Vancouver’s red-hot home market continues to stir debate over how to protect low- and middle-income residents against the ever-escalating costs, driven in part by demand from overseas.
Expert comments, reported by the Globe and Mail, from a recent industry forum on foreign ownership suggest that rising market prices can be contained via a more progressive taxation of luxury properties.
David Ley, a geography professor at the University of British Columbia who studies housing bubbles, said implementing a more progressive property transfer tax on the high-end homes, while keeping such levies low on cheaper properties, is an “easy” policy option that would create a trickle-down effect and lower prices throughout Metro Vancouver.
While considering the option, Mike de Jong, British Columbia Finance Minister, is not entirely convinced it is the best course of action, telling the publication: “I have come to believe that for every taxation action there can be a reaction.”
A reaction appears to be exactly what the price moderation forces are hoping for with Prof. Ley telling the forum that “there is a lot of evidence that price pulses through a metropolitan market come in through the top end.”
The current property transfer taxation system, implemented in 1987, imposes a tax on the buyer of 1% on the first C$200,000 of the purchase price. An additional 2% tax is then levied on the purchase price amount above C$200,000.
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