Canadian Politics Today

Beyond Ottawa => Provincial and Local Politics => Topic started by: kimmy on February 05, 2017, 01:32:38 pm

Title: Why are we subsidizing property taxes of millionaires?
Post by: kimmy on February 05, 2017, 01:32:38 pm
Here in BC we have rapidly rising home prices, and we have a homeowners grant to that gives you a $570 (or higher, depending where you live) discount on the property taxes of your primary residence, provided it's valued at $1.2 million dollars or less.  Those two phenomena collided recently, as many homeowners discovered they were no longer eligible for the grant and proceeded to howl loudly.

http://www.news1130.com/2017/01/18/bcs-housing-market-pitting-one-generation/ (http://www.news1130.com/2017/01/18/bcs-housing-market-pitting-one-generation/)

No problemo, declared BC Finance Minister Mike deJong. We'll raise that threshold to $1.6 million, so you can keep your grant.

The government of BC spends about $820 million per year on the homeowners grant, according to the article I linked. We should ask: is that a wise use of provincial funds?  Is it an equitable use of provincial funds? My view is that the answers are "probably not" and "definitely not".

What is the actual point of this grant?  If the goal is to promote home ownership, maybe this policy is exactly the wrong way to achieve that objective. This policy rewards people who have already got into the home ownership game, at the expense of people who can't get into the home ownership game.  That $820 million worth of grants to homeowners has to come from somewhere else in the revenue stream.  They're collecting $820 million in taxes from British Columbians in general, and gifting it to just home owners.  They're robbing Peter to pay Paul.  As a home owner myself, I certainly appreciate receiving a property tax grant.  But just because it works out well for me personally doesn't make it a good policy.

Giving people a tax break because they made a bunch of money is contrary to how taxation is supposed to work.  Skyrocketing housing prices have created legions of new millionaires in BC. My own modest home, far from the housing boom areas in the lower mainland, has increased in value by about $20k in the past couple of years... typical properties in the Vancouver region are worth 10 times as much and have grown at a faster percentage rate. Property owners have seen their assets increase by the equivalent of several years of income, just by being in the right place at the right time.  They don't deserve a tax break for receiving a windfall.

Property values and resulting taxes have gone up rapidly. Then again, so have rents.  When I was a renter I don't ever recall getting a government subsidy to cover rapidly growing rent... I don't recall the Finance Minister ever tinkering with tax policy to make sure I could afford to stay in my home.

And... why is it "good" to help people stay in homes they can no longer afford the taxes on?   When these kinds of stories are in the news we always get a sob-story about some sad old widow who is afraid she will lose her home because the property taxes have gone up.  Well, maybe she should sell her home and move some place she can afford. She's got a million-dollar asset that she can cash out... why does she need help from the general public? She's a millionaire.

Why have her property taxes gone up so much?  Because housing prices have gone up so much. Why have housing prices gone up so much? Because there is extremely high demand for homes in her area. Why is the demand so high? Because people like her are clinging to their homes instead of selling them and moving someplace more affordable.  Ultimately, getting the sad old widow to sell her home and move someplace more affordable is one of the keys to addressing housing prices in the Lower Mainland.   Vancouver needs workers, workers need homes, and the sad old widow could make a nice profit by moving someplace else.  If she's too attached to her neighbors or her home to consider moving, I guess that's her decision, but I don't see that other British Columbians should support her nostalgia with their taxes.



 -k
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: wilber on February 05, 2017, 03:11:15 pm
My mother in law was one of those. A single parent mom who lived her whole life in the same house that had belonged to her parents since 1914. She had a small pension and kept an illegal suite in the basement so she could pay her taxes. The place (lot, it was a teardown) was worth over two million when she died but she was determined to die in that house no matter what it took and no matter how much better she could have lived materially if she sold, and that is what she did. There are more important things than money to many people and I don't think people should be taxed out of homes they have spent most of their lives in.
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: kimmy on February 05, 2017, 08:28:41 pm
If that's her choice, that's her right, but I don't see why others should be required to subsidize her decision. Especially renters who didn't get to benefit from the housing market windfall, and young workers who might never be able to afford home ownership in BC at the rate real estate prices are growing.

