City hall’s taxing dilemma

There has been a lot of talk in the media lately about creating new taxes to address housing affordability. Who then can we attribute this quote to?

“Basically, the investors that are holding all these vacant homes, there’s well over 18,000 estimated by housing at city hall.”

“We need to have a tax, effectively a business-tax rate applied to empty homes.”

If you guessed it was Gregor Robertson you would be correct.

He was also quoted by the Province newspaper as stating, “What I will work to implement as mayor is a speculator tax.”

That promise was made just over eight years ago at a Vision Vancouver mayoral candidates’ debate in June 2008!

To be fair to the soon-to-be-mayor, it was only three months later that a global economic collapse began. Real estate prices were sent into a tailspin worldwide, quickly quieting any talk of new taxes.

A few years later — during his 2011 re-election campaign — Robertson reportedly rejected a speculator tax outright.

Fast-forward to today, and that old promise has been dusted off in the form of a new “empty home” tax. In a June 22nd news conference staged before a council vote on the matter, Mayor Robertson urged the provincial government to give the City new taxation tools.

He then stated that the city is prepared to “take action on its own” in absence of a provincial response. The Mayor gave Victoria until Aug. 1st to begin working with them on the tax.

By announcing his intentions via a news conference and throwing down the gauntlet with the Clark government, it was a classic Vision Vancouver moment.

In one fell swoop the responsibility for the so-called housing affordability crisis is punted to another level of government.

Giving ultimatums to senior levels of government might make for good politics, but one can argue that it does little to address housing affordability.

It is almost as if the mayor has forgotten that he co-chaired a housing affordability task force just a few short years ago. While that committee’s final report can still be found on the city’s website, you would be hard-pressed to find which of their recommendations have been acted upon yet.

At the committee’s recommendation the city did create a new housing department however. Chief Housing Officer Muktar Latif was hired in 2013 to lead the Vancouver Affordable Housing Agency.

After so many years talking about the need for affordable housing, undoubtedly Robertson is under pressure to produce results. His proposed empty residence tax, however, could have several unintended consequences.

First of all, the mayor insisted the city was prepared to “go it alone” if the province did not provide the legislative changes he needs to tax empty homes. His own staff report identifies significant risks — both financial and legal — by taking this approach.

Staff cautions that it will take “significant resources” to monitor, bill and enforce this proposed empty house initiative. Of the allegedly 10,800 homes one research report says are empty, 9,700 of those are condos. The challenge will be to find which units are supposedly empty, confirm that they are indeed unoccupied, and apply a tax to each owner.

Can a city that has a hard time keeping boulevard gardens weeded find the resources necessary for such a formidable task?

Then, there are the inevitable legal challenges that will result. Staff warns that enforcement of any new city-led initiative would place a burden on existing legal resources.

In its report to council, staff cites the fact that strata regulations enable owners to limit the number of units that can be rented. For reasons that are not clear from the report, staff did not recommend that council pursues reforms that would allow more units to be put onto the market as rental.

Changing strata regulations has the potential to change the amount of homes available for rental in short order, without having to locate and track empty condos, administer a new tax, or dispute costly legal challenges.

Regardless of how city hall accomplishes its affordability goal, it is safe to assume that the public is getting weary of fact-finding committees, empty promises and political finger pointing.

Let’s get on with it.

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