Vancouver’s Perverse Taxation

These are my speaking notes against Council’s motion to directing staff to produce a budget with a zero percent property tax increase. The motion ultimately passed, and you can read more coverage about it here.

If you’re looking for further reading, Russil Wvong has some deeper discussions of property taxes here and here.

A clip will eventually appear here. Until then, here is a link to my comments from the Council livestream.

I recognize that Council’s mind is made up on this issue, and I get it. Nobody wants to raise taxes in an election year. So if anybody has any urgent emails they need to reply to, this would be the time to do it – I promise I won’t be offended. You’ll only be missing a riveting discussion of Vancouver’s tax system.

Because Vancouver’s tax system is bad. It’s a great example of perverse incentives that contributes to our housing crisis.

Oh, right, have I mentioned we’re in a housing crisis?

Vancouver has the lowest residential property taxes in the city. The number I found was 0.28 percent, a country mile behind the next lowest, Victoria, at 0.44 percent. For context, the two largest cities in Canada, Montreal and Toronto, tax at 0.59 percent and 0.72 percent respectively.

So our residential property taxes are a fraction of those in every other city in Canada – and yet we still have to provide services like the major city we are. So how do we do it? By squeezing every other revenue tool we have, including business taxes and development charges.

And that’s where we come to the perverse incentives I mentioned. Because residential property taxes are so low, and development charges are so high, it is dramatically more profitable to buy a piece of land and sit on it than try to build something on it, or start a business on it. Because why go through the long and expensive process of permitting and public hearings when you can sit in your single-family house, watching the grass grow behind your white picket fence, and make more money that way?

That is to say: Our tax system rewards owning land and punishes doing something with it. That’s perverse. It’s a major reason why we have so much trouble building desperately-needed new housing or growing our local economy.

Like I said, I know Council’s mind is made up on this. I know how this vote is going to go. But as a citizen, I oppose this motion. Thank you for your time.