Spec tax bad for Peachland?
Trevor Nichols - Apr 12, 2018 - Biz Releases

Image: Contributed

As ire in the Okanagan continues to build in the face of the province’s proposed “speculation tax,” local communities that won’t be directly hit with the tax are worrying it will even hurt them.

In the Okanagan, both Kelowna and West Kelowna have been specifically targeted by the tax. The municipal governments have said it will drive investment and development out of their cities, and some believe that investment could move instead to communities just outside the boundaries of the tax.

However, leaders in at least one of those communities say the exact opposite appears to be happening.

Elsie Lemke is the chief administrative officer at the District of Peachland.  She says she’s very concerned about the impact the tax could have on the district.

“At first blush it might appear that this could push investment towards us. We do believe there’s some caution around that, that it’s more likely to have a (negative) ripple effect,” she explains.

Lemke says that even though the tax hasn’t officially come into effect yet Peachland has already directly felt its “chilling” effect on potential development.

She says the district recently heard from one developer who pulled his project when he was only weeks away from putting it in front of council.

“He has now advised us that, directly as a result of the provincial government, he has put his plans on hold,” she said.

Lemke said that while the developer didn’t specifically mention the speculation tax he did single out government actions, and the district presumes the tax was a significant part of his decision.

She said many developers appear apprehensive that it’s “just a matter of time” before the tax is extended beyond Kelowna and West Kelowna to the entire Okanagan Valley.

“This is obviously extremely disturbing to us, and it’s a concern that this is the ripple effect we’re starting to feel,” she said.

Peachland council appears largely to agree with Lemke. During its last meeting councilors expressed their disapproval of the tax, and toyed with the idea of supporting West Kelowna and Kelowna in their opposition to it.

Finance Minister Carol James has said the purpose of the tax is to target “people who are treating our housing market like a stock market,” leaving their homes empty for large portions of the year, effectively taking them out of the housing stock.

Forcing homeowners to either pay a hefty tax on the value of their home or put it back on the market should, in theory, increase housing supply and drive down the overall price of homes.

Lemke said the district hasn’t yet looked thoroughly into the tax’s possible impact on the residential housing market, but said she’s worried the tax could do precisely the thing it’s intended to prevent.

“Certainly if it puts more houses on the market there’s some potential there (for the cost of homes to go down), but we don’t know if that’s going to happen,” she said. “If that doesn’t happen and there’s less housing on the market because there’s less new development, then it could actually have the opposite effect.”


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