It might be unfair that property taxes could potentially force seniors to sell their homes and move, but there are a lot of unfair things going on in the housing market, and I'm not sure that millionaires having to pay taxes even cracks the top 10.  The phrase "asset rich, cash poor" is often heard among retired people who have solid assets, like a paid-for home, but lack funds to pay their expenses, such as property taxes.  Well, there are financial strategies designed to resolve this dilemma by borrowing against the value of their home.   She gets to keep her home, the rest of us don't have to subsidize her taxes, and everybody wins... except for maybe her heirs who inherit a slightly smaller estate once her loan is paid off.

But it's slightly annoying that we always have to talk about the sad old widow as if she's the representative for everybody whose property taxes are going up.  I think the truth is that she's actually not typical at all, I think she's actually a pretty rare exception. What if instead of talking about her, we talk about a well-off double-income couple who bought their home before real estate prices exploded and are laughing all the way to the bank?  Why should they get a subsidy?  They do, after all. These subsidies aren't means-tested.

It seems to me that this whole concept is tremendously unfair-- the government is providing over $800 million in financial assistance to the wealthiest British Columbians, money that's coming, in many cases, from people who will never accumulate the amount of wealth as the people whose property taxes they're subsidizing.

It's disgusting and perverse.

 -k
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: Blueblood on February 05, 2017, 08:34:26 pm
I think a lot of people in bc are going to have to start asking themselves the is it worth it question if they want to keep being House poor.  It is an unsustainable runaway freight train and if interest rates rise, a lot of people are in trouble. 

I would wonder if in the future with new tech jobs would people be able to work more and more at home and if in the future the continuation of the upgrade of rural internet services.  There are places in the prairies in small villages where houses cost less than a car and in the east coast where home prices are very reasonable.  That's how I think the problem gets solved as people are now slaves to their houses.
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: msj on February 05, 2017, 08:38:58 pm
But seniors can defer the payment property taxes to stay in your home: http://vancouver.ca/home-property-development/defer-your-taxes.aspx

I'm with Kimmy on this: tired of homeowners getting so many breaks.
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: wilber on February 05, 2017, 08:58:34 pm
Why are you picking on homeowners who's property values have increased. Let's face it, everyone who gets the homeowner grant is being subsidized by those who don't own their own homes. If you really want to be fair, the grant should be abolished, period.
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: msj on February 05, 2017, 09:00:13 pm
That is an excellent idea.
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: kimmy on February 05, 2017, 09:07:56 pm
Why are you picking on homeowners who's property values have increased.

Are there any homeowners in BC whose property values *haven't* increased?   I suppose there might be towns where the sawmill or mine closed down and housing prices dropped. I'm sure those are vastly in the minority.  What I'm getting at is that home owners in BC, in the overwhelming majority, have done very well in the past 15 years or more. I've only owned my home for 5 years, and I've already done very well from it. Home owners are by and large a very fortunate group, and we don't actually need subsidies, especially from people who are less privileged than us.

Let's face it, everyone who gets the homeowner grant is being subsidized by those who don't own their own homes. If you really want to be fair, the grant should be abolished, period.

Yes, that's what I'm getting at.

