January 8, 2016

Trapped in Vancouver?

(slight edits below in burgundy to reflect updated information about the city property tax deferment)
Two articles recently which both seem to influence the city’s ability to function, grow, and continue to provide services.
The first, featuring developer Michael Geller as the apparent ‘face’ of a movement:

Geller Housing

(Margaret Gallagher/CBC)

Defer taxes, make money: The new way to profit on Vancouver real estate

A Vancouver planner and developer says the B.C property tax deferral program is allowing wealthy home owners to make even more money.
Michael Geller also admits he’s first in line to take advantage of the situation.
“Most people can invest the money and get a better return,” Geller told CBC.
“A lot of people I know take advantage of this program even though they have the money to pay their taxes because the current interest rate is 0.85 per cent.”

This was new to me … because every single time I have heard anyone suggest increasing property tax, the response I hear is along the lines of “senior calls rising property assessment ‘rope on my neck’“, and so not wanting to hang Seniors out to dry, the conversation stops.
The more serious issue with this, however it would seem, is in the amount of taxes which are deferred. According to VancityBuzz:

There are over $130 million in deferred property taxes each year, income for the various districts and municipalities that could be used to build roads, fund school boards, maintain parks, and pay local police and fire authorities.

Now this wouldn’t be that critical if property prices were stagnant, or if the same number of people have deferred taxes for at least a generation. Where it becomes a problem is when property taxes are rising quickly, combined with what is likely an increasing number of deferrals. So long as the people starting to defer, and stopping this deferral are unequal, it represents a loss in income to the city. On Sunday I wrote about CAC’s percentage of the Vancouver yearly budget as ~$250Million per year out of a total ~$1.25Billion budget … this means that the deferred taxes would total ~10% of the revenue per year.
I added the word would above, because it turns out that the city isn’t the one out this money, it turns out the province is the one who is out … whether or not this might be able to be ignored with a trick of accounting is above my paygrade. On the face of it, however, it seems hard to see it as anything other than a medium-term revenue shortfall.
There are likely those for whom this deferral is absolutely necessary, who are trapped by the value of a home which has outpaced their fixed income, to stay in a house when that would no longer be possible. There are, however, those like Michael Geller who definitely those who do not need this aid, for whom the deferral is an investment opportunity, and yet another reason that a house functions more as a safe deposit box than a home.
The point of the above isn’t to single out MGeller any more than the news already has, or to fault him for taking advantage of available programs, the point is, entirely, to question why so much is being spent/deferred on those who don’t need the help.
Speaking of not needing aid:

Immigration mega-fraud: the rich Chinese immigrants to Canada who don’t really want to live there

 A photo released by the Canada Border Services Agency shows some of the doctored Chinese passports seized from the offices of Xun Wang, along with fake Chinese immigration stamps. Photo: CBSA

Xun “Sunny” Wang, a Vancouver-area consultant jailed for masterminding the biggest immigration fraud in Canadian history, is startling in scope.
Wang, 46, who was sentenced on October 23 to seven years in prison, conducted his fraud on an almost industrial scale, as he helped rich Chinese clients maintain Canadian permanent-resident status and later obtain citizenship.
Chinese passports both real and fake were shipped in bulk to the mainland, where professional forgers would doctor them to make it look like their owners had been present in Canada when they had actually been in China. Wang would set up his clients in fake jobs at his firms, printing business cards for them and issuing pay slips – adding insult to injury, their fake salaries were so low his wealthy clients were able to file tax returns that allowed them to claim from Canadian coffers tax benefits intended for the working poor.

(emphasis is mine)
Given that the headlines last summer were about how Richmond, though filled with expensive houses, has an unusually high percentage of declared poverty, with areas having almost 30% poverty.

Wang’s clients wanted to be able to maintain their PR status without actually living in the Great White North, since their jobs and businesses were back in China. And by faking their presence in Canada they would eventually be able to claim Canadian citizenship, with all the privileges it confers, including the right to live in Canada – eventually.

Canada’s ‘immigration jail’

That anyone should immigrate to Canada while regarding living there as a burdensome task to be endured or avoided might sound weird, but the concept is so common among some Chinese immigrant circles that there is a word for it: yiminjian, or “immigration jail”. The term refers to the period of compulsory Canadian residency (now, four years out of the previous six) which one must suffer before applying for citizenship. Think of a Canadian passport as the get-out-of-jail card.

