Just watched Carol Taylor talking about the budget consultations that are happening around the province. Interesting question about the property transfer tax.
A while back Ms. HHV unfortunately owned a property she never lived in. We now no longer qualify for the property transfer tax exemption. That tax is fairly unique in BC. It doesn't exist in Alberta.
It works like this: you sell your home and buy a new one. The buyer pays the transfer tax. The tax is 1% on the first $200,000 and then 2% on the rest. What does that look like for us?
Condo max purchase would be around $225K = $2500 in property transfer tax. Lot of money sure. But is it going to keep us out of the market? Not likely.
House max purchase would be around $425K = $6500 in property transfer tax. Lot of money, more than our car is worth. Is it going to keep us from buying? No.
The tax goes to the province. It's worth about $1 billion per year in revenue. The province is running a surplus right now. Should we get rid of the tax and try to make housing a bit more affordable? ABSOLUTELY NOT.
I'm not a fan of lowering consumption taxes. Why? Because usually what happens, especially on big ticket items, is that the tax discount just gets priced into the actual product offering.
Say the province drops the tax. You go to a Realtor to list your house. She says to you, great timing, they just dropped the transfer tax, now is a great time to take advantage of some new buyers in the pool. Price the discount in: you were going to list for $425K, list it for $435K and see what happens.
If they want to lower taxes, they should pick areas of the economy that need incentive, like education, research and technological innovation. Education, to me, is an investment. If you can write off the interest on a loan for your RRSP or non-registered investments, why can you only write down 17% of the interest you pay on a student loan? Seems to me that would be better tax policy than giving home sellers more on their end of the real estate transaction. It would also have positive impact on the budget long-term, not negative.
I believe we are over taxed. But I also believe we need to support certain fundamental government-only businesses like health care and education. We can allow some privatization in these spheres; we can also allow some value-added, paid in cash options. But unlike the real estate market, I believe our society should guarantee that no one ever finds themselves priced out forever when it comes to medical care and education.