Election season is upon us, and British Columbians should be prepared for a blizzard of spending announcements and bad policy choices.
It kicked off in late July when the Christy Clark government changed its mind on a foreign homebuyer’s tax. After years of making the case against gouging non-Canadian investors, it became clear in their poll numbers that they had to look like they were doing something to control housing prices. Voila! A new 15 per cent tax on foreign investment in the Lower Mainland was passed into law.
It’s unclear what, besides securing their re-election, the BC Liberals hope the tax will do. They have offered no suggestions as to what they expect to raise in revenue from the tax. They have made no comments on how much, if at all, they would like to see property prices fall. They have the ability, with the stroke of the pen, to both increase and decrease the tax, but have not stated what would provoke such a move. They also won’t say what would cause them to spread the tax beyond Greater Vancouver – how hot do other BC markets need to get before they get the same “protection” from foreign investors?
This nebulousness makes for bad public policy, as it offers taxpayers, economists and watchdogs no way to gauge whether the tax’s aims have been successful. It’s like playing a hockey game with no nets – how do we know if we’ve scored?
With that vagueness comes another threat to taxpayers. Almost 30 years ago, Premier Bill Vander Zalm brought in a property transfer tax because “Foreign investors, many speculatively, [are] driving up home prices beyond the reach of British Columbians. These people paid no tax and most [have] never paid a BC tax of any kind … these welcome newcomers should also contribute to the needs of the province.”
Sounds a lot like the argument for this foreign buyers’ tax, doesn’t it? But Vander Zalm’s property transfer tax, once designed to hit only the top five per cent of homes, now drives up the price of virtually every property in BC Luxury taxes can quickly become everyone taxes.
Other election goodies have already been announced by the BC Government, and you can see how each is targeted to a potential voting group. A couple of new schools in Surrey, always a swing community provincially. Freezing the hated Medical Services Premium tax after 15 straight years of increases. A tiny tax credit (roughly $12.50 per child) for school supply purchases as a way to reach out to parents. The long-awaited Evergreen SkyTrain Line will open before Christmas as a way to show government’s commitment to suburban voters. A number of highway improvements throughout BC have been announced. Funding for a First Nations economic development strategy was unveiled, along with more money for aboriginal students and training. Half a billion dollars for social housing.
To connect with the vital Indo-Canadian community, the government has borrowed $97.5 million on the Indian Masala bond market, and reinvested it in the Housing Development Finance Corporation Limited of India. The government expects to make a $2 million profit after three years – a very low rate of return.
The biggest motivator seems to be entrenching economic links to India, especially as a BC lumber buyer, as a way to build the government’s connection to Indo-Canadian voters here. Indeed, BC is spending $5 million over three years to promote BC wood in India. A noble cause, to be sure, but one that should be kept separate from BC’s investment decisions. A decision to risk $97.5 million should not depend on marketing aims – or on hopes to woo voters.
All those announcements happened in the first two weeks of September. By the time the May 9, 2017 provincial election arrives, BC residents may not be able to sneeze without government rushing to offer us a taxpayer-funded tissue – all paid for with our
Director of BC Canadian Federation of Taxpayers
BC Director - Canadian Taxpayers Federation (http://www.taxpayer.com ), Author, Husband, Dad. Plus an unapologetic Canucks, Packers & BC Lions fan.