Taken together, it is hard to determine just how much tax has been effectively avoided by these programs (‘these programs’ referring to the absent immigrants and the apparently fraudulent poverty), and just how much effect this has had on the city’s ability to function (luckily for the city, the property tax deferral seems to only affect the province’s), however, if Wang was paid more than $10Million, the number is not small, and considering the potential declared poverty, the issue is not just one of missing income, it is actually us paying people not to live here … and people wonder how anyone can afford to keep their condo/house vacant?!? Rough life being trapped in Vancouver!

Canada’s former ambassador to China, David Mulroney, in his recently published book on Canada-China relations, pointed out that the problem of investor immigrants heading back to China to earn their livelihoods was one of Canada’s making. “Such newcomers are often criticised for treating citizenship as a business proposition – after it has been presented to them as such”

These are both all business propositions which need to be reexamined, while there are many who love to ‘Starve the Beast’ of government, I don’t think that many would consider that either any of these is are a good way of going about this.

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  1. One important detail on tax deferral: the city still gets its tax money. This is from the Provincial website:
    “If your application is approved, the province pays your current year unpaid property taxes on your behalf.”
    That’s not to say it’s not a problem; it’s just not the city’s problem, it’s the province’s.

  2. Hang on a minute! The city and other municipalities are not losing out on any tax revenue. I repeat, the city gets its tax revenue. The Province pays it on my behalf. It the places a line against my property for the amount deferred, Plus interest at 0.85% (not compounded).
    My comments to CBC and other media followed a tweet in which u pointed out that the program exists. My intenting was to let others know they could defer their taxes. When the reporter asked me if I did I told her yes. To the tune of $60,000 over the past 6 years.
    And why shouldn’t I? As long as the program is not means tested. However I went on to say that I thought it should be. There’s no reason why the province should be lending money to me at such a low rate. But as long as it offers the program, I’ll take advantage of it.
    Let me conclude by emphasizing that I am not advocating an end to the tax deferral program. Just a revision. Now I hope you will re-write your post to clarify how the program works, noting that the only ‘cost’ to the province is the difference between its borrowing rate and the rate at which it lends out money, and other administrative costs. Cheers

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      Entirely not obvious … I’ll amend as necessary to note the distinction, but as John Graham mentions, its still someone’s lost (well, significantly delayed) tax income, if not the city’s …
      I don’t fault you or anyone else for taking advantage of the program, but I do fault the program for the same reasons you mention.

      1. “its still someone’s lost (well, significantly delayed) tax income”
        Banks are more than happy to move that income forward in time for a fee (interest). Tax deferral simply isn’t an issue *if* the interest paid on tax deferral covers the interest charged by banks. It looks like it doesn’t, so the interest rate charged for tax deferral is a problem, not the existence of tax deferral itself.
        This is pretty basic stuff. Not the best post I’ve seen on Price Tags.

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          This logic could just get extended ad nauseum though … But typically isn’t. The entire logic of heralding balanced budgets relies on the fact that borrowing against the future is a bad idea.
          Either it is a good idea or it isn’t.
          Either its a good idea for the government to fund infrastructure, or it isn’t.
          The issue is whether there is some magic other than political expediency which makes it a good idea that at age X you no longer need to pay property tax. I can think of plenty of people who are just starting out on the property ladder who could use this help also.
          If the tax paid is truly only .85% then not only is it helping those deferring not pay tax, it is allowing them to actually make money on the proposition even with the current interest rates.
          We all understand the concept of interest, and but there are many questions involved concerning who needs the help, and how much help, and how much they should pay for this help. There are bigger discussions involved than tit for tat accounting.
          I’m surprised that no-one’s seems to be concerning themselves with the fraudulent poverty section of this post.

          1. “the fact that borrowing against the future is a bad idea”
            1) Whoa, you might want to add some qualifications to that statement.
            2) The government is effectively lending to homeowners, and banks do that profitably. The province could too (or it could be revenue-neutral), depending on the exact interest rate charged.

  3. @mageller – You brought this up about three years ago and it didn’t go anywhere. It’s all in the timing and the way it’s rolled out. This time it’s become a hot topic, many people have never heard of it and still don’t understand how it works. The radio media didn’t fully explain it.
    As you say, the interest rate is the only issue. It doesn’t actually cost the province anything and the dollars can be added to the books as as deferred earnings.
    It does give retired people a good break. A means test is bureaucratically heavy and would not likely result in any benefit to anyone.