 -k
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: TimG on February 05, 2017, 09:23:32 pm
Why are you picking on homeowners who's property values have increased. Let's face it, everyone who gets the homeowner grant is being subsidized by those who don't own their own homes. If you really want to be fair, the grant should be abolished, period.
Property taxes pay for municipal services which used by renters as well as owners. The system is inherently unfair to expect property owners to pay for all of it. If we wanted a fair system then everyone living in a city would contribute to its tax base whether they rented or owned. The only people who are being subsidized are renters who get to used the roads, parks and community centers but pay nothing towards their up keep.
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: JMT on February 05, 2017, 09:24:16 pm
Rental properties pay property tax, and that gets passed on in the rent.
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: msj on February 05, 2017, 09:31:30 pm
Rentals don't get the homeowner grant so presumably the renter is paying more in property tax (flow through the landlord if you will) than the homeowner who does get the savings.
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: TimG on February 05, 2017, 09:33:13 pm
Rental properties pay property tax, and that gets passed on in the rent.
Rental properties charge what the market will bear. Taxes are a cost that will indirectly impact the supply of rental properties. More importantly, renters are not directly impacted by property taxes yet they are entitled to vote for politicians that will increase spending. It makes no sense to complain about unfairness when unfairness appears in many different ways.
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: JMT on February 05, 2017, 09:35:29 pm
How are they not directly affected by it?  They're paying it, even if they don't get a property tax bill.
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: TimG on February 05, 2017, 09:36:56 pm
Rentals don't get the homeowner grant so presumably the renter is paying more in property tax (flow through the landlord if you will) than the homeowner who does get the savings.
And all owners of rental properties are subsidized when compared to owners of commercial property.
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: msj on February 05, 2017, 09:39:14 pm
in what ways?
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: TimG on February 05, 2017, 09:40:42 pm
How are they not directly affected by it?  They're paying it, even if they don't get a property tax bill.
The amount rent goes up each year is not related to changes in property taxes. The only way renters see the impact of property taxes is through reduced supply as some landlords get out of the business because they can't recover their costs. This leads to higher rents in the long term but there is no obvious connection to property tax rates.
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: JMT on February 05, 2017, 09:41:36 pm
The amount rent goes up each year is not related to changes in property taxes.

You don't think that costs factor into what rental owners (globally) charge?
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: TimG on February 05, 2017, 09:43:12 pm
in what ways?
http://business.financialpost.com/news/property-post/think-your-property-taxes-are-high-try-being-a-commercial-landlord

Quote
A new survey shows commercial landlords continue to do the heavy lifting on property taxes and this is especially true in Canadaís three largest cities.

Toronto, Vancouver, and Montreal continue to post the highest commercial to residential tax ratios, all in excess of 4:1.
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: TimG on February 05, 2017, 09:46:24 pm
You don't think that costs factor into what rental owners (globally) charge?
That is what I said. But renters don't know this. If a property taxes go up and the landlord raises rents do renters blame "greedy landlords" or "spendthrift politicians"? I bet it is former in most cases because most renters have no appreciation for the  costs incurred by a property owner.
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: wilber on February 05, 2017, 09:46:53 pm
Property taxes pay for municipal services which used by renters as well as owners. The system is inherently unfair to expect property owners to pay for all of it. If we wanted a fair system then everyone living in a city would contribute to its tax base whether they rented or owned. The only people who are being subsidized are renters who get to used the roads, parks and community centers but pay nothing towards their up keep.

Rental properties don't get the homeowner grant. There will always be inequities, subsidies or no. A local pet peeve of mine, unlike the US Border Patrol, the CBSA only functions at border crossings, they don't actually patrol the border. I don't like it that my municipal taxes pay for my city police department to be responsible for 30 km of this country's border. That's the Fed's responsibility.
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: msj on February 05, 2017, 09:53:10 pm
http://business.financialpost.com/news/property-post/think-your-property-taxes-are-high-try-being-a-commercial-landlord

Except property taxes are flowed through to paying customers (although perhaps less so now thanks to Amazon, for example).

The payers are always going to be those living in the homes (homeowners or renters) and those payong for the product/services. 

The rest is just a shell game.
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: TimG on February 05, 2017, 10:05:37 pm
The rest is just a shell game.
That is why I think it is not productive to talk about "fairness".  I personally do not think paying taxes embedded in the cost of things is the same paying a tax directly because the line of accountability between the cost and the reason for the cost is broken. This leads to bad decisions on the part of the customer that is paying the hidden cost (i.e. how many people would use credit cards if the 2% fee was added to the purchase price?).

What is worth talking about is how laws and regulations can be adjusted to increase the supply of rental properties. Extending the home owners grant to properties that are actually rented could be one of those measures. Simply eliminating the grant and reducing taxes on properties held like gold bullion would not be helpful.

 
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: msj on February 05, 2017, 10:26:40 pm
I would prefer to just divide the total amount of property taxes collected (or required by the municipality) by the prorata total fair market value of all properties (especially including churches) and have everyone pay on that basis.

Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: cybercoma on February 06, 2017, 06:45:43 am
Property taxes pay for municipal services which used by renters as well as owners. The system is inherently unfair to expect property owners to pay for all of it. If we wanted a fair system then everyone living in a city would contribute to its tax base whether they rented or owned. The only people who are being subsidized are renters who get to used the roads, parks and community centers but pay nothing towards their up keep.
It's funny how you note that CO2 tax gets passed on to the consumer (which is true depending on a number of factors that influence how much people are willing to pay for a thing), but you don't see that property tax is rolled into the cost of rent.
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: cybercoma on February 06, 2017, 06:48:31 am
Rental properties charge what the market will bear.
All businesses "charge what the market will bear" on all goods. It just so happens that people need shelter to survive, so they're willing to pay whatever it costs in most cases (unless they relish the idea of living on the streets).
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: kimmy on February 06, 2017, 09:33:45 am
In my area, the rental vacancy rate is vanishingly close to zero, and "what the market will bear" is pretty outrageous.  I know what property taxes on apartments like mine are, and I know what similar apartments in my area are renting for, and I can say with complete confidence that property taxes are a trivial factor in rental prices.


That is why I think it is not productive to talk about "fairness".  I personally do not think paying taxes embedded in the cost of things is the same paying a tax directly because the line of accountability between the cost and the reason for the cost is broken. This leads to bad decisions on the part of the customer that is paying the hidden cost (i.e. how many people would use credit cards if the 2% fee was added to the purchase price?).

That's the assumption?  People have chosen to rent because they're making a bad decision? If they were aware that their rent includes money that the landlord will use to pay property tax, they'd make a different choice such as buying a home of their own?

What is worth talking about is how laws and regulations can be adjusted to increase the supply of rental properties. Extending the home owners grant to properties that are actually rented could be one of those measures. Simply eliminating the grant and reducing taxes on properties held like gold bullion would not be helpful.

How many landlords actually create rental properties?  Not many.   Some turn their basements into rental suites... but most landlords are buying properties condominiums off the real estate market and renting them out.  Making landlordship even more profitable is primarily going to increase demand for real estate even further, putting home ownership even further out of reach for the less wealthy and giving the more wealthy even more advantage.

Here in my town the city council approved a subsidy for a developer to create Affordable Housing. The developer went out and built an apartment building with smaller, less luxurious units, intended to be ideal "starter homes" for first time buyers and young single working people and that sort of thing. And before the mortar was even dry, rental listings started showing up for apartments in the new building, renting at the same outrageous prices as everything else in this town.  So much for "affordable housing".  City council accidentally subsidized yet another way for the wealthy to cash in.

 -k
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: TimG on February 06, 2017, 09:36:10 am
It's funny how you note that CO2 tax gets passed on to the consumer (which is true depending on a number of factors that influence how much people are willing to pay for a thing), but you don't see that property tax is rolled into the cost of rent.
I made it clear that taxes impact the cost of rent. I just said that people paying rent don't realize that they are paying taxes and this matters because people tend to be less concerned about rising taxes if they do not realize that they are paying them. The same goes for carbon caps or any other scam designed to pretend to do something to reduce CO2 emissions.

All businesses "charge what the market will bear" on all goods. It just so happens that people need shelter to survive, so they're willing to pay whatever it costs in most cases (unless they relish the idea of living on the streets).
And when rents go up there is an incentive for more people to offer more rental housing which brings rents down. This is not true with property taxes which keep going up year after year.
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: TimG on February 06, 2017, 09:50:01 am
That's the assumption?  People have chosen to rent because they're making a bad decision? If they were aware that their rent includes money that the landlord will use to pay property tax, they'd make a different choice such as buying a home of their own?
I was using the term "bad decision" as a statement of economics rather than morality. Credit cards hide the costs and therefore charge more than they would be able to charge if the cost was in the open. This is bad from an economic perspective.

How many landlords actually create rental properties?  Not many.   Some turn their basements into rental suites... but most landlords are buying properties condominiums off the real estate market and renting them out.  Making landlordship even more profitable is primarily going to increase demand for real estate even further, putting home ownership even further out of reach for the less wealthy and giving the more wealthy even more advantage.
These activities are called "creating rental properties". People do not have to rent out basements if they do then those are new rental properties that never existed. Investors can and do buy properties for capital gain. They do not have to offer them as rentals. Choosing to offer them as rentals is expanding rental supply.

