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/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