  4. The tax deferral program is currently the only reason my home isn’t sporting a “For Sale” sign.
    I’m quite surprised to hear that Mr. Geller is only paying 0.85% on the amount deferred. The form I saw recently bore a rate of approximately 3.5%. It seems perfectly reasonable for the government to be charging the same amount as the banks do for a secured line of credit.

    1. A couple of things. As Eric kindly noted, I have been reminding people of this program for a number of years. I have written about it in my Vancouver Courier column and pointed out it could benefit many ‘seniors’ ( altho I question why 55 should be considered the age at which we need benefits). I attracted media attention last week because I acknowledged that I use the program, as do many of my financially savvy friends. At the same time I advocated that the program eligibility should be means tested, especially if the interest rate is so low.
      On that point, the rate is 2% below prime.
      As for the morality of using a government program, I don’t view this like taking food from a foodbank. I view it like income splitting on an income tax filing or accepting a rebate on an electric car. (Yes I did that too!)
      While the author of this post does not know me, and therefore thought I should be a target for his scorn, I do hope that other regular visitors to Pricetags, including its host Gordon, know me well enough that I don’t have to further try to proclaim my decency as a responsible member of society.

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        I don’t view ill on anyone taking advantage of the program, just like I don’t about anyone in Council Housing, or using the food bank, like Chris Keam below I am surprised that the rate would be so low as to actually become, in effect, an investment vehicle.
        The bigger point to this though is the discussion of who needs help, and what help they need.
        Certainly the absent immigrants in the second half of my article would have also been eligible for this assistance, and we can all agree, I think, that they wouldn’t deserve it.
        My question, as it is for many of these things, is that if it is considered a ‘Good’, why do people even need to apply for it? No matter how low the barrier it might be, someone’s grandparent will fall through the crack. Just like barriers on transit need to have allowance built-in for those who might not be able to navigate that barrier. Wouldn’t it be less bureaucratic to make enrollment automatic? Then no-one’s grandparent would be ‘taxed out of their home’.
        Someone’s grandparent is always used as the first reason not to increase property taxes, maybe all such ‘grandparents’ should be exempted? But why this group specifically, and why at 55 exactly? It seems odd that this group would simultaneously both ‘suffer’ the ravages of increased taxes, and at the same time be able to avoid paying these taxes in any way that would affect them during their lifetime. The fact that at the moment this is possible is an example of a bad set of rules.
        Thomas, in the comment below, is right to question whether there should be a ceiling for this help … and I might combine things and suggest that if we, as a society, view this as a good, then anyone under a certain threshold gets helped, anyone over the threshold gets less/none. This would mean that no-one of would be taxed out of their home, and that maybe we could consider the discussion of tax levels, per the second half of Thomas’s comment. Right now, it is too easy to block all discussion by pointing to someone’s poor grandparent and asking ‘what ogre would harm them’. The answer of course is none, but there are ways to expand the discussion to eliminate the ‘raising taxes’=’mugging grandparents’ refrain where it often gets stuck.
        If a ‘Good’ is a ‘Good’ for one group, it is ‘Good’ for all groups. If seniors have a right to stay in their home, so do young people have a right to stay in theirs and not to be rennovicted (and this list goes on … I’m just using one example).
        I placed no specific scorn on you Michael, (or question your decency), I don’t question the player, I question the game, your photo front and center on CBC simply made you the star player on the team.

        1. Indeed a property tax subsidy is needed by very very few. Why should society subsidize anyone in their luxury abode ? The poor widow in West Van or Pont Grey who lives in a $3M house with a $15,000/year property tax bill can decide to
          a) get a reverse mortgage, or
          b) rent out a basement suite for $1500 or
          C) sell it and downsize to a $1.5M condo nearby.
          This seniors tax deferral program is possibly unconstitutional ( discrimination by age) and utterly irrelevant for anything over ” shelter ” value, say $400,000. For $400,000 you get a decent 2BR condo in Burnany, New West or Surrey. Anything above that is a life style choice. Why support this by tax payers ?
          Part of the overall BC attractiveness for seniors ( aka vote buying) is the very reason why rich Asian immigrants or non-resident buy huge properties: they are grossly undertaxed while we overtax incomes.
          ==> Time for a re-think here with so much Asian money parked here distorting property values ‘

      2. ………As for the morality of using a government program, I don’t view this like taking food from a food bank………..
        Maybe you should.
        Both the tax deferral program and the food bank are intended for people in need. Both programs are inspired by compassion and are based on the honor system.
        And to clarify, no none has ever “taken” food from a food bank! People receive the gift of food because some people have compassion for those without means.

