The University of British Columbia finds Vancouver’s expensive homes pay very little tax

According to a recent survey by the University of British Columbia, Sauder School of Business, Vancouver residents who own expensive homes are paying very little in TAX.

“They’re sitting on some of the most expensive real estate in North America, but owners of the priciest properties in Vancouver are paying extraordinarily little in income tax,” said UBC Sauder associate professor Thomas Davidoff, who co-authored the study with Dr. Paul Boniface Akaabre from UBC’s school of community and regional planning and Dr. Craig Jones from UBC’s department of geography.

In Vancouver in 2018, the top 5% of homes had an average price of $3.7 million, with the medium tax of $15 800 paid by owners, which equates to 0.42% of their home value. The study also found that owners with homes valued at $984,000 paid just 1.37% tax on their homes. “At the very top, you see this outrageous pattern. It’s hard to characterize any other way,” Prof. Davidoff said. “That people who own $3.7 million-dollar homes pay that little in yearly income tax is a total failure of progressivity.” Toronto appeared to be more reasonable, where the medium value of the top 5% of homes was $1.8 million, and the taxes were $30 700 or 1.69% of their property value which is more on par with other North American cities.

Vancouver and Toronto have higher tax rates for those with a higher income through income tax, property tax, or any other tax on wealth. British Columbia’s average income tax rate for higher income brackets is 40%. On average, the more luxurious homeowner in greater Vancouver pays 0.42% of their home value. Professor Davidoff indicated that if policymakers implemented a minimum income tax rate of 1% of the property value, it would increase the average of what higher-income owner is currently paying. Should Vancouver generate $25 000 from 30 000 expensive homes, this could amount to $750 million, representing only one-half of the top 5% of properties.

Considering the lower-income property owners, Professor Davidoff feels there needs to be more evidence that long-time homeowners make up a large percentage of the lower-income tax. The tax could be limited to anybody under sixty-five to prevent lower-income senior citizens from being affected. Instead, the value could be based on the original purchase price rather than the current market value.

With a new Premier in British Columbia, new Mayors in Vancouver, and the metropolitan areas, the public could be more willing to accept new suggestions and long-term plans.