Douglas Todd: British Columbians’ houses are not really their ‘castles’

Immigration-related excerpt of interest. And a new term for me, “satellite families:”

….However, if Kesselman was in power, he would consider a change to the NDP’s proposed speculation tax, which in part targets “satellite families” that own vacant dwellings in B.C.

Satellite families are those that typically maintain student children or spouses in B.C., but in which the breadwinners make most or all of their income outside the country, which means the family usually pays little or no Canadian income tax (which is designed to support the common good).

While understanding the B.C. government’s rationale for targeting satellite families, since some “own high-valued homes in B.C. while declaring little income for tax purposes,” Kesselman recognizes the surcharge will also affect some B.C. second-dwelling owners who have long paid taxes in the province.

“My first change would be to allow B.C. residents a credit of actual income taxes paid in B.C. against the speculation tax, rather than the $2,000 per year credit. And I might extend this option to taxes paid by other Canadians not resident in B.C.,” Kesselman said.

In the same vein, the public policy specialist finds the NDP’s surtax on homes valued over $3 million to be an “imperfect but justifiable measure, given the obstacles to implementing a better approach.”

Even though he believes it may be fairer to impose some kind of capital gains tax on profits made on B.C. homes, Kesselman admitted it would be a “political non-starter.” The surtax on expensive homes is “somewhat arbitrary,” he said, because it hits the homeowners regardless of their level of capital gain, how long they’ve owned the property, their current cash flow and their mortgage debt.

But at least the expensive-house surcharge captures often large and otherwise tax-free profits, Kesselman said, in effect supporting Arthur Pigou and the ethical notion that housing, indeed, needs to be treated as a public good.

“The surtax should also encourage some larger properties to be re-developed into denser housing, which is needed to address affordability,” Kesselman added, strengthening the case for Pigou’s principle. “An additional benefit of the surtax is to discourage foreign buyers from using high-valued B.C. homes as speculative piggybanks, in some instances using illicit funds.”

Source: Douglas Todd: British Columbians’ houses are not really their ‘castles’

About Andrew
Andrew blogs and tweets public policy issues, particularly the relationship between the political and bureaucratic levels, citizenship and multiculturalism. His latest book, Policy Arrogance or Innocent Bias, recounts his experience as a senior public servant in this area.

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