BC “School Tax”

Property Tax

Surcharge

BC Budget 2018

May 2018 Elizabeth Murphy

Facts About the Surtax

Vancouver currently has the highest property taxes in Canada.

The BC surtax is not for funding schools, goes to general revenue.

Vancouver revenue already subsidizes the rest of BC.

BC substantially encroaches onto the municipal tax base.

Makes life less affordable for both owners and renters.

Taxation on unrealized gains is against Canadian tax policy.

This is a regressive provincial tax grab that will expand over time.

Source: Andrey Pavlov, Ph.D., Professor of Finance, Beedie School of Business, SFU, April 2018 (Based on most recent 2017 property tax data.)

.

3,143 3,313 3,567

4,416

2,697 2,633

5,032

7,035 6,378

8,795

6,351

8,354 8,391

10,808

CALGARY EDMONTON MONTREAL OTTAWA REGINA SASKATOON CITY OF TORONTO

TORONTO CENTRAL

CITY OF VANCOUVER

VANCOUVER WEST-SIDE

Property Taxes Paid Based on MLS Benchmark (Adjusted for the Assessment Methodology use in Toronto)

Base Tax Utilities

City of Vancouver currently has the highest property taxes in Canada

“Hot” commercial properties inflated beyond average in rezoned areas – City of Vancouver report 2016 Detached properties inversely subsidize property taxes for strata units.

Source: Andrey Pavlov, Ph.D., Professor of Finance, Beedie School of Business, SFU, April 2018

Source: Andrey Pavlov, Ph.D., Professor of Finance, Beedie School of Business, SFU, April 2018

Metro Vancouver study shows

School Property Tax revenue expanding

faster than expenditures.

Vancouver School District: School Tax comprises 111% of

School District Expenditures – Provincial average is 46%

Vancouver subsidizes the rest of BC

City of Vancouver changed from:

Across-the-board 3 year Averaging

To Targeted Averaging in 2016

This means taxes went up for most people.

Property tax deferrals – City of Vancouver report 2016

Deferrals increasing across city, mostly where property taxes are highest.

Facts About Deferral

Deferral is not justification Taxes must be affordable – not designed to create debt load.

Deferral cannot be depended upon Future programs may be reduced or eliminated.

Not everyone qualifies for deferral. Rental properties of less than 3 units do not qualify. So surtax

either passed onto renters or owner faces debt or sale.

Mortgages and loans require bank approval and qualification.

Must be over 55 yrs. or with children under 18 yrs.

Real agenda of surtax:

Neighbourhood clearing for upzoning

Rezoning inflates land values.

“Hot” properties inflated beyond average concentrated in rezoned areas – City of Vancouver report 2016

“Hot” commercial properties inflated beyond average in rezoned areas – City of Vancouver report 2016

Who Benefits?

Bob Rennie – UDI 2016 –

“We have to change the narrative”

Tax shift report – Generation Squeeze - May 2018

1% tax on property > $1m =

$10,000 + property tax on $2m

Affecting all detached in Vancouver

The Alternative

Take a ‘Second Look’

Former Premier Mike Harcourt & Min. Darlene Marzari suggests

Vancouver Sun archive photo, 1972

The Affordable Alternative

Use the progressive BC income tax base

What it would take to cover $250m budget

Add 0.25% to top income bracket above net $150,000

Net income of $150,000 = Zero extra

Net income of $250,000 = $250 extra (.25% on $100,000)

Ability to pay, affordable, no complications

No increased administration costs like surtax

Confirmed by Ministry of Finance analyst

Thank you.