Minister of Finance Mike de Jong has made it clear that there’s no room in the provincial budget for new spending. In fact, that’s been the message of his office for several years, and BCREA respects this fiscally-prudent approach.
But fiscal prudence isn’t just about saying no; sometimes, a strategic yes is in order.
BCREA consistently and regularly recommends that the provincial government minimize the negative impact of the Property Transfer Tax (PTT). The PTT places an unfair burden on homebuyers, and is by far the highest provincial property transfer tax in the country. While BCREA understands the government’s objective to balance the budget, adjusting the PTT could stimulate additional activity in the real estate market, encourage spending related to property transactions and would certainly demonstrate an understanding of the important role of real estate and property owners in the provincial economy.
Since it was introduced in 1987 as a luxury tax, the PTT has always been applied in the following way: 1% on the first $200,000 of the fair market value of a property, and 2% on the remainder. This static structure is entirely at odds with BC’s dynamic real estate market.
As an initial measure to improve the fairness of the PTT today and in the future, BCREA strongly recommends the provincial government index the 1% threshold of $200,000, and then make adjustments annually.
The impact on provincial revenue would be minor, and the goodwill from homebuyers and real estate sector stakeholders significant. This is a strategic yes.