Michael Smyth
The Province
The only politicians you typically find at the B.C. legislature in the summertime are make-believe ones.
They are the young actors who dress up as 19th-century lawmakers to entertain the tourists. Eccentric former premier Amor De Cosmos is a common sight, strolling the precincts in his top hot and moustache.
But, on Monday, the real MLAs are back in town for a rare summer sitting of the legislature to confront an issue bristling with political intrigue.
It’s the Metro Vancouver housing affordability crisis. Prices have shot through the stratosphere, souring the dream of home ownership for non-millionaires.
Now, after fiddling for a year while the real estate market burned, Premier Christy Clark and her Liberal government are finally taking the issue on.
The Clark government is set to pass legislation to allow the city of Vancouver to impose a tax on empty homes. Speculators who buy up houses and condos and then let them sit empty would be slapped with the punitive tax.
The government is also hinting at new measures to build affordable housing, and they certainly have enough money to do it.
That’s because the red-hot real estate market has generated a lucrative cash windfall for the government from the property transfer tax.
When a B.C. home is sold, the government takes a percentage cut. The higher the price, the more the government collects.
With prices so high, the government is making a transfer-tax killing: A jaw-dropping $1.53 billion last year — that’s a 44-per-cent increase in one year and over $600 million more than the government expected to collect.
Are you starting to see now why the government has been hesitant to derail the real-estate gravy train?
Throw in the fact that the governing Liberals are heavily bankrolled by real estate companies — to the tune of $12 million in campaign contributions — and it’s easier to understand why the government didn’t want to spoil the profit party.
So why are the Liberals taking action now? Probably because they are looking at polling data that shows voters want something done with an election just 10 months away.
An Insights West poll said 76 per cent of voters are dissatisfied with the way Christy Clark has handled the issue, and 80 per cent think a tax on absentee homeowners is a good idea.
“The level of animosity toward the government is pretty high,” said pollster Mario Canseco. “Victoria had to act in some fashion.”
So here comes the action. But is the government doing the right thing and will it work?
The idea of an vacant-homes tax, confined to the city limits of Vancouver, has other municipal mayors in the region concerned.
“I don’t see any way it can be efficiently administered,” said West Vancouver Mayor Michael Smith. “What constitutes ‘vacancy’? Everybody has their own definition and you’d need a bureaucracy to administer it.”
And wouldn’t absentee speculators just snap up homes in the suburbs instead to avoid the tax?
“A lot of the mayors think it’s totally stupid to have a solution for just one city that, even if it works, could simply push the problem to the borders of Vancouver,” said NDP housing critic David Eby. “It’s absurd. We’re going back to the legislature to address a regional housing crisis with a solution for just one city in the region.”
Eby and others say the government is ignoring the real problem: Offshore speculators flooding the region with billions of dollars in foreign money and distorting the market.
The NDP has proposed a tax on non-resident buyers by cross-checking real-estate sales with income-tax data: Homebuyers who don’t pay income taxes here would be hit with an anti-speculation tax, with the money used to build affordable housing.
Will the government slap a tax on foreign real estate capital? I asked de Jong that and he responded with a strange 10 seconds of silence and then dodged the question.
I expect that’s because the government is trying to figure out a way to bring in some kind of restrictions on offshore money that will appease restless voters while not puncturing government revenues or ticking off Liberal donors and homeowners.
In the meantime, the finance minister is going out of his way to remind everyone this empty homes tax is Vancouver Mayor Gregor Robertson’s idea.
“We’re facilitating the city of Vancouver to do this,” de Jong said.
But Eby thinks that’s just another way of saying: “Don’t blame us if it doesn’t work.”
“It’s a very convenient way to look like you’re doing something while not having to take any responsibility for the outcome,” Eby said.
“All the political risk around the impacts and the implementation of this tax falls in the lap of the city of Vancouver. If it fails, the province can step back and say ‘Well, they asked for it, we gave it to them and they screwed it up.’ They don’t have to take any responsibility.”
De Jong, though, cautioned the government can only do so much.
“Let us not make the mistake of assuming that governments are going to tax our way out of the challenge that exists for people to acquire a home,” he said, adding a better idea is to increase supply.
“Build more product,” de Jong said. “Build more houses. People want to buy them. So let’s give them something to buy.”
He hinted that some of that $1.5-billion transfer-tax windfall could be used to do just that. That would certainly keep relations happy with the real estate companies that have so generously supported the Liberals.
But maybe the biggest political concern for the government is a fear that housing prices could suddenly drop, a lot of people could lose a lot of money and those people would blame the Liberals.
“I’m not saying this is a bubble, but it may be,” said UBC business professor Tom Davidoff. “But even if it’s not a bubble, there could certainly be a correction. And if I was going into an election, I would not be eager to do anything that could lead to a bust.”
But Davidoff thinks the government should do something. He’s the leader of the anti-speculation-tax idea.
Now the heat is on the Christy Clark government to deliver something, anything, to deal with an issue that poses a serious political threat to her re-election next May.
© 2016 Postmedia Network Inc.