Here in my town the city council approved a subsidy for a developer to create Affordable Housing. The developer went out and built an apartment building with smaller, less luxurious units, intended to be ideal "starter homes" for first time buyers and young single working people and that sort of thing. And before the mortar was even dry, rental listings started showing up for apartments in the new building, renting at the same outrageous prices as everything else in this town.  So much for "affordable housing".  City council accidentally subsidized yet another way for the wealthy to cash in.
The prices are not going to be affected by a single building. It takes time for prices to adjust to new supply and a city that encourages people to rent out housing will see lower rents than a city that puts up barriers..
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: cybercoma on February 06, 2017, 11:11:43 am
I made it clear that taxes impact the cost of rent. I just said that people paying rent don't realize that they are paying taxes and this matters because people tend to be less concerned about rising taxes if they do not realize that they are paying them.
Okay, I agree with that. People who rent apartments generally don't pay too close attention to property taxes because it has an indirect effect on them. I don't agree with your overly simplistic idea of supply and demand when it comes to rentals though.
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: Blueblood on February 06, 2017, 11:36:01 am
Okay, I agree with that. People who rent apartments generally don't pay too close attention to property taxes because it has an indirect effect on them. I don't agree with your overly simplistic idea of supply and demand when it comes to rentals though.

It's also a bit harder to control rent in bc vs the prairies due to extremely limited building space.  Rents go up in the prairies and it's a bit easier to pop up an apartment complex or build houses.  Once again the prices are reflective of demand.  People want to live in bc and there is limited space to build and demand has to unfortunately be rationed.  That's why I'm hopeful for an increase of high speed internet on prairies so that people don't have to be going to the office and can work at home and are able to have more options of where they live.
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: TimG on February 06, 2017, 12:38:37 pm
Okay, I agree with that. People who rent apartments generally don't pay too close attention to property taxes because it has an indirect effect on them. I don't agree with your overly simplistic idea of supply and demand when it comes to rentals though.
The law of supply and demand in a perfect free market is an abstraction but there are always issues in the real world because there is no such thing as a perfect free market because barriers prevent more supply from being created or limit the ability of buyers to choose not to buy. That said, when discussing policy it useful to ask what can be done to remove factors that prevent the market from functioning like a perfect free market. With rental housing it is important to understand that regulatory barriers discourage people from making rental units available so if you want cheaper rents you need to think carefully about what barriers are really needed. Adding more regulatory barriers is only going to make the problems worse.
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: the_squid on February 06, 2017, 05:05:24 pm
Corporate property tax rates could be lowered if individuals didn't receive subsidized property taxes. 

Which would be a good thing.  I benefit from the 1st time home buyer grant tax subsidy...  but it makes no sense.
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: msj on February 06, 2017, 11:01:25 pm
I also doubt that people living in apartment buildings are voting en mass in municipal elections. 
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: cybercoma on February 07, 2017, 08:22:48 am
I also doubt that people living in apartment buildings are voting en mass in municipal elections.
I don't think anyone is voting en masse in municipal elections. Voter turnout for municipal elections is often below 50% across the country, afaik.
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: msj on February 07, 2017, 08:51:51 am
35% or less is the usual turnout across most cities and towns.

Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: kimmy on February 07, 2017, 09:25:54 am
Is this really a concern?  That renters are such a powerful voting block that they'll elect politicians with ludicrous spending plans, because they don't pay property taxes directly?  This seems highly far-fetched.

 -k
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: msj on February 07, 2017, 09:27:13 am
Tim seems to think so.

I doubt it too, though. 
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: guest4 on February 07, 2017, 09:28:43 am
Is this really a concern?  That renters are such a powerful voting block that they'll elect politicians with ludicrous spending plans, because they don't pay property taxes directly?  This seems highly far-fetched.