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          There is a difference though, in that I think it is rather more common knowledge that the food bank exists than this deferral program … judging by the number of times that the ‘grandparent is taxed out of their home’ makes the news … its practically a meme.
          You don’t have to qualify or fill out paperwork, or know english to go to the food bank, you do have to with this program. The food bank doesn’t care if you are 54 or 55 or have kids or don’t … this program does.
          I’m all for compassion for those without means. I am not for programs which establish hurdles prior to that compassion, or for compassion which is selective in its deeming of who is worthy. Or that which says only certain groups apply – we typically say that’s a bad thing when it comes to race, why is it acceptable when it comes to age?
          Bring on the compassion … for all … from each according to his ability, to each according to his needs.

          1. Why base the tax deferral on age? Seriously?
            Seniors are invisible as Gordon has pointed out. Nearly zero employment opportunity, fixed pensions, rising health costs, and the inflation of nearly everything leaves many seniors teetering on the edge of bankruptcy. Deferred tax is forfeiture protection for seniors in these circumstances. It is not the answer to invisibility, but it is a compassionate response to a serious
            structural problem in our society.

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              … which is why I suggest that such protection, if it exists, should also be automatic … as at the moment, it seems there are those who could use it, who don’t know about it, and I would imagine that they would also likely be those who could use it most..
              My point wasn’t that there shouldn’t be this protection, my point was that there are others who might need protection also. I’m all for compassionate responses, I think there should be more of them, and I think people shouldn’t have to hunt around to find out that they qualify for help. This barrier, like any other, guarantees that some won’t be able to navigate that barrier. What is special about the strike of 55, specifically that says you deserve help?
              I do know of people in their 30s and 40s living elsewhere who face those same issues (“Nearly zero employment opportunity, fixed pensions, rising health costs, and the inflation of nearly everything leaves many seniors teetering on the edge of bankruptcy”), some from battle trauma, some for other reasons, who also could use help … the current policy says, in effect, that ‘some people are more equal than others’ … and I’m not a fan of that.

      3. It’s a loan from the provincial taxpayer at a below market rate to people who can well afford to pay their taxes, through a variety of methods. It’s still a misuse of taxpayers money to subsidize asset wealthy property owners with resources provided by all taxpayers. I’d love to get an investment loan at 0.85 percent and it is a financial crime against provincial taxpayers that it is being made to the wealthiest people in the province.

        1. Correct. Hence a suggested cap, say 400,000 as a basic condo for required “shelter. “. Beyond it is merely a life style choice not worthy of tax payer support.

  5. Taxes deferred are still income on the provinces’ books as they are receivables. An income statement makes no difference between receivables and actual cash received.
    Seniors do not need a property tax break. We should abolish it, and certainly for houses or condos over $400,000.
    Indeed our property taxes are far too low, and our income taxes too high. Why do we not view properties, beyond basic shelter, as consumption like a car, coats or shoes that we levy with PST and GST ? BC fails to properly monetize foreigners’ and immigrants’ desire to own properties here. Rich Asians make the correct rational choice: buy the biggest house they can as it is grossly undertaxed but declare no income as incomes in Canada are grossly overtaxed (30% on average: 10% provincial and 20% federal, higher once significantly above $95,000/year). Why not do what Texas does: drop provincial income tax and raise property and consumption taxes ?

  6. “And why shouldn’t I? As long as the program is not means tested. However I went on to say that I thought it should be. There’s no reason why the province should be lending money to me at such a low rate. But as long as it offers the program, I’ll take advantage of it.”
    This is a fascinating remark that has me thoughtful about how a reason can become a rationale and then an excuse, depending on one’s circumstances. And how leadership so often entails a cost to the person setting an example.
    It sounds like the absolute crux of the issue is whether the difference in interest rates the province charges for this program, and what it pays on its outstanding debt*, results in people who can afford to pay their tax bill offloading this difference to the population at large for the benefit of their personal finances.
    *3.6% according to this document. Am I reading that right?
    http://www.fin.gov.bc.ca/PT/dmb/ref/debtsummary.pdf
    If that’s the case, then it’s hard not to see it through an ethical or moral lens. It’s not an especially pretty panorama from where I’m standing. It sure makes it hard to turn to a young person and suggest to them that sacrifice in the now is their duty to generations to come on issues such as energy resource use.

