Thank you for writing to me about our government’s proposal to improve funding for BC’s chronically underfunded schools. BC schools are funded at one of the lowest per-capita levels in Canada, and as a result, kids who need more attention – whether because they’re struggling or they need to be challenged – have been short changed for a generation.
Our government is changing that dynamic with the largest investment in kids in BC schools in a generation, as we committed to do in the general election.
But the funding for this initiative needs to come from somewhere, and the provincial budget as we found it was significantly different than we were told it would be during the election.
In particular, one major piece of information that we did not have in the general election was the financial state of ICBC. ICBC lost about $900m in the last fiscal year, and is projected to lose $1.3bn in the current fiscal year. Before the election, we were told that the loss last year, for example, would be closer to $11m.
I have responsibility for reforming ICBC within our government, and am moving quickly to get ICBC’s costs under control, but the impact on our provincial budget of this fiscal crisis at our public insurer was devastating.
As a result of the impact of ICBC, our Finance Minister worked hard with her team to find ways to ensure kids in BC get access to the education they deserve, despite the dismal state of the provincial budget once ICBC’s losses were incorporated.
One of the potential sources of provincial revenue identified was an incremental increase in the school tax for the value of properties over $3,000,000 in the province.
Specifically, this tax proposes a .2% property tax increase on the value of properties between $3m and $4m, and a .4% property tax increase on the value above $4m. Homes valued at $3m and below do not pay the tax, and those valued at $3m or more only pay the tax on the amount that exceeds $3m, not on the first $3m in assessed value.
This tax can be deferred by seniors, and by families with children at home. This deferral takes place through subsidized programs the province offers with the express intention of minimizing the impact of rising property taxes on seniors and families who may be living in a family home that has dramatically increased in value around them.
Those who take advantage of these deferral programs do not have to pay the tax until they sell their homes.
If you’re interested, you can find more information about deferral programs here:
The reasons for my support of this tax are based on my belief that the tax is fair, and my knowledge that there are programs in place to reduce impact on those less able to pay in the short term.
On the point of fairness, the Globe and Mail reported on January 3 last year that increases in assessed value in 2016 among extremely high value homes in our community ranged from 18%, in the case of a property owned by 3085 Point Grey Road Holdings Ltd. (from $63.9m to $75.8m) to an increase of more than 20% in the case of a property owned by Pisonii (PTC) Ltd. on Belmont Avenue (an increase of 21.3% to $69.2m).
Yes, these are residential properties, and the value increase in these homes from 2016 alone would pay for almost half a century of this proposed tax.
I recognize that these examples may not ring true to those who may have bought homes many years ago in the UEL or Point Grey and are not holding their homes in trusts or corporate structures.
I’ve heard from some with concerns that their home is just the place they live, was a property bought many years ago at a vastly more affordable price on a middle-class income, and the assessed value is just numbers on paper. They’re not holding it in a trust, and they don’t want to use it as a bank machine, because the assessed value could change.
This new tax is very real to people in these circumstances, especially seniors. I understand that, and I have heard from a number of people in these circumstances.
I still feel that the tax, as proposed, and with the mitigating programs in place, is fair.
Even those homes in the $3m to $10m range have appreciated dramatically in the last decade, in excess of 150%, and that wealth is real. When, and if, people fortunate enough to own a home in this price range decide to sell, they will benefit from a great windfall. This is a windfall that I know a number of us in this community – including a number of you who have written to me about this tax – agree is the product of a pernicious and corrosive housing affordability crisis that has badly hurt the sustainability of our community, and Vancouver as a city.
Many families in our communities across BC have not been so fortunate as homeowners in our neighbourhoods of Vancouver Point Grey with homes valued in excess of $3m. The growing gap between the richest and the poorest in our province is a source of insecurity for everyone.
A properly funded education system means that thousands and thousands of children that would not have had an opportunity to succeed now will. They will be the engine of our provincial prosperity for many years.
Even those that have seen increases in the value of a $300,000 condo have not seen anywhere near the same net increase in wealth as those who own properties whose value exceeds $3m, wealth that could pay this new tax over and over for many lifetimes to come with a single year’s change in value.
In summary, I believe the proposed tax on the 150% increase in value over the last few years is fair, in that it is only on the amount of any assessed value over $3m, and at .2% and .4% is a fraction of a fraction of even just one year’s appreciation in the value of these homes.
It is matched by a provincially subsidized program that permits those homeowners that don’t have the funds to pay the tax until they sell their homes to defer these taxes in situations where seniors or families might be impacted.
I understand that no new tax is welcome and that we may have to agree to disagree; however, I am grateful that you took the time to write to me to express your concern, and I will absolutely do my job let my colleagues know about your perspective of the impact of this initiative in our community, and on you personally.
If it is helpful, my office staff are fully prepared and able to assist anyone with obtaining further information about how to defer taxes.