Says Ian, on this article by Suzanne Moore in the Guardian:
What is Vancouver now but a place to stash Cash. I bet plenty of money siphoned through Panama, as shown by the Panama Papers leak, will now be parked in Vancouver. See also those who buy million dollar homes, while claiming no/little income, so as to not only pay no local tax, actually receive poverty assistance too (I wrote about that bit, but everyone got too caught up in Michael Geller’s tax avoidance to get fussed on everyone else’s).
Quote from the Guardian:
Making money is not a vice, but refusing to contribute tax is.
” this wealth bubble is a private-members club because it is, by nature, profoundly antisocial. Tax-dodging, aversion or whatever polite term we use, is premised on the free movement of money. The social consequences of this, be it the movement of migrants or the closure of industries, is someone else’s problem.”
Yes tax evasion is illegal. Tax avoidance is not. Tax avoidance is arranging one’s affairs to minimize taxes, legally.
Affluent immigrants do that in Vancouver, IN SPADES. They buy the biggest house they can afford, plus one per child or spouse. Then get free ESL, education and healthcare, and no capital gains tax on the house/condo. And no income taxes as the main bread winner (usually husband) declare his income in another country. That is rational behavior, or tax avoidance.
Foreigners also buy the choiciest rare real estate (homes in W-Van, Point Grey, Richmond, water front lots, ..) with their legal (or sometimes illegal, hard to trace) cash.
As such we need to – as a BC society – monetize this better and tax incomes less, but consumption (the new Jag) and real estate more., Perhaps even eliminate or cap capital gains taxes on homes, say to $1M. Then we actually have the cash to build transit, affordable housing and hire more nurses and teachers. Our current income tax focused approach (over 50% at times) is the wrong approach.
It is interesting to consider the new chinese/canadian money/people repatriation agreement, and see what that might mean for lots of those ‘took more than $50k out of china illegally’ houses.
The two biggest issue is undertaxation of real estate, especially SFH (single family home) and too much SFH vs denser zoning
re 1) In the US property taxes are far FAR higher and you can deduct interest and property taxes from your taxable income, essentially cutting in half holding costs. This benefits locals vs foreign owners, whereas in Canada we treat locals and foreign owners the same. It is gold for foreigners to own homes here.
re 2) In addition we do not allow upzoning, even to townhouses in 90%+ of our neighborhoods, so instead of allowing 500,000-$1M townhouses or row houses we allow only $3M+ SFHs.
==> As such, much of this current unaffordability is self-inflicted and can be fairly easily changed: tax properties more and give income tax filers or seniors a credit, and allow city wide upzoning.
Good insight here on these two topics by UBC professor Thomas Davidoff: http://www.kelownacapnews.com/news/395022891.html