The B.C. government took in more income tax, sales tax and property transfer tax than it budgeted last year, leading to an operating surplus of $730 million for the fiscal year ended March 31.
The focus is on the government’s windfall from a hot real estate market, with property transfer tax revenue up $468 million over the previous year, according to audited year-end figures released by Finance Minister Mike de Jong Thursday.
The current B.C. budget had forecast a decline in property transfer tax revenue this year, but de Jong said those revenues are running significantly ahead of what was expected in February. When the B.C. legislature convenes for a rare summer sitting next week, de Jong said there will be further indications of how the government will use its extra revenues to deal with a housing market that has become unaffordable for many people in urban areas.
The government has committed to allow Vancouver to impose a new property tax on vacant homes, in an effort to make absentee owners sell them or offer them for rent. Victoria has indicated an interest in similar taxation power, but de Jong said changes to the Community Charter that governs cities outside Vancouver won’t happen this summer.
If there is a consensus among local governments at the Union of B.C. Municipalities convention this fall that a vacant residence tax is needed, the province will likely allow it, de Jong said. But he repeated his view that the best answer to rising home prices and a shortage of rental accommodation is to build more of them.
“Let us not make the mistake of assuming that government is going to tax our way out of the challenge people are facing when trying to buy a house,” de Jong said.
NDP leader John Horgan said B.C.’s surplus is despite a slump in resource revenues, and instead is based on $200 million from increased Medical Services Plan premiums and a “massive increase” in property transfer taxes.
“And as we’ve seen in the past, blackjack, booze and bungalows is not a way to build a sustainable economy,” Horgan said.
For 2015-16, the number of properties sold in B.C. jumped 18.6 per cent over the previous year, and the total value of sales was up 20.9 per cent.
The finance ministry estimates the total value of real estate sold in 2015-16 was $93.67 billion, with nearly $80 billion in residential properties and the rest commercial.
B.C. finished the fiscal year with economic growth of three per cent, more than triple the national average. Population rose and retail sales increased by six per cent.