 -k

Have to admit that my interest in municipal elections has always been non-existent, until I became a home-owner, when my interest skyrocketed to "Oh, there's a municipal election this year?".   
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: cybercoma on February 07, 2017, 09:28:55 am
Is this really a concern?  That renters are such a powerful voting block that they'll elect politicians with ludicrous spending plans, because they don't pay property taxes directly?  This seems highly far-fetched.

 -k
It's one of those conclusions you come to when you work theories in your head to support your beliefs without actually thinking about how they would play out in reality.
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: TimG on February 07, 2017, 09:36:06 am
Is this really a concern?  That renters are such a powerful voting block that they'll elect politicians with ludicrous spending plans, because they don't pay property taxes directly?
It is the principle that matters. They can vote and they don't pay taxes that they are aware of. This is not true for other levels of government where everyone pays PST or GST even if they have no income.
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: kimmy on February 07, 2017, 09:57:23 am
I was using the term "bad decision" as a statement of economics rather than morality. Credit cards hide the costs and therefore charge more than they would be able to charge if the cost was in the open. This is bad from an economic perspective.

I believe that most renters are renting because they lack the financial resources to own, not because they lack the information about hidden costs in their rent. (and as I mentioned before, I know that for landlords renting properties like mine in my area, tax is an insignificant amount compared to the rents being charged.)


These activities are called "creating rental properties". People do not have to rent out basements if they do then those are new rental properties that never existed. Investors can and do buy properties for capital gain. They do not have to offer them as rentals. Choosing to offer them as rentals is expanding rental supply.

Scooping up real estate to turn it into rental properties does nothing to increase the supply of housing. Same number number of suites... more rental units, fewer opportunities to own. Buying properties to rent out is extremely profitable, and people are willing to pay high prices because they know the return will be high.  They don't need an extra $570+ subsidy to convince them to rent them out.

Perhaps incentivizing the creation of basement suites is a good idea-- that actually does create new housing.

But giving people further incentive to buy up existing homes as rental properties is counter productive.  It's probably doing at least as much to drive up real estate prices as the hated "foreign investor" who keeps getting blamed for Vancouver home prices. If anything there should probably be barriers, not more incentives.

The prices are not going to be affected by a single building. It takes time for prices to adjust to new supply and a city that encourages people to rent out housing will see lower rents than a city that puts up barriers..

The free market is doing a great job of encouraging people to rent out housing. The profit motive is so persuasive that nobody needs an extra $570+ to convince them.  It's like giving away gold, and then deciding to give people free gas to drive to the mine to collect it too.

Homes are being built as fast as possible. The barrier isn't the lack of profit to be made.

 -k
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: ?Impact on February 07, 2017, 10:41:41 am
It would be interesting to look at the demographics of renters and their involvement in municipal politics. I am assuming there are a large percentage of young renters without children that are fairly mobile and don't concern themselves with local politics because they don't see themselves staying in that location for a long time. Once people start to think about raising a family then local politics start to play an important role because they begin to settle down in one area and become less mobile. They may remain renters or purchase a home, and they move from house to house, but do they remain within the same municipality for longer periods of time?
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: cybercoma on February 07, 2017, 11:14:16 am
This article compares and contrasts renter demographics in Vancouver with the rest of Canada.

http://www.theglobeandmail.com/news/british-columbia/the-picture-of-renters-in-vancouvers-tight-rentalmarket/article31111809/

Nothing on voting behaviour, but given the demos, I highly doubt there's any consistent or statistically significant differences that can't be explained by confounding influences.
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: Manob on February 21, 2017, 06:22:14 pm
Less subsidies and less tax complexity means less economic distortion. Absolutely cancel the subsidy.
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: kimmy on February 22, 2017, 01:04:29 am
It is the principle that matters. They can vote and they don't pay taxes that they are aware of. This is not true for other levels of government where everyone pays PST or GST even if they have no income.

It might also be the case that homeowners and landlords support policies that help keep rents and property values high (for example, zoning restrictions and enforcement of anti-rental bylaws at the municipal level, the BC homeowner grant at the provincial level, and mortgage policies and interest rates at the federal level) without considering the economic cost to their communities and ultimately themselves.

