[Flash Walken]

I take umbrage with the position that the BC Liberals have effectively managed the economy, as a significant portion of their economic 'success' is tied directly to the mismanagement of the Vancouver housing industry. When manufacturing, mining, energy extraction, forestry and even construction are either in decline or at similar levels as they were 20 years ago, I don't think you can make a credible argument for economic stewardship. Basically the only industry in the province that has seen substantial growth under 15 years of BC Liberal policies has been the real estate sector which employs just a tiny fraction of the province.

At least in Alberta, when they go all in on energy, it employs a significant portion of the province. Not so in BC, but the government has gone all in anyway.

This is no different than an Alberta government that props itself up on ludicrous commodity prices. Eventually the bottom is going to drop out. BC Residents are now carrying twice the personal debt load they did in the mid 90s. This reflects overall trends in Canada but is stark in BC due to the relative lack of high incomes as compared to Alberta.

These are policy decisions:

On Thursday, the provincial government announced it had raked in $2.2 billion in revenue from the property transfer tax and the new 15 per cent tax on foreign buyers of Metro Vancouver homes.

That’s a billion dollars more than the government had projected.

That enormous windfall caused Liberal MLAs to break out into a spontaneous conga line through the legislature. Finance Minister Mike de Jong was forecasting a surplus of $1.94 billion, up from an earlier projection of $264 million. He then announced that $500 million from the property tax would fund a housing affordability program and another $400 million would go into the B.C. prosperity fund “as a legacy for future generations,” he said.

And this, for the cherry on top:

The surplus allowed the government to scrap a planned four per cent increase in medical service plan premiums. It wasn’t as tasty a treat as an announcement to revamp or scrap the loathsome MSP entirely would have been. But it did make the medicine go down easier.

Overall, the windfall made B.C. the brightest light on the country’s economic horizon. And those dire predictions of house-impoverished millennials fleeing Metro Vancouver and B.C. for cheaper house prices? It hasn’t happened. Net inter-provincial immigration has increased year over year for the last three years. You go where the work is.

So, good news all around.

But: De Jong’s figures showed just how stark B.C.’s economic dependence on real estate has become. Real estate-related taxes are now the government’s single largest revenue generator. They not only outstripped the $1.2 billion gambling brings in — which is pernicious enough — but they also surpassed the tax revenue, individually, from forestry, mining, natural gas and all other resource industries. Only when you combine the tax revenue from those resource industries do they bring in more than real estate, and just by a few decimal points.

None of this takes into account the economic spin-offs that a hot real estate market generates. An angry public may chafe at the rising unaffordability of the market, and they may rightly grow livid at the influx of laundered monies, tax cheats and real estate scammers our hapless enforcement agencies have proven either too inept or too understaffed to catch.

But that hot market also employs law-abiding builders, lawyers, renovators, car salesmen, airline employees, retailers, etc. Those jobs can’t be ignored. Real estate’s reach in this province, and in this government’s bottom line, is much longer than just a matter of tax revenue. The danger is not just that real estate has become a windfall for us: The danger is we have become dependent on it.

http://vancouversun.com/opinion/colu...on-real-estate

The never-ending anger toward real estate in Vancouver can be very intense sometimes. For first-time buyers, getting priced out of the market brings with it a range of emotions and a never-ending gamut of blame. Blame the foreigners! Blame the speculators! Blame real-estate agents! Blame the City of Vancouver! Blame Christy Clark! Blame the rich! Blame the poor! One thing that seems to be ignored in the discussion is that B.C. real estate owners are the most taxpayer subsidized in all of Canada.

And it’s not even close.

Let’s start with the Home Owner Grant. Every January there is a media storm wondering how much the government will change the exemption to. You know why this is big news every year? It’s because this is a component for a lot of homeowners trying to decide whether or not they sell their property or keep it. So every year the B.C. taxpayer pays some of its citizens $570 toward their property taxes, whereas in an unsubsidized market these owners could be inclined to sell. In a market where the lack of supply is often argued as a reason for high prices, the provincial government puts an unwarranted restraint on the property market’s natural supply of listings with this program.

Yes, some homeowners might be forced to sell their properties and that is a horrible thing when someone is in that situation. That’s also how it plays out in every other real estate market in Canada, North America and the rest of the world. And let’s not forget that the owner could, in theory, be sitting on $1.6 million worth of real estate. Downsizing or losing your property is a natural order of a free, real estate market, and our government currently actively interferes with this occurrence.

The Home Owner Grant will cost B.C. taxpayers $857 million during the coming fiscal year, and was introduced by the Social Credit government of WC Bennett in 1957, and amended by his son Bill Bennett in 1980. At the time the market was in a serious downturn with homes that were recently bought underwater, meaning their value was less than what was owed on the mortgage. Interest rates were also pushing 21 per cent, so the measure was likely needed to help a large number of property owners avoid foreclosure. Currently, B.C. is the only province in Canada that provides immediate tax relief simply based on an owner living in their home.


Now onto the property-tax deferral program. This program is increasing in popularity every year. In B.C., when you turn 55, you can apply to have all of your property tax deferred until you sell your home. Not only does the provincial government pay these taxes for you, but they charge you an extraordinarily low interest rate of 0.7 per cent for the benefit. We aren’t the only province in Canada to offer a program of this nature, but our program is by far the most lucrative for homeowners.

B.C. is the only province in Canada to allow application for this deferral at 55 (all other provinces who offer it you need to be 65 to apply), offers an interest rate at almost one-quarter its closest comparable (Alberta at 2.7 per cent), and is the only province that doesn’t qualify applicants based on having a low income. According to the recent budget, about $154 million in property taxes are currently deferred as part of this program. If B.C. was to make a simple change and charge the same interest rate as Alberta, our government’s assets would increase by $3 million this year. A small amount, but again this is another program that interferes with the real estate market’s natural supply of listings.

In other parts of Canada, if you want to retire early at 55, you sell your home and downsize. In our province, taxpayers subsidize you so you can stay in your current home. After all, $8,000-$10,000 a year pays a lot of bills. The provincial property-tax deferral program was introduced by the NDP government of Dave Barrett in 1974.

In January, Clark’s Liberal government introduced another taxpayer-funded program into the real estate market, the B.C. Home Owner Mortgage and Equity Partnership. Now I believe it’s in every person’s financial interest to own their primary residence at the very least, but should the ability to do so come at a cost to other taxpayers? This program is set to cost B.C. taxpayers $728 million over the next three years, and is estimated to add 1,400 buyers to the B.C. market in each of those years. While the loans will be repaid as long as the equity in the property remains in the red, the loans are interest free for the first five years.

So the provincial government subsidizes the real estate market to the tune of somewhere around $1.25 billion every year. Two programs affect supply by offering an incentive not to sell, and the other creates demand by encouraging people to buy. Just another three ingredients in the perfect recipe for higher prices and lower affordability for first-time buyers.

Of these programs, the most equitable program is the property-tax deferral program, but is still likely too generous and should be tightened. The Home Owner Grant is a classic example of a regressive tax break that favours those who already have means. It was likely needed in 1980, but in 2017 it isn’t. The mortgage and equity partnership is a classic example of a government stimulating demand and interfering with the economics of the free market. If the government put the money from these two programs into eliminating the Medical Services Plan premium they could eliminate about two-fifths of everyone’s fees with a simple transfer of this priority.

http://www.theprovince.com/opinion/o...285/story.html