Is it time for a more equitable system for property taxes?
In early April, 2017, Metro Vancouver released a report highlighting the disproportionate amount of Provincial property-based taxes paid by the homeowners of this region. Nowhere is that discrepancy more pronounced than here on the North Shore.
Metro’s report looks at greater Vancouver’s contributions to the Provincial Home Owner Grant, Provincial School Property Tax, and Property Transfer Tax, and what it shows is that, thanks to an outdated Provincial tax system, the homeowners of this region are actually subsidizing other areas of the province where land values are lower.
Challenges with the current system
The current system was developed long before the real estate market ignited to its current state, when there wasn’t the discrepancy in land values across the Province that exist today. Here are three challenges:
Homeowner grant threshold
While the average home price in Metro Vancouver increased by 48 per cent between January 2014 and December 2016, the qualifying threshold for the Home Owner Grant only increased by nine per cent.
Even with the most recent grant threshold increase, greater Vancouver lags behind the rest of the province when it comes to the percentage of property owners who qualify for the full grant.
School property taxes
When it comes to the School Property Tax, greater Vancouver homeowners collectively pay three times more than the rest of the province.
As well, our region contributes 71 per cent of the total School Property Tax collected in B.C., but is home to only 54 per cent of the population. And, while School Property Tax revenue has grown over the years as home values have increased, education spending in the lower mainland has not kept pace.
Property transfer taxes
The Property Transfer Tax (PTT) was originally intended as a wealth tax on the sale of the highest-valued five per cent of homes. But due to recent changes in the marketplace. this tax now applies to over 95 per cent of the homes in Metro Vancouver.
Provincial revenue from PTT is estimated to have doubled, thanks to increased property values.
Making the system more equitable
To make the system more equitable, Metro is recommending some key policy changes:
- Establish a different Home Owner Grant threshold for Metro Vancouver that is adjusted annually and based on property values in the region.
- Adjust the School Property Transfer Tax annually, and base it on school expenditures, not on property values.
- Invest this region’s contribution from the PTT into affordable housing initiatives — something our region desperately needs.
Property values vary widely across the province, but these days, high property value does not correlate with income level or ability to pay.
It’s time to recognize that a more equitable Provincial property-based tax system is needed — one that doesn’t base taxes on assessed property values that are subject to the whims of a volatile real estate market.
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