It’s time to reform BC’s unfair Home Owner Grant. here’s how

Opinion: A new housing subsidy for low-to-middle income people applied to homeowners and renters could recognize the high housing costs faced by all British Columbians – and would benefit most seniors, who live with a fixed income

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Early January showed how British Columbia’s housing system favors existing homeowners, at the expense of renters and housing affordability.

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First, the last property value ratings in British Columbia showed double-digit increases in all areas. Large annual increases, such as the 16% increase seen in the city of Vancouver, have become the norm. On a regional basis, however, we see even bigger numbers, with increased valuations of 20-40% extending north beyond Whistler to Pemberton and down the Fraser Valley to Hope. .

In the wake of this news, the The Government of British Columbia has announced it will raise the homeowner subsidy (HOG) threshold to $1.975 million. The HOG is paid to almost all homeowners who live in their home (as opposed to secondary or rental properties). As house prices have risen, the HOG threshold has risen, so 92% get it.

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Introduced as a political gimmick in 1957 by the government of WAC Bennett, the HOG system exists nowhere else but in British Columbia. It is fundamentally unfair, an unnecessary tax cut for those who have the privilege of owning property.

And it will cost about $873 million this year, which is a very poor use of public funds in this time of housing emergency. On the contrary, it adds fuel to the fire of skyrocketing real estate assessments by effectively reducing BC’s already low property taxes.

As a result, people who own and live in homes valued up to $1.975 million get a $570 grant to reduce their property taxes. Those outside Metro Vancouver, the Fraser Valley and the Capital Regional District receive an additional $200. If you are a disabled or senior owner, you get an additional $275.

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All this just to own his primary residence, a house that has probably gone up in value by tens or even hundreds of thousands of dollars in the past year alone, regardless of income.

Meanwhile, these rapidly rising property values ​​will not necessarily result in equally large increases in property taxes. Unlike income tax rates which are stable over time, the property tax rate (known as the rate per mile) has declined because house prices have risen so rapidly. Property tax bills are determined each year based on the revenue needs of provincial and local governments in British Columbia. Annual increases in property taxes are typically only a few percentage points higher (compared to double-digit increases in property assessments).

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Last summer, a Expert Group appointed by the BC and federal governments have proposed that BC eliminate the HOG and use that money to build much-needed social housing instead. Yet hours after the report was released, BC’s finance minister, who was the former housing minister, dismissed the idea.

Rather than eliminating HOG, in the last two election campaigns the NDP government promised a $400 rebate to tenants to partially address the imbalance between landlords and tenants. Four years later, there is still no such reimbursement.

  1. The home of Lululemon Athletica founder Chip Wilson at 3085 Point Gray Road in Vancouver is valued at $73.15 million.

    Property values ​​soared again in 2021, including many of BC’s most expensive homes

  2. The number of newly listed properties fell about 3% from November to December.

    Housing affordability ‘likely to get worse before it gets better’ as listings hit all-time low

  3. Demographer Andy Yan, director of the City Program at Simon Fraser University.

    BC assessment records show housing stress is being pushed out across the province

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We may finally see a new tenant rebate in the 2022 BC budget next month. But it’s also time to reform HOG and use those funds to address the housing crisis.

Using funds currently being spent on HOG, a new housing subsidy for low-to-middle income people, applied to homeowners and renters, could recognize the high housing costs faced by all British Columbians. Similar to other transfer programs, there could be a maximum amount payable which would then be phased out as income exceeds a defined threshold.

The reformed subsidy would benefit most older people, who live on fixed incomes. It should also be added to the housing portion of assistance to social assistance recipients.

Reforms like this should be part of a broader set of much-needed changes to property taxation to help rebalance the housing market and reduce housing-induced wealth inequality. Eliminating HOG will not solve the housing affordability crisis in our province, but it is one of many steps needed to help balance the scales.

Marc Lee is Senior Economist at the Canadian Center for Policy Alternatives, British Columbia office.


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