Realtors, prospective home buyers and sellers, and others can stop hoping that B.C.'s property transfer tax (PTT) will be discontinued.
It's never going to happen. The reason? It's a major cash cow for the provincial government, needed to balance the budget and there's nowhere else to raise that large chunk of cash without raising personal and corporate income taxes, and that's not on for the BC Liberals.
Premier Christy Clark is proud of what she says is the country's lowest tax rate so this kind of special tax, that only hits buyers of property, is not going anytime soon, even though, as Clark herself says, it's a drag on the economy.
Here's how it shakes down, according to a recent article by Black Press regional reporter Jeff Nagel: The PTT consists of 1% charged on the first $200,000 of a property's value and 2% after that. That means for a $600,000 house, $10,000 is due every time it changes hands.
This handy calculation is not just a painful hit to the pocket book when purchasing a home - it's a major source of revenue, generating $1.04 billion in 2014.
Don't think that's a lot of cash? Well, consider that the PTT raises significantly more than forestry - formerly the province's number one industry - which only brings in about $757 million; or natural gas royalties, which at $542 million, generate about half of what the PTT does.
These revenue numbers are interesting for another reason: They show how important real estate is to B.C.'s ongoing financial solidity. Without a strong real estate market, helped, no doubt, by record-low interest rates, the provincial coffers would be much poorer.
The province also benefits from rising property values and while there are exemptions for family transfers and first-time home buyers, it appears the property transfer tax is a necessary evil that raises millions to cover basic provincial services. A strong real estate industry and increased property values, especially in single-family homes, are therefore critical to government budgeting - at least for now.
So unless the much-vaunted LNG industry or another economic sector can provide a windfall, the PTT is here to stay.
