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As B.C. homeowner grant approaches $1B, critics call for its end

Has a property tax refund to B.C. homeowners passed its best before date? Approaching one billion dollars annually, the B.C.
Housing Minister Ravi Kahlon, seen here with Vancouver-Mount Pleasant MLA Melanie Mark at a Vancouver news conference in December, says he’s committed to reducing homelessness and pushing municipalities to build more affordable housing. Could Kahlon draw one billion dollars from the B.C. homeowner grant to do so? | Mike Howell

Has a property tax refund to B.C. homeowners passed its best before date?

Approaching one billion dollars annually, the B.C. homeowner grant refunds a portion of property taxes back to most owners of principal residences, should they be Canadian citizens or permanent residents living.

However, as home values continue to rise, padding the overall wealth of owners, relative to renters, there are renewed calls to cancel, or amend, the grant and redistribute the money to affordable housing projects or other housing-related subsidies.

The homeowner grant was created in 1957 by W. A. C. Bennett to relieve property taxes for principal residences. Popular among the middle class, the grant has persisted since then and has long been broadly considered to be “political suicide” for politicians should they terminate it.

The grant is also limited to a maximum home value, which is continuously re-assessed by the bureaucracy to capture roughly the same amount of properties and keep the total amount on pace with inflation. In 2023, the grant fully applies to all residential properties valued at less than $2,125,000 — whereas in 2021 the threshold was $1,625,000.

The regular grant amount is now $570 for properties located in the Victoria area, Metro Vancouver and the Fraser Valley. For all other areas of the province, the amount is $770. Seniors (over age 65) receive an additional $275. All told, the grant will cost $892 million this year and is on pace to reach a billion dollars in about five years.

At such a threshold, critics say the grant serves to provide tax refunds for the more well-heeled class — that of homeowners.

Economist Marc Lee calls Bennett’s prolonged policy “a pointless tax reduction to those with the privilege of home ownership.”

The grant, said Lee, should be cancelled or at least redistributed in an income-tested form.

“The people who don't own homes are the most at risk and most vulnerable in our society. I think that's the area of the market where we most are concerned about in terms of public policy, and yet we don't provide any equivalent,” said Lee, of the Canadian Centre for Policy Alternatives, which broadly favours taxation for government social programs.

Lee said the BC NDP has yet to deliver on a promise to provide $400 annual grants to renters. Statistics Canada shows there are 669,450 renter households in B.C. Such a grant would hence cost $267 million per year.

Another idea, said Lee, is to take all or a large portion of the grant money and redistribute it to affordable housing projects.

Lee thinks doing so is no longer political suicide given how real estate has become the primary driver of wealth in the province.

“I think if you took that money and said, ‘Well, we're going to spend it all on developing non-market or social housing... and addressing homelessness,’ I think people would probably buy that. I think if you took that same amount of money and said, ‘OK, we're instead going to create this income-tested housing grant that'll go to, you know, renters or owners alike, I think people would buy it,” said Lee.

Another critic in line with Lee is Vancouver-based real estate developer Michael Geller.

Although a general critic of property taxes impacting housing affordability, Geller says the grant is unnecessary for most recipients and given the state of homelessness and lack of affordable housing, the funds can easily be diverted.

“This is one (grant) that’s outlived its usefulness. I do sympathize with those who are renting and grants going to homeowners,” said Geller.

He also points out that the threshold applies across the province and as such a $2.1-million property in rural B.C. gets the same as one in Vancouver.

“In some communities around B.C., that’s the nicest home in town and we’re giving the owner a grant,” said Geller.

Housing for low-income individuals is needed, in particular, said Geller, who estimates it costs about $500,000 per fully subsidized unit. So, a four-year political term would fully fund about 7,200 homes with the redistributed grant.

Provincial housing ministers have long defended the grant, noting it assists seniors — although as Lee and Geller both note, property taxes can be deferred by seniors (over age 55) and the deferments are clawed back from the equity upon sale or transfer. Families with children may also defer property taxes.

Housing minister Ravi Kahlon said as much in an interview with Glacier Media this month. He also defended the grant but suggested his government is considering changes.

“It supports a lot of seniors, and certainly, in the future, we'll have to look at it. We have to find ways to ensure that it's supporting the people who need the support the most. But that's where it's at, at this stage,” said Kahlon.

“Of course, we want to make sure that any supports we have are progressive in nature. And again, we'll review all the supports in the future to see what we can do, but it's not just a one-off. There's a whole host of things that we're putting in place to support people and the different situations that they're in,” said Kahlon.

The BC NDP took power in 2017 and, between 2018 and 2021, homelessness increased 11.5 per cent, according to BC Housing’s 2020/21 report on homeless counts in B.C.

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