What a year it’s been in B.C. politics. This month marked one year since the cliffhanger 2017 election. Following weeks of political uncertainty, Christy Clark and her Liberal Party were ultimately removed from power by the thinnest of margins possible. Clark resigned her seat in Kelowna soon thereafter and the party was left to pick up the pieces and relearn the role of Official Opposition after 16 years in power.
After a rather anemic leadership race, MLA Andrew Wilkinson was chosen to lead the Liberals back to power. He doesn’t have much to show for his efforts so far. NDP Premier John Horgan’s approval rating is strong, despite decisions like the Site C dam approval that alienated significant numbers of his party’s base. A poll conducted by Angus Reid in early May found Horgan had a 47 per cent approval rating, with Green leader Andrew Weaver trailing at 34 per cent and Wilkinson lagging well behind at 26 per cent.
The minority NDP government, who are only able to hold power due to a “confidence and supply” agreement with the Greens, once looked unlikely to survive more than 18 months in office without an election. Now it looks possible they could govern until Fall 2021, the next fixed election date. Wilkinson and the Liberals – and the vested interests that back the corporate party – need to find a foothold to start their climb back to power.
With the recent controversy over the BC NDP’s new “school tax,” essentially a modest surtax on homes valued at over $3 million, Wilkinson thinks he’s found his big issue. The Liberal leader recently characterized this new property tax in ominous terms in a letter to homeowners released to the press: “This new tax calls for a dramatic increase to your property taxes, and is on top of the numerous other tax increases by the NDP you are seeing this year. This is a potentially devastating burden for hardworking British Columbians, many of whom have lived in their homes for decades. … It’s really an asset tax, designed to charge you based on the assessed value of your home, regardless of what you originally paid, or your ability to pay it. Not only will this tax allow for annual escalating increases, but it sets a dangerous precedent for the government to tax away your personal property.”
Wilkinson’s claims are absurd. Here’s how the so-called “dramatic” increase will actually play out, once the new tax regime takes effect in 2019. First, it’s crucial to understand that the new tax is a marginal tax on the assessed value of homes, empty lots, or strata properties over $3 million. The marginal rate starts at 0.2 per cent and increases to 0.4 for the value over $4 million. So a westside Vancouver resident with a home assessed at $3.2 million would only pay an additional $400 per year. Taxing away personal property? Nonsense. Even the owner of a $5 million home will only face an additional tax bill of $6000/year. And if they’re retirees living on a fixed pension they are able to defer their taxes.
Compare this to the legally allowable annual rent hike – set this year at four per cent – paid by tenants in Vancouver. A family renting an average $2,000/month 2-bedroom apartment or basement suite in Vancouver will pay an additional $960 per year in rent. That’s more than double the new annual expenses of the person in a $3.2 million house. For renters, many of whom live paycheque to paycheque, an additional $960 per year could be enough to tank the family budget or even force them out of their home or out of the city.
So Wilkinson’s fearmongering about people being driven out of their homes is aimed at the wrong class of residents. It’s renters, not homeowners, who are the most precarious in the current crisis. The tax revolt he’s looking to promote is a revolt of the elites.
The fact is that given the unprecedented and frankly out of control land value appreciation in Vancouver over the past decade – a housing bubble that the B.C. Liberals allowed to inflate by turning a blind eye to rampant speculation and profiteering – the shift to progressive property taxes is common sense. Properties don’t appreciate in value because of the genius or hard work of the owners, so it’s perfectly reasonable for part of the wealth generated by appreciation to be captured and used for the society as a whole.
In a world scarred by inequality, economists and policy makers are increasingly advocating for wealth and asset taxes including progressive property taxes. One weakness of the NDP’s new tax is that the revenue is not targeted to the building of social and affordable housing for those who need it most.
One reason Wilkinson is seizing on the property tax issue is that so many of the impacted properties are in the riding of Attorney General David Eby, who was the Liberals’ biggest critic on the housing file and now an effective and powerful player in government.
Wilkinson’s hyperbole, however, points to another danger for the Liberals. Their elite revolt has grabbed some headlines for now, but there are dangers to the strategy. In the long run they may fail to unseat Eby, only to succeed in reinforcing the view that their party only really cares about the wealthy and the well off.