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  7. Why is it somehow more tragic that a senior has trouble paying their tax bill than a 30 year old working single parent?
    The solution in both cases should be move (or go out an make more money). Helping people live beyond their means shouldn’t be the responsibility of any level of government. If you can’t afford to pay your property taxes, then you should find a cheaper property.

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      Why shouldn’t that working parent also get some help then, is a counter argument. There is a limit to the effective distance that people can move before the increased cost in transit overwhelms the savings. There is a limit to the amount that a working parent can make if they are paying essentially the same for childcare as they are making in those working hours.
      Simply saying ‘move’ is an overly facile response. We can look to other cities to see how much worse affordability can get … it is often said about those that can’t afford London that they move to, say, Leeds … but if there aren’t jobs in Leeds that becomes hard. How far should people be asked to move? Is there any ‘Right’ to live where you grew up? (if the answer to these is ‘infinite’ and ‘no’ then we as a society should have that discussion, but the general impression I get is that most people think that people should have the ability to live within the ballpark of where they might like to, and that they should be able to live in the city they grew up in/etc… but maybe that’s just me?)

  8. I know someone who’s property taxes are higher per year, than their parents paid for the house they are living in. This is due to the massive and recent increase in the property value. As they are now in their retirement years they should be entitled to stay in their home and if the government is offering them a technical reverse mortgage, that makes sense. They are not living beyond their means, are they?

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      All of the things above are issues about which a common language could be hammered out by a ‘charter of housing rights and freedoms’ … I wonder if one of the issues is (as is evidenced above), everyone seems to have a different idea of what rights each group might have. Other countries have this … maybe its time for us too?

    2. Changes to property value by themselves should not have any effect on property taxes since the tax rate is based on the city budget divided by the total value of all properties. If all properties doubled in value over a one year period and city budget stayed static and no new buildings were added, then there would be no increase in property taxes

    3. Why should they be entitled to stay in their home? Why should anybody?
      It could be argued they should be entitled to action from every level of government to prevent the insane run-up in housing prices, but I’m not holding my breath on action from those political cowards.

      1. Why should anyone be forced from their home against their will?
        Sorry Ma’am, you’re an elderly widow occupying a 2400 sq. ft. house. That’s highly inefficient. You must move to an 800 sq. ft. condo immediately. If the shock manages to kill you even better. Then there will be two empty properties available for sale.

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          While your point is satirical … look at the Bedroom Tax in the UK … this is what happens when what is and is not in the public good is left undiscussed and prone to political course corrections.
          It should be up for discussion whether people have a right to live in their home in some kind of perpetuity … but this discussion elsewhere not limited to home owners only, and as more and more people become renters, they are going to have to be part of the discussion also. Elsewhere they are (NYC is one example, almost anywhere in Europe is another).
          Also, look at Little Mountain – sorry folks, a developer says he can make money off your property. Scram. If you’re still alive by the time we get around to rebuilding, you might be able to get a place back. In the interim, you can live in this tiny place somewhere off to hell and gone.
          How is Little Mountain really all that different than your elderly widow example?

      2. The “insane run-up in housing prices” was not created by older folks choosing to stay in their family homes. To forceably remove them after decades of living in one place would be a violation of their human rights.
        And the “insane run-up” pertains to the land, not the structure. Vancouver’s land is not being used very efficiently under current zoning, thus the “insane run-up” refers to detached houses on large or standard lots, especially in desireable neighbourhoods, not to average condos.
        There is a reason why many families are choosing to stay in their houses and build a lane house. It offers an affordable alternative to younger generations to foot the cost of building the lane house than to look for another detached home. It would be better if the option existed to parcel off and sell lane houses separately if a family wasn’t large enough for two generations to occupy both the main house and lane house.
        Still, many people do opt to sell to spec builders who prefer to demolish everything in sight and build another house possibly with a lane house with little gain in sustainability and absolutely no gain in affordability. The word “affordability” shouldn’t be soley defined as “bringing existing prices down” but would more effectively be captured by creating more supply.
        With no available fresh land, the big answer would be to incrementally convert detached home sites into attached home sites while maintaining ground-level access. There is no reason why a group of five rowhouses couldn’t rise where two houses on adjacent end lots stood before. If the city allowed one more unit (total of six units) in exchange for avoiding the demolition of the existing houses and the recycling of most of the materials (which has additional costs), then that adds to the overal housing supply. A rowhouse would be a lot more affordable than the detached home dream everyone now laments as unaffordable and it fills the median price void between the dream and a condo.

