Vaughn Palmer: B.C. NDP signals continued support for homeowner’s grant

Vaughn Palmer
The Vancouver Sun

Opinion: House-value threshold for homeowners’ grant matches increase in B.C. home values as NDP stick by promise to not tinker with 65-year-old tax break

B.C. Finance Minister Selina Robinson announced last week that homeowner’s grant would apply to principal residences with assessed values of up to $1.975 million. Photo by Selina Robinson Minister of Fina /PNG

VICTORIA — Finance Minister Selina Robinson started the year by increasing the eligibility threshold for B.C.’s homeowner grant by 22 per cent, ensuring the decades-old break on property taxes will continue to apply to nine out of 10 homeowners whether they need it or not.

Last week’s announcement means the basic grant of $570 will apply to principal residences with assessed values of up to $1.975 million, up from last year’s threshold of $1.625 million.

The increase, reflecting this year’s average 22 per cent increase in property assessments, was necessary to keep pace with the NDP government commitment that 92 per cent of all residential properties qualify for the grant.

The $350,000 increase in the threshold was the second largest in dollar terms for the homeowner grant (HOG), exceeded only by the $400,000 boost in the last year under the B.C. Liberals.

The latest surge, derived from the year-over-year increase in assessed values for residential properties as of last July 1, showed that the New Democrats have made limited progress on their election promises to improve housing affordability in B.C.

Still, there is no reason to expect the NDP to respond favourably to calls for the government to reform or abolish the HOG — or “hog” as critics prefer — and use the savings to fund other, more needy causes on the housing front.

The near universal aspect of the grant has drawn increased criticism in recent years, including from two former NDP ministers of finance.

Four years ago, former NDP finance minister Paul Ramsey was part of a government-appointed tax panel that branded the grant as “inconsistent with principles of progressivity, administrative efficiency and fairness.”

The panel recommended it be abolished in favour of tax credits for homeowners and renters, means tested on income and phased out completely for the highest earners.

The New Democrats declined to incorporate the recommendation in their 30-point plan to improve housing affordability.

Then last summer a federal-provincial commission chaired by another former NDP finance minister, Joy MacPhail, condemned the grant and recommended the savings be used to fund social housing.

“The report is not intended to actively discourage home ownership,” the panel insisted. “Rather the focus of the recommendations is to achieve more equitable treatment of renters relative to homeowners.”

But within an hour of the release of the MacPhail report, Robinson rejected the call.

“I can absolutely assure the member that we are not interested in making any changes in the homeowner grant,” she assured Opposition MLA Mike Bernier in answer to a question posed in the legislature.

She could hardly do otherwise, having earlier in the year assured the legislature repeatedly that the New Democrats had no designs on the grant.

It happened during debate on legislation that saw the Finance Ministry take control of the grant application process from municipalities.

The shift was undertaken to reduce costs to local government and add “rigour to grant administration to help fight tax evasion, reduce fraud and ensure people are paying the right amount of tax,” according to Robinson.

The province also required grant applicants to provide, for the first time, their social insurance numbers — SINs in taxpayer parlance.

The Opposition, ever suspicious, wondered if the move were a prelude to the government clawing back the grant in whole or in part or using the tax numbers for means testing.

Far from it, insisted Robinson.

“The social insurance number is a common identifier for many tax programs,” explained Robinson. “This is not an unusual component of making sure of eligibility for programs and using it to identify which citizens or permanent residents are making applications.”

The grant itself “is part of affordability,” so far as the New Democrats are concerned.

“I can confirm that there is no intent to change the homeowner grant,” said Robinson, repeating the line several times.

She went on to pay tribute to the historic nature of the grant, a mainstay of tax relief for homeowners since it was created by premier W.A.C. Bennett in 1957.

“What’s before us is a grant that has existed for decades,” Robinson acknowledged. “Again, this legislation before us is not about changing the grant. It’s just about where it’s going to be administered.”

The New Democrats have other grounds for hesitating, recognizing that assessed values do not necessarily equate to either wealth or affordability for some homeowners

Some of those $2 million grant-eligible principal residences are owned by younger people struggling to pay huge mortgages and seniors on fixed incomes protecting their equity so they can pass it on to their children and grandchildren.

While increasing the eligibility threshold, Robinson has left the grant structure unchanged.

The basic grant is $570 for residents of the Metro Vancouver, Fraser Valley and Capital Region Districts.

The entitlement increases to $770 in other parts of the province. Seniors and persons with disabilities are eligible for a $275 top up to the grant, wherever they live.

Means testing, regional thresholds and other suggested reforms would mean tinkering with a near-universal tax break that has been baked into the expectations of homeowners for 65 years and counting.

No wonder the finance minister, speaking for the NDP government, declared the grant off limits with a kind-of “read my lips” declaration on the floor of the legislature.

Not likely could Robinson repudiate those words without undermining her credibility on other finance, budget and taxation matters.

vpalmer@postmedia.com

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