Kelowna's mayor says the province's speculation tax is not having desired affect

SVT hurting, not helping

The province's Speculation and Vacancy Tax is not having the desired impact on cities in the Central Okanagan

While newly appointed finance minister Selina Robinson touted 2019 data released last week, Kelowna mayor Colin Basran painted a much different picture in a letter to the minister seeking feedback from affected municipalities.

When the controversial tax was rolled out in 2018, the province said the intent was to go after those non-residents who were buying homes but leaving them vacant, thus encouraging them to put them on the rental market or pay the tax.

Robinson said last week the tax brought in $88 million in 2019, 94 per cent of which came from non-B.C. residents, and 88 per cent from non-Canadians.

She further stated it helped in a 16 per cent increase in housing starts and a seven per cent hike in the vacancy rate.

In his letter, Basran said those numbers were not being seen in the Central Okanagan.

"In Kelowna, close to 60 per cent of the $2.74 million in tax revenues was collected from Canadian residents. This reflects our community's strong appeal as an attractive destination within Canada, and should be considered when evaluating the ongoing implementation of the program," the letter stated in part.

The letter added 70 per cent of spec tax revenues in West Kelowna were collected from Canadians.

In terms of the housing market, Basran said the two key objectives of the tax, tempering rising house prices and increasing the rental supply, are not being met in a meaningful way in the city.

"In 2019, the real estate market reached new highs, with an average single-family home price of $857,000 in December, 2019."

And, based on the province's vacancy-conversion rate,' Basran says the local rental supply only increased by "a nominal 0.7 per cent."

Basran also questioned whether there is a direct relationship between the SVT revenues collected in Kelowna and West Kelowna, and the among the "direct re-investment of these revenues in our community.

"The lack of Kelowna-specific transparency between SVT revenues collected and SVT revenues invested makes it difficult to justify this additional tax as it impacts our residents."

Basran says the conclusions support council's long held stated position that the tax is not meeting key objectives and outcomes anticipated when it was implemented two years ago.

"Further, the unequal regional implementation of the SVT continues to promote inequality and confusion. Accordingly, we request that Kelowna (and, by extension, West Kelowna) be excluded from the tax," the letter concluded.

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