By BRENT JANG
Wednesday, June 20, 2018
VANCOUVER -- It's the great tax revolt of 2018, Vancouver-style.
British Columbia's plan to target owners of highly valued properties for extra tax revenue has triggered an uprising by millionaires who don't feel rich.
Thousands of B.C. properties, including more than 30,000 detached houses in the Vancouver region, will be hit by a new surtax to be imposed starting next year on homes valued at more than $3-million.
Anger has been steadily rising since the provincial government first announced the annual property surtax in its February budget.
Since then, homeowners have been doing a slow burn, belatedly banding together at recent protests.
B.C. Attorney-General David Eby, who represents the VancouverPoint Grey riding, has tried to quell complaints, defending the new surtax in a March letter to constituents.
That merely elicited more anger in April, and prompted Mr. Eby to cancel a May 1 meeting with 300 residents hours before the scheduled start time, citing security concerns.
The surtax has been the focal point of one town hall in late May and another two so far in June.
Homeowners are crying foul because they believe they have been unfairly targeted by the annual property surtax on their nest egg.
Take Maarten Mulder and his wife, Wendy Hales. Mr. Mulder works part time as an electrical site reviewer for an engineering firm, while Ms. Hales teaches geography part-time at a local college.
The couple will need to pay an extra $870 a year as a result of the BC NDP government's property surtax, an unwelcome surprise when they already have mounting bills and three children to raise: Tom, 14; Elleke, 12; and Ian, 11. Two of the three kids have special needs - Tom is in a wheelchair and Ian has a learning disability.
In the backyard, there are two wooden storage sheds assembled by Mr. Mulder and an old used barbecue. Parked on the street are the family's two minivans: a 2007 Toyota Sienna and a 2015 Dodge Caravan.
"We're not looking for sympathy, but it's bad tax policy," Mr. Mulder said last week as he stood on the sidewalk with the family dog, Tyske, in the Kitsilano neighbourhood on Vancouver's pricey west side. The land value alone exceeds $3million for every single lot on his street and also nearby blocks.
The couple bought their place in 2006 for $1.3-million.
Their property's total assessed value surpassed $3.4-million last year, although the 82-year-old house itself is technically worth only $68,200 - considered by developers to be a teardown.
Premier John Horgan's NDP government has drawn the ire of homeowners caught in the web of what is formally called an "increased school tax."
The school tax label is a misnomer because the extra money raised each year will go into the province's general revenue, say B.C. protesters, who look on in envy at California, where long-time homeowners sitting on valuable properties pay low property taxes.
Critics wonder why the NDP government is targeting people living in principal residences, most of whom are many years or even decades away from selling.
They say the NDP has overstepped its bounds in introducing what is seen as an asset tax that won't help with housing affordability for first-time buyers, and doesn't tax income or consumption.
"The concern is that people's savings are under attack. It's really an NDP tax grab," said Andrew Wilkinson, leader of the BC Liberals, the official opposition.
But Mr. Horgan blames the previous BC Liberal government under Christy Clark for failing to take enough measures to intervene during a real estate boom that has resulted in skyhigh prices and created an affordability crisis. The Liberals implemented a 15-per-cent tax on foreign buyers in the Vancouver region in August, 2016. Four months ago, the NDP increased the rate to 20 per cent and also expanded the foreign-buyers tax to cover other urban areas in the province.
On June 4, Mr. Eby finally held his constituency's town hall at a community centre in his riding, with his supporters cheering him. "This meeting today was a much better reflection. The true feeling in the community is that people are divided," he said later.
The actual amount to be paid, effective for property tax bills in 2019, will be based on BC Assessment's valuation on July 1, 2018. A 0.2-per-cent tax will be imposed by the government on the portion valued above $3-million and up to and including $4-million; for the portion above $4-million, a 0.4per-cent rate applies.
For example, the owner of a property assessed at $4-million will fork over extra taxes of $2,000 next year, while the owner of a $6-million home will cough up an extra $10,000.
The NDP advises people who are cash-strapped, including seniors on fixed incomes, to defer their property taxes, which would then become payable upon the sale of a property.
"My 82-year-old mom stocks up on toilet paper when it's on sale. She would never think of deferring the tax. Taking on debt is not in the mindset of many seniors," said Phil Moore, president of the Real Estate Association of Greater Vancouver.
But the anti-surtax movement hasn't swept up every homeowner in the $3-million club.
Retired lawyer Joan Rush, 66, attended the first two gatherings, showing up in support of the NDP's tax policy. At the first event, she was one of only two people who publicly backed the surtax, saying homeowners have enjoyed windfall gains and should count their blessings.
After an anti-surtax homeowner heard that Ms. Rush believes in the new tax, the scene deteriorated.
"The elderly woman beside me was so angry that she was practically spitting at me," Ms. Rush recalled. "She actually got the people in the rest of our row to all move over a seat so that she could move one seat away from me."
Ms. Rush and her 70-year-old husband, Dennis, own a Point Grey property assessed last year at nearly $4.7-million, a huge leap from the $570,000 that they paid in 1990. They say they will gladly defer their taxes, including an estimated $4,800 in annual surtax.
The average price for detached homes sold within the City of Vancouver hit $3,080,563 last October, just shy of the record high in April, 2016. "It has been a housing freak show," Mr. Rush said.
Pro-surtax resident Wolfgang Tolkien owns two properties with his wife, Sabine Bartels-Tolkien, with each place worth roughly $2.2-million. While the new tax doesn't affect them, they pledge to proudly pay it if the government were to lower the threshold in the future.
"Nobody likes new taxes, but we have an obligation to give back to society," said Mr. Tolkien, who disrupted an anti-surtax protest, held before one of the town halls. "Other people have a mindset that they're not rich. They've become accidental millionaires."
Residents voice their disdain over a proposed increased school tax in Vancouver on June 4.
BEN NELMS/THE GLOBE AND MAIL