The proposed speculation tax has placed a crowd of uncertainty over the residential construction industry in Kelowna, West Kelowna, Lower Mainland and southern Vancouver Island.
But it is not the only tax hindrance damaging potential job creation growth in home construction and renovation, says Les Bellamy, president of the Central Okanagan chapter of the Canadian Home Builders’ Association, which represents 260 members in the residential construction industry from Peachland to Vernon.
Bellamy offered some suggestions to the provincial select standing committee on finance and government services forum held in Kelowna on Thursday, which sought public input on potential spending priorities for the 2019-20 provincial budget.
Bellamy, chief executive officer and owner of Kelowna-based Bellamy Homes, said his industry is very concerned about the speculation tax, saying just the potential of its introduction next year has already cancelled more than $400 million in construction projects.
“This doesn’t just affect the home builder and their homeowner. It impacts the 60 skilled trade companies and their employees that contribute to a new home, and the local suppliers they purchase materials from,” Bellamy said.
He said the industry remains in the dark about what the status is of the speculation tax implementation in the 2019-20 budget.
The government has so far confronted opposition to the tax by reiterating its support for the tax as a revenue generating option to fund providing more affordable housing. A final decision is expected to be announced at some point this fall.
Bellamy also called for the province to introduce new tax credits for energy efficiency upgrades in existing homes, to restructure the Property Transfer Tax (PTT) burden on home buyers and to decrease the annual housing taxes collected on new housing projects.
He noted homes built before 1985 use 100 per cent more energy than a home built today, saying research indicates ever dollar invested in an energy house retrofit yields four to seven times more energy savings than a dollar spent upgrading a new home.
He suggested the policy structure for offering such a tax credit already exists as British Columbia homeowners can deduct the costs of renovating for seniors or individuals with disabilities.
“Adding energy efficiency to the existing policy is a natural next step,” Bellamy said.
He said the tax credit scheme is preferable to the direct financial grant incentives announced this week by the province because it would be a voluntary program and also help fight the underground economy in the renovation sector.
“Homeowners and housing operators will have to work with a contractor that will provide receipts to receive the tax benefits.”
For the PTT, Bellamy’s association calls for the first-time home buyer threshold to avoid the tax be increased from the current $500,000 to $750,000, and the two per cent PTT threshold be increased from $200,000 to $525,000.
“When the PTT was first introduced, it was a luxury tax, ” explained Bellamy. “Now, many properties are priced well above the $200,000 threshold. This measure would help all consumers for both new and existing homes and is an immediate way to decrease the tax burden on British Columbians.”