Wednesday, May 3, 2017

Inequality in Home Owner Grant and School Property Tax. Langley City affordable housing leader.

Metro Vancouver, our federation of local governments in the region, recently released a report on property tax in Metro Vancouver.

Property tax system needs reform: Metro Vancouver homeowners shoulder tax burden. Select infographic to enlarge.

A little more than 50% of property tax is controlled by local municipal governments in Metro Vancouver, the remainder of property tax is controlled by the provincial government and other agencies.

Because of how the property tax system currently works, Metro Vancouver property owners end up paying more property tax than the rest of the provinces on a per capita basis.

For example, provincially-controlled school tax in Metro Vancouver covers 61% of the expenditures of school districts in our region. In the rest of BC, school tax cover 31% of the expenditures of school districts outside of Metro Vancouver.

The Metro Vancouver report authors also found that the lion’s share of property transfer tax comes from Metro Vancouver, and the Home Owner Grant cut-off level doesn’t reflect the value of property in our region.

The Metro Vancouver report authors defines some of the problems with property taxation system inequality, and proposed some solutions.

When it comes to the Home Owner Grant cut-off, the recommendation in the report is to have the province shift away from a single threshold throughout the province, to a system where the cut-off is unique in every regional district to ensure that 91% of residential properties on average in each regional district would qualify for the grant.

A similar idea is proposed for school property tax. The recommendation in the report is to have the province adjust the school property tax rate in each community to ensure that the school property tax covers around half of the expenditures of each school districts.

For the windfall revenue from the property transfer tax received in Metro Vancouver, the recommendation is that the province use this unbudgeted revenue to invest directly back into regions for local government infrastructure, transit, and affordable housing.

One table in the report that stood out to me was the total residential properties by each municipality that would quality for the 2016 Home Owner Grant in Metro Vancouver. In Langley City, 99.7% of all residential properties would qualify for the Home Owner Grant. This is the highest percentage in the region.

Home Owner Grant eligibility by municipality in Metro Vancouver (2016). Select table to enlarge.

This is no surprise as Langley City has the highest percentage of land dedicated for apartments and rowhouses in the region. We have been redeveloping our older single-family neighbourhoods in the north side of our community to provide a variety of housing types.

While adjusting the Home Owner Grant cut-off will help give some people a tax break, it really doesn’t make housing more affordable in the region. The key to providing affordable market housing is by making the most of the current urban land base.

In Langley City, we have been slowly increasing our population and housing variety for several decades by redeveloping older single-family areas with care. When I look at some other communities in our region, the same can’t be said.

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