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Speculation Tax Dashes One Man's BC Dream

'We are part of the problem… but I don't think we are the ones to blame.'

By Andrew MacLeod 26 Apr 2018 | TheTyee.ca

Andrew MacLeod is The Tyee's Legislative Bureau Chief in Victoria. Find him on Twitter or reach him here.

Fernando Estrada would have liked to stay in Victoria but instead he sold his house this week because of the provincial government's new speculation tax.

"I'm really sad because we have to leave," Estrada said, taking a pause at a scenic lookout on a Tuesday afternoon bike ride. "I really enjoy being here. I really feel sad because I have to sell my house. I actually just sold it yesterday."

Estrada and his family came to Victoria three years ago from Cabo San Lucas, Mexico, where he designed outdoor lighting for high-end homes. They spend six months a year in the city, the maximum they are allowed to be in Canada on tourist visas, he said.

His daughter finished high school in the city and is now studying sciences at the University of Victoria.

Estrada first bought a home in Oak Bay, then moved to another in the Maplewood neighbourhood in Saanich. "We bought it because of the garden," he said, describing it as a "dream house" with a large lot. They renovated, and it is "really a place we want to retire."

But the speculation tax the government announced in February has changed Estrada's thinking. Once fully implemented in 2019, non-citizens like Estrada will have to pay two per cent of their property's value in tax.

On a house worth $800,000, that will mean a bill of $16,000 a year.

"I think it's not that fair, especially if you're already here," Estrada said. "What I feel it's saying is we don't count. Because we don't vote, they don't care. They can punch on us because we don't have any voice, so they can do whatever they want to us and nobody will feel sympathy."

Despite such concerns, Premier John Horgan says the tax is needed as part of the government's plan to make housing more affordable.

"Our intention was to dampen demand, to get speculation out of the marketplace so that people could have housing that they could afford," he said. "That was what we heard loud and clear during the election campaign. That is why we have so many housing related bills on the order paper, because we believe there's not one solution to the challenges we face, but there need to be many solutions."

So what would Horgan say to someone like Estrada who now feels unwelcome in the province?

"I say that British Columbia is a great place to live and if people want to come and live here I welcome them," the premier said.

Finance Minister Carole James said the speculation tax is one piece of the government's 30-point housing plan. The government introduced legislation this week to allow municipalities to zone some areas for rental housing only and to ensure people pay fair taxes when they flip pre-sale condos.

"I recognize there are people who are going to be concerned when you bring in change," James said. "But if I take a look at the housing crisis in British Columbia, if I take a look at the pressures that families are facing, that seniors are facing, that individuals are facing, we have a responsibility as government to address the housing crisis."

The government is monitoring the effect of its actions, as well as those taken by the federal government, she said.

"When you take a look at the entire plan, we believe it's going to begin to address the housing crisis," she said. "This is a crisis in British Columbia. It requires bold action and that's what we're doing."

BC Liberal Leader Andrew Wilkinson said the speculation tax sends people the wrong message.

"The speculation tax is a very blunt instrument that is antagonizing a lot of people who feel their roots are in British Columbia and now they feel like they're being sent off because their assets are slowly being taken away from them by the NDP," he said.

"If people are liquidating their assets and getting out of British Columbia because they no longer have confidence in it, the NDP need to think twice about that."

The tax has led to $1 billion in construction projects, including 250 rental units in Victoria, being put on hold or cancelled, Wilkinson said. "The NDP are showing their blunt approach to taxation is so crude that it's actually having the opposite effect on affordability. It's driving up prices through reduced access to housing because the number of available units are going down."

For his part, Estrada said low interest rates are a much bigger driver of high prices than foreign buyers like him. "I understand we are part of the problem in the market, let's say, but I don't think we are the ones to blame," he said. "It's not fair to blame just us."

He said he may not be paying income tax in B.C., but he and his family pay provincial and federal taxes whenever they spend money, including on renovating their house. "We are here, we are spending our money, we are living here... We put a lot of our money into the economy."

Estrada said he thought they might move to Portugal where there is a Golden Visa program that gives legal residency to people who spend at least €500,000 Euros ($781,000 Canadian) on a property. Immigrating to Canada is harder, especially for people like him who are retired or semi-retired, he said. "I don't want to work. I want to enjoy life, ride my bike every day."

After five years in Portugal he would be able to apply for a permanent residency. "They welcome people," he said. "They know that you will put money into the economy."  [Tyee]

Read more: BC Politics

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