Buying or selling right now in super popular Kelowna? Congratulations – you’ve contributed to the $730 million operating surplus in the province of B.C., accumulated from income tax, provincial sales tax and the ever popular property transfer tax. It’s a lot more than the government budgeted for, with the lion’s share of this unexpected revenue coming from the latter as real estate continues to be a hot topic in the Okanagan Region.
In fact, revenue from property transfer tax alone increased over the previous fiscal year in the province by $468 million. This figure was obtained from the audited year-end report publicly released by provincial finance minister Mike de Jong.
The budget for the fiscal 2015-2016 year end just completed by the province had forecasted a decline in revenue from this tax; however de Jong said that by February revenues were already well ahead.
The legislature will convene shortly in Victoria for a summer sitting, something that is beyond its general practice, and the provincial government will concoct a plan on how to put extra revenues to good use, particularly at a time when housing has become unaffordable for a lot of people in B.C.’s larger urban communities.
One of the initiatives that the province has committed to in Vancouver is to implement a new type of property tax on empty homes, hoping to force absentee landlords to either sell them and move on, or put them up for rent. There are restrictive rules as laid out in the Community Charter that prevents other municipalities, such as Victoria, to put forward a tax like that which the province hopes to amend at some point after the summer. It’s hoped that an agreement will be reached among civic bodies at this fall’s Union of B.C. Municipalities convention.
Even if this type of tax goes go through, de Jong has said that immediately the best answer to combat ever increasing home prices and the horribly low vacancy rates in B.C. is to get building more homes. The B.C. government is not going to tax its way out of this dilemma, de Jong reiterated.
The provincial opposition pointed out that the surplus has been accumulated even though there has been a decline in revenue from natural resources and that it may not be a positive thing as it’s also come by way of increased medical plan premiums and that the property transfer taxes have been excessively increased.
John Horgan, leader of B.C.’s NDP party is fearful that despite the windfall, the manner in which it has arrived doesn’t contribute to a sustainable economy in the province.
Homes sales in B.C.
During the province’s fiscal year, property sales in B.C. were 18.6 % higher than the previous FY with sales also jumping by 20.9%. The dollar volume was $93.67 billion according to the finance minister, with $80 billion coming from the sale of residential properties and $13.67 billion coming from the sale of commercial property.
Compared with the rest of Canada, economic growth in the province was three times the national average.