Out-of-province property owners hit with 2% speculation tax in 2018 budget

Derek Kilbourn

Sounder News

Tuesday, February 27 2018

Non-BC-resident owners of property on Gabriola, Mudge, and Decourcy (as part of the Regional District of Nanaimo) will pay 2% more in taxes starting in 2019, as part of the provincial NDP government’s new Speculation Tax.

Announced as part of the NDPs 2018 budget, the speculation tax is aimed at foreign and domestic speculators.

It will apply in Metro Vancouver, Fraser Valley, Capital, and Nanaimo Regional Districts, and the municipalities of Kelowna and West Kelowna.

In announcing the tax, the NDP government said they are aiming to target, “speculators who don’t pay taxes here, including those who leave their units sitting vacant. 

“This will include satellite families.”

The foreign buyers tax will be increased and expanded as well.

The government says this is so foreign buyers contribute more for the high quality of life enjoyed when they do move to the province.

The foreign buyers tax will increase to 20% from 15% effective February 21, 2018 and will continue to apply in Metro Vancouver, and be added to the Fraser Valley, Capital, and Nanaimo Regional Districts.

Within the budget, the government also committed to:

Building on the Province’s progress to date, Budget 2018 takes action to make life more affordable by:

• Introducing a new affordable child-care benefit that will reduce child-care costs by up to $1,250 per month for every child and support 86,000 B.C. families per year by 2020-21.

• Providing up to $350 per month directly to licenced child-care providers to reduce fees for an estimated 50,000 families per year by 2020-21.

• Curbing speculation in B.C.’s housing market and helping to build 114,000 affordable rental, non-profit, co-op and owner-purchase housing units through partnerships.

• Eliminating Medical Services Plan (MSP) premiums by Jan. 1, 2020, saving individuals up to $900 a year, and families up to $1,800 a year.

• Making ferries more affordable by freezing fares on all major BC Ferries routes, reducing fares on non-major routes and fully restoring the Monday to Thursday seniors passenger fare discount.

• Improving B.C.’s Fair PharmaCare program to eliminate deductibles for families with annual net incomes below $30,000, starting Jan. 1, 2019. Approximately 240,000 families will receive expanded coverage.

• Reinstating free bus passes with the flexibility to support other transportation needs will help over 100,000 people receiving disability assistance to better connect them with their communities and the services they rely on.

An employer health tax is being put forward to allow for the full elimination of MSP premiums.

The B.C. government committed to eliminating MSP premiums within four years. The government took the first step in Budget 2017 Update by cutting MSP premiums by 50%, starting Jan. 1, 2018, and increasing the threshold for premium assistance by $2,000.

In order to continue to deliver the services British Columbians depend on, the Province is replacing the revenues from MSP premiums with an employer health tax.

This new payroll tax will come into effect Jan. 1, 2019, with the following rate structure:

• Businesses with a payroll of more than $1.5 million, will pay a rate of 1.95% on their total payroll.

• Businesses with a payroll between $500,000 and $1.5 million, will pay a reduced tax rate.

• Businesses with a payroll under $500,000 will not pay the tax.

By exempting businesses with payrolls under $500,000, the employer health tax is designed to help protect small businesses. At 1.95%, it is the lowest rate among provinces with a payroll tax in Canada.

Further details about the employer health tax will be provided prior to its implementation on Jan. 1, 2019.

In 2016-17, MSP premiums provided a total of $2.6 billion in revenue.

The new employer health tax is estimated to provide $1.9 billion in revenue per year in 2019-20 and 2020-21.