VANCOUVER—As the debate over a tax increase for homes worth over $3 million continues to rage in Vancouver’s Westside neighbourhoods, a lobby group for young people is arguing Canada should go further in taxing property wealth while reducing income taxes.

Paul Kershaw, a UBC professor and founder of Generation Squeeze, has launched a campaign calling for a “tax shift” from incomes to property wealth. He argues the $3-million threshold is actually too high; instead, he says, a one per cent surtax should be charged on all homes valued above $1 million, meaning the owner of a $1.25 million home would pay an extra $2,500 a year.

That new tax could raise $3 billion a year, money that could be used to cut income or sales taxes or spent on more social services, Kershaw argues. He calculates that the tax would apply to 20 per cent of B.C. homeowners.

Kershaw agues the shift is needed because Canadians under age 45 earn less and face a much wider gap between incomes and home prices than their parents did 40 years ago. And because of Canada’s aging population, working-age Canadians are now paying a greater share of their taxes to medical costs for seniors. Kershaw calculates that “the amount paid for medical care used by citizens over age 65 by a typical young British Columbian is 46 per cent to 62 per cent more than members of the aging population paid for the same program when they were young adults.”

Kershaw argues reducing income taxes while increasing property taxes on high-value homes would make it less attractive to treat homes as “commodities” and would cool overheated real estate markets.

To take the sting out of property tax increases for homeowners who are “cash poor” but property rich, Kershaw proposes that the provincial governments allow all property owners to defer paying the increased property tax until the home changes hands. In B.C., homeowners over the age of 55 and parents who are supporting a child under the age of 18 can already defer their property taxes.

Kershaw isn’t the first Vancouver-based academic to propose lowering income taxes while increasing property taxes: Tom Davidoff, an economist at UBC’s Sauder School of Business, has long called for such a shift, arguing that B.C.’s relatively low property taxes and high income taxes make it more attractive to own property here as an investment than to live and work in the province.

Rhys Kesselman, a professor of economics at Simon Fraser University, has proposed a progressive property tax, meaning that owners of high-value properties would pay a higher tax rate.

In its February budget, the B.C. government introduced a speculation tax on second homes, adopting an idea that Davidoff had championed: a speculation tax targeted towards people who don’t live or pay income tax in B.C. Property owners can avoid paying the tax if they rent the property out.

The B.C. government also introduced a higher rate for the “school tax” (the provincial portion of property tax): owners of properties worth between $3 million and $4 million will pay 0.2 per more, while owners of properties over $4 million will pay 0.4 per cent more. The increase affects nearly every single-family home west of Cambie St., where rapid price increases starting in 2015 pushed even modest properties into the multi-millions.

NDP MLA David Eby, who represents Vancouver-Point Grey, cancelled a town hall meeting planned for May 1 to discuss the school tax increase out of concerns angry protesters would make the event unsafe.

Those opposed to the surtax say it will force them to move out of homes many have lived in for decades, and say they don’t want to defer their property tax as they don’t want to carry a debt.

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Large red and black signs protesting the tax are now commonplace in the affluent Westside neighbourhoods of Shaughnessy and Point Grey, while some homeowners turned their ire on Davidoff — the perceived architect of the NDP government’s new taxation policies – and called on UBC to reign in the outspoken economist.

Eby’s town hall meeting has since been rescheduled for June 4.

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