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Keith Baldrey: Tax increases aggravate B.C.’s affordability problem

Hikes by multiple levels of revenue-hungry government help keep solution out of reach
Tax increases are helping propel the continuing decline of housing affordability in British Columbia. | Burnaby Now files

Governments at all levels ― and politicians everywhere ― have been grappling with the “affordability” issue for several years now, but there is mounting evidence that the problem is getting worse and not better.

For example, numerous city and municipal councils are raising property taxes by amounts not seen in years. In Metro Vancouver, at least 11 councils have approved increases of more than five per cent and four are in double digits.

Surrey is tentatively looking at an increase of 12.5 per cent, while Vancouver is raising taxes by 10.7 per cent. The larger-than-usual hikes are not confined to the Metro region, as the city of Victoria will see a nine per cent increase and Prince George is looking at an eight per cent raise.

There is a chance some of these increases may be pared down if a municipality opts to use the one-time windfall coming its way courtesy of the provincial government’s new $1 billion Growing Communities Fund.

The money is significant. Surrey is getting almost $90 million, while Vancouver is getting $49.1 million. Pretty well all towns are getting at least a half million dollars. About 160 municipalities and 27 regional districts are receiving an average one-time grant of several million dollars.

But the key term is “one-time.” If a municipality rolls this funding into its operating budget to keep tax increases down, it will have to find that money in the next budget year if it wants to keep funding those services.

In other words, a municipality may just be kicking the proverbial can down the road for a year before having to bring in a bigger tax hike.

The B.C. government wants the municipalities to instead invest the one-time grant in infrastructure projects: things like water and sewer lines as well as new housing.

However, municipalities are not the only level of government passing on larger than usual tax hikes these days.

While the B.C. government’s recent budget generated a lot of headlines regarding spending, there was also one tax increase included that will eventually take quite a bit out of wallets.

I’m referring to the carbon tax, with a new tax regime mandated by the federal government.

Page 80 of the provincial budget lays out a “new carbon pricing model” that shows annual increases of $15 per tonne, taking it from the current rate of $50 per tonne to $170 per tonne by 2030. (The next increase is set for April 1.)

This means more than a tripling of the tax in less than 10 years. The tax on gasoline at the pump will jump from 11 cents a liter to 37 cents a liter over this time.

So far, the carbon tax, first introduced in B.C. in 2006, has not resulted in B.C. achieving anywhere near the targets for reductions in greenhouse gas emissions, and it is an open question whether it will help meet the ambitious targets set for the future (a 40 per cent reduction below 2007 levels by the year 2030).

Nevertheless, the tax (which was originally revenue “neutral,” as it was first tied to an income tax cut) has become a huge part of the provincial government’s budget (carbon tax revenues are projected to increase by more than $1 billion in three years). So it is here to stay.

As the cost of living and the cost of fighting climate change keeps delivering big numbers, the affordability riddle will continue to be more than challenging to solve.

Keith Baldrey is chief political reporter for Global BC.

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