 -k
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: eyeball on February 26, 2017, 08:34:56 pm
Where I live vacation rentals (read, AirbNb) are the big emerging issue. A vacation rental is simply an un-licenced BnB as near as I can tell. But in these characterizing times we live in I guess there will always be a need to make a distinction so as to cast whoever you have your issue with as black sheep.  Local governments have invested in Host-Compliance software that tracks advertising online so as to crack down and get tough (their words) on outlaw landlords. 

From what I can gather the impetus for legalizing unlicensed Vacation Rentals is coming from BnB's that pay a business licence and see this as an issue of fairness.  Other issues include changing the nature of residential neighbourhoods and displacing long-term renters. Fair enough, but what local Village councils are proposing goes much farther than simply licencing or enforcing something they let get out of control.  What they're proposing is that the BC government change the entire province's tax code so that the residential properties that have vacation rentals and or bed and breakfasts can also be taxed as commercial properties.  What they want to do is create a new dual residential/commercial zoning so they can tax some portion of the property at the commercial rate which I believe is twice the residential rate. To do so they will be proposing the BC government get onboard at the next meeting of the Union of BC Municipalities.
 
It appears the impetus for this is from big resort operators who feel it's unfair that they pay commercial tax rates while everyone else doesn't.  I can't help but get the sense its like comparing a Mom and Pop corner store to Walmart. This aspect of the beef that much bigger corporations and our local politicians have with the little guy should be troubling to anyone that does any sort of home-based business - especially given that the route to making a home-based business a big political and economic issue is to simply complain and suggest government raise everyone's taxes.   Thatís just too easy and sleazy IMO. I guess this is where pointing out that black sheep arenít white helps the cause - lets face it, arranging to have an extra cost imposed on your competition is probably the next best thing to putting money into your own pocket.

Apparently one of the goals of local governments is to encourage or preserve affordable housing through long-term rentals so perhaps they should propose a larger tax grant to residential tenancy property owners as compensation for giving up on the big accommodation bucks and instead provide a valuable social and economic need that many local governments appear to be utterly powerless if not useless at providing.

I'm trying to find a balance between social responsibility and capitalist swinery by providing both. Fortunately I'm in a regional district and not subject to village bylaws.
Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: msj on February 26, 2017, 09:20:41 pm
Good post eyeball.

I will also point out that there could be GST issues here too (converting residential property to commercial property and, presumably, back to residential at some point) and income taxes. 

In 2016 we have to declare any sale or change in use of our principal residence which people will begin to see how this impacts their PR exemption claims in the future (i.e. people have been getting away with tax free capital gains on more than one property due to sloppiness on the governments' part).

So the governments are starting to catch up and cash in on the real estate craze - about stinking time.

Title: Re: Why are we subsidizing property taxes of millionaires?
Post by: eyeball on March 01, 2017, 11:58:56 am
Another question I'd like answered is why we're encouraging more millionaires to buy property in BC.  Seems like a dumb question on the face of it I know but I really think we should be careful about what we wish for.

I mentioned to a couple of guests of mine how the effect of a hot real-estate market in Vancouver is spilling over hereabouts in the form of people cashing in on the big bucks, buying a really nice place here with a third of their gains and retiring on the rest.  They seemed surprised and told me they were exactly what I was talking about and were in the area shopping around.

The problem I have with the money coming into BC is not where the people bringing it are from but the values and principles they used and abused to earn it.  I suspect much of the wealth buying its way here was created on the backs of exploited workers and at the expense of the environment these workers and their families live in and will likely die in.  Instead of staying at home and using these millions and billions to bring their own countries up to a better standard its coming here where it's clean, green and much safer and nicer.

If we were really serious about screening people for their values out of a concern for preserving our's we'd probably only have to look at their wealth to get the gist of where it and the people it belongs to are really coming from.  When I think about how wealth and power here appear to be working together to make it tougher for little people to stay and make a buck I can't help but get the sense its to force them out to make room for those who've already got it made - like addressing this issue by making it harder for local first time buyers for example or to squeeze people in the manner I mentioned in my previous post.

I think maybe a lot of those values and principles I mentioned are already well established here. Perhaps we should change the name of BC to Elysium.