KELOWNA – The Federal government’s recent raising of the bar on mortgage stress tests, coupled with new information about who will bear the brunt of the proposed speculation tax, suggests even more compelling reasons to scrap this punitive, unfair and ineffective measure, says the Okanagan Mainline Real Estate Board (OMREB).
“It’s disconcerting that the BC government continues to contemplate the speculation tax in the face of higher interest rates and the federal government’s May 9th hike to the mortgage stress test lending rate, both of which are having the desired effect of curbing demand,” says Tanis Read, OMREB Immediate Past President, reminding that the Federal government has promised more interest rate hikes as early as this year.
“Driving away demand is not the answer. Saddling an already normalizing market with even more regulation that ironically targets mostly BC residents is liable to be the straw that breaks the camel’s back,” warns Read, adding “We’re due for a pull-back which if deepened by too much regulation, could result in severe impacts for all BC residents, not just current homeowners or those the tax targets and worse, our most vulnerable citizens could be hardest hit…not exactly a recipe for affordability.”
Particularly concerning for tourism-driven regions like the Okanagan, a significant drop in real estate demand could result in job loss, not just from failed or delayed housing projects, but also reduced consumer spending impacting all manner of jobs and particularly front-line consumer-facing jobs that are the lifeblood of many renters and low income earners.
In a bizarre paradox, lower property values would slow housing supply expansion, lead to more critical shortages in future and fewer municipal tax dollars to pay for much-needed services, with shortages likely to be made up by current homeowners.
“None of this spells greater affordability and, while no one is disputing the need to increase affordable housing supply, the misnamed speculation tax, really a tax on assets, is not the way to achieve this goal and is likely to harm the very people the government aims to protect and support,” says Read.
Adding its voice to those of many other real estate and development experts, OMREB contends that the answer (to more affordable housing) lies in working with local municipal government and industry to facilitate and encourage development of housing that is specific to the need.
“The general public hears ‘affordability’ and quite naturally concludes that the proposed speculation tax must be a good thing, but the reality of what this tax is likely to trigger is a very different picture than what is being painted”, Read says, which is why OMREB is speaking up on behalf of its almost 1300 Okanagan Realtor members and has joined a coalition of BC groups calling for Premier John Horgan and the government to reverse their decision to implement a speculation tax on BC and Canadian taxpayers.
Members of the public can visit http://scrapthespeculationtax.ca/ to learn more and write to their local Member of the Legislative Assembly (MLA) to express their concerns.