  9. I find the idea of a means test quite laughable, especially in light of the second posted article about our “impoverished” paper immigrants. If that group of freeloaders also take advantage of this program, it would further infuriate me about that whole stinking mess. We’re not very good at establishing true wealth, at least for some of us.

  10. Is it just me or do other people find anonymous names vexing? It’s like having a conversation with someone who has a bag on their head. Very distracting.

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    Oh, you mean me? I introduced myself fully on my first post this week on Sunday … my wordpress account has the Artitectus handle associated with it, and I after that initial introduction, I didn’t think additional clarification was necessary (not even a conscious choice to not do so, simply didn’t consider it, and no-one’s mentioned it all week).
    Ian Robertson
    artitectus a-t gee mail dot commercial abbreviation
    Sufficiently de-bag’ed?

  12. I wish a speedy recovery to Gordon Price. He could credit a healthy life to that, what is certainly true. But more importantly it is an optimistic and positive attitude, which we see well alive in this inspiring post, which allows a patient to recover
    An optimistic and positive attitude, which was also the trademark of this blog too. Alas, 2016 has started with too often ill informed posts, which are most often than not, unnecessarily negative in tone.
    I write this “negative” comment under this post, because a well-known citizen, Michael Geller, seems to be unfairly singled out by an “unknown” writer, in a post “conflating” his behavior (lawfully taking advantage of a tax deferral program) to the one of a passport forgery business.
    I find this deeply concerning, and I wish this blog to recover soon too!
    Regarding the issue of property tax deferral: it pertains to a largest issue of financial advantage given to seniors, including other property tax grant, or Translink concession fare. In the light of a “booming” senior population and “new” economic realities, the discussion has some merits, but it could have gained to be better engaged.

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      My posts this last week were intended to be critical, not negative, a distinction my architecture profs were always clear to make during final reviews. I have certainly been accused of righteousness on occasion, and sometimes that comes through more strongly than I intend.
      As the tax deferral program was reported in multiple news sources, none of them parsing that the province chipped in. Honestly, I didn’t know, and while I should have looked, so should those writers. When this was pointed out, I immediately amended the post. I have spoken to Michael several times in the past, and even paid to attend at least one of his talks, and I appreciate many of his views – he does a city a good service talking about possible routes to affordable housing, and advocating for different housing forms.
      Were I to have written this again from scratch, I might have done so somewhat differently to highlight the issues you mention at the end of your comment … but please understand, there are many in my generation, and those either side of mine, who believe it is exactly as criminal that a senior could be making money off of investing instead of paying their taxes, and that it is entirely unfair that some groups of the population have received, by virtue of being born first, a golden ticket which is unavailable to those who are a generation too young. You might not agree with the degree to which generations X-Y-Z feel genuinely screwed, but please understand that the emotion is real, and in many ways entirely justified. Many commenters above, and many others who I have talked about this are quite incredulous that such programs exist at all … I don’t mind, but I do think that if you believe it is a ‘good’ to help one group, that it is also just as much of a ‘good’ to help all groups.
      I believe that tools like minimum income are much better routes to letting all ages/colors/creeds/abilities find a ‘home’ in the most stable sense of the word, also for finding ways to decouple the cost of land from the cost of housing. If I have time to actually spend sufficient time on a post to fully flesh out a full argument, I might write another post about that quite broad topic. I hope you find it as it will be intended, sufficiently critical, but not inherently negative.
      The theme of my week was effectively ‘lessons from elsewhere’, and I tried to pack a great many issues in one week, because there are so many almost great things about Vancouver, which I believe would require only trivial reconsideration of ‘normal’ and ‘possible’ to implement, and that would help get rid of the word ‘almost’. Sometimes you have to be a bit righteous to interject overcome the institutional inertia of the popular consensus.
      Thanks for reading.
      -Ian

