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The story is similar for a $4-million property, which in B.C. could be subject to a surtax on the provincial portion of property tax (known as the “school tax”). The change announced in February’s provincial budget adds a 0.2-per-cent surtax on the value between $3 million and $4 million, and 0.4 per cent on value above $4 million. Adding new brackets at the high end is something the Canadian Centre for Policy Alternatives has long recommended to make the property tax system more fair.

In Vancouver, property taxes on a $4-million property were about $10,220 in 2017, with the surtax this would rise to $12,220. The taxes on a $4-million property in Toronto are much higher at $18,693.

Even after incorporating B.C.’s new surtax on high-end properties, taxes on a $4-million property are still more than 50-per-cent higher in Toronto than Vancouver.

Some will insist that property taxes should be compared not on actual property values, but instead different values across cities should be used since typical prices are so much higher in places like Vancouver.

One little-discussed effect of having low property tax rates is that it encourages holding residential real estate as an investment. Most investments have a “carrying cost”, and low taxes mean the carrying cost for property investment in Vancouver is very low, making investing in property attractive compared to holding other types of assets.

For example, if you invest in mutual funds in Canada you will typically pay a carrying cost of about two per cent annually in investment management fees. Compare that to the nearly eight-times-smaller 0.26 per cent carrying cost of property taxes in Vancouver. Residential property values have risen steadily in Vancouver — almost tripling since 2005. When you combine very high investment returns and very low carrying costs, it’s clear why this makes an enticing investment.