just ban foreign ownership already?” Some have urged banning foreign ownership as an alternative to the SVT. With the foreign buyer tax, currently at 20%, purchases by foreign buyers are already down substantially at only 2-3 percent of total purchases last year in affected areas.
The housing crisis is not an easy problem to solve. Learn more by reading this article about the SVT - Speculation and Vacancy Tax and it's intent and aims. Tell us what you think.
Read this article for more information The Speculation and Vacancy Tax: An Explainer Josh Gordon School of Public Policy, Simon Fraser University March 4, 2019.