    2. A property tax deferral is not an escape clause from paying taxes. The deferral will be repaid with interest on the sale of the home. The interest, if greater than inflation, will make up in part for the profits made on the money saved today on the deferral. Deferring property taxes is little different than deferring taxes on RRSP investments. The taxes are paid in time, and the money freed up can benefit the overall economy which in turn generates its own tax revenues.
      Not every tax deferrer is wealthy. The provincial government has every right to close loopholes and impose limits as housing prices (more accurately, land prices) rise and fall.
      There are still many people who are now living on pensions who put decades of blood, sweat and tears into their houses and raising families in them while diligently paying property taxes, and who do not ever see their house as a commodity. They are rooted in their community. Then values with their attached taxes rose well beyond their control by orders of magnitude. Deferring taxes allows them to stay in their homes until circumstances like age forces them to sell. With deferral, they have years to plan for eventualities like these.
      And to many property tax deferrers, “home” is the key word. To cavalierly suggest the state or society should excavate them from their homes and shovel them into anonymous condos is patently unfair to the things that really count in life in a city: community, neighbourhood, extended family and ethnicity in a particular locus, social economy, emotional investment, supporting local businesses, avoiding isolation, and a number of other priceless human considerations that revolve around the concept of “home.”

  13. “The interest, if greater than inflation, will make up in part for the profits made on the money saved today on the deferral.”
    Isn’t the interest rate charged to those who are plus-55 years and utilize the program 0.85%? Current inflation rate is at 1.6% and the central bank would like to see 2.0%. I don’t think there’s an ‘if’ at play here. Bluntly, are all taxpayers subsidizing the investments of 55+ homeowners using the program as an investment vehicle? Seems that we can definitively answer yes or no to that question with the data we have.
    http://www.thestar.com/business/2015/12/18/meat-vegetables-push-canadas-inflation-rate-higher.html

    1. Interest rates, over time, are not static. Also, not every 55+ person is looking to defer property taxes in order to invest. Many are looking at the savings in an extraordinary and very real tax increase on a paper number (the assessment) to supplment their limited pension income. In otherwords, their income is too limited to consider investments.
      A house is a commodity only in the minds of some people.

      1. Right. And I don’t think anyone is suggesting that every person over 55 is using the program in that fashion. But clearly some are. And it deserves a discussion that is honest and not derailed by a suggestion no one seriously seems to be making, namely that seniors should be booted from their homes if they can’t afford their taxes. So there’s that. The question your reply raises is whether we can realistically expect inflation to match or drop below 0.85%. Thoughts?

        1. Is a $2M home a right ? Can we honestly expect tax payers to support your life style choice ? A reverse mortgage is an option or a line of credit for most equity rich seniors, too ! Is a house that used to be inhabitants by perhaps 4-5 people and now by one or two the most sustainable life style choice ? Why not rent a basement suite for extra income ?

  14. The inflation rate is irrelevant. The rate the province borrows money at is the only one to, perhaps, consider.
    As pointed out before by others, the money saved is frequently spent and the economy therefore benefits. For every retired veteran, widow or widower or simply any retired couple that have heirs outside the province, there’s a good chance that deferring property taxes adds money to the local economy.
    Were this programme to not exist the local economy would benefit less, if, when the property were sold the entire proceeds were sent to beneficiaries outside the province.
    Some might be donating money to worthy causes. Others could be investing in new local ventures that might benefit society.
    It’s not a simple question to answer. Certainly not bluntly. The ramifications are multiple and multi-faceted. I know of a 93 year old that is now able to stay in their small condo, since their funds are limited.

  15. I mention the inflation rate because MB offered it up as part of the conversation. But I think we have come full circle (for me) to my original comment about reasons vs rationales vs excuses. I doubt those who aren’t using the program would take issue with helping seniors facing economic hardship or loss of housing.
    But it’s a different set of considerations to say it’s worth letting people who can afford to pay their property taxes use the program as well, because some might be using the same program to donate to worthy causes or invest in new businesses. A far more amorphous benefit to the community and deserving of attention and discussion. There may well be better and more transparent ways to encourage that kind of activity. To me, your examples are rationales for a use to which the program is ostensibly not intended, and may well find less favour with the taxpayers bankrolling the overall scheme, especially if the benefits are unquantified and their impact highly debatable.

  16. No Chris. You came around a bit but I tried to explain that there are almost infinite nuances because each situation is as unique as a fingerprint. You asked a blunt question. The answer is, no.

  17. This was my question:
    ‘Bluntly, are all taxpayers subsidizing the investments of 55+ homeowners using the program as an investment vehicle?’
    Your position is that the answer is clearly No?
    (Really seeking clarity here rather than being contrary)

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