The New NDP Tax Math:
Tax on Tax on Tax on Tax on Tax on Tax on Tax = Tax7
The NDP is pleased to announce 7 new taxes for West and North Vancouver residents to enjoy. They are:
- School tax
- Personal income tax
- Carbon tax
- Payroll tax
- Speculation tax
- Foreign buyers tax
- Higher municipal taxes on real estate
Based on history, nobody should be surprised when the NDP raises taxes — but seven times? They have big spending plans, and the money has to come from somewhere.
For example, day care, toll-free bridges and more affordable homes for everybody. That’s expensive. But their solutions inevitably revolve around taxes.
Here’s how the NDP announced their housing affordability plan: They are increasing the supply of housing by taxing it. More specifically:
They are “stabilizing” the housing market by loading new taxes onto “speculators,” increasing the foreign buyers’ tax, curbing demand and improving security for renters – so that tenants are harder to dislodge. A new “school” tax seems to be intended to drive out seniors living on fixed incomes who have been sitting on houses with inflated value, so that younger people could move in. (No mention of where those seniors are supposed to go.) For us locally, it boils down to an NDP plan to achieve “affordability” by giving a good whacking to the home owners of West and North Vancouver.
Let’s detail how, under NDP’s Budget 2018, everybody on the North Shore will pay higher taxes seven different ways:
- “School Taxes” are going up. Please note this has nothing to do with financing our schools which, if anything, are short-changed by the Ministry of Finance. Starting in 2019, an additional tax given the title “school tax” (any other name would do: chimney tax, road tax, motherhood tax, etc.) will apply to all residential properties in the province valued at $3 million and above, including detached homes, stratified condominiums or townhouse units, and most vacant land too. The additional tax rate is 0.2% per year on that one million of assessed value between $3 million and $4 million, and 0.4% on the residential portion assessed at more than $4 million. The table following shows how many West Vancouver residents are captured by the higher school tax:
About 45% of the residential tax folios in West Vancouver for Single Detached Dwellings and for Strata’s (combined) are valued at $3 million or over. The North Vancouver portion of my riding of West Vancouver-Capilano is impacted as well.
The NDP government’s new school tax has such a targeted consequence for the North Shore, I believe it is appropriately labelled a “targeted attack.” In West Vancouver, 7,059 homes are captured by the NDP Government’s new school tax — close to one-half of all residences in this community. Under the previous government, this segment of our homeowners collectively paid a school tax each and every year of $28.4 million. Under the new government, they will pay a school tax of $71.7 million each and every year, an increase of 154%.
In North Vancouver District, 934 homes are captured by the NDP Government’s new school tax. Under the previous government, they collectively paid a school tax each and every year of $3.6 million. Under the new government, they will pay a school tax of $5.6 million, each and every year, an increase of 53%.
These two municipalities are together now going to be paying $77.3 million, an increase of 141%.
West Vancouver and North Vancouver combined will now pay close to 40% of the entire $200 million increase in school taxes imposed by the NDP on the province of British Columbia, as reported in the budget.
This money goes into general NDP government revenues and is used for whatever. The school taxes are certainly NOT allocated to West Vancouver and North Vancouver schools, or schools anywhere for that matter.
We pay far, far more than our fair share, and receive far, far less than our fair share.
- Personal Income taxes are going up. The NDP government’s own official forecasts show household income slowing down, while personal income taxes accelerate, over the next three years.
The NDP Government’s most recent budget and fiscal plan shows household income in 2017, the last year under the B.C. Liberals, growing at a robust 5.1% annually. Under the NDP, however, household income slows down over the next five years to 3.8% in 2020. While household income growth is slowing down significantly under the NDP, the same official budget figures show personal income tax revenues flowing back to the government — which taxes actually shrank by 8.4% in 2017, the last year under B.C. Liberal management — now accelerating to a 4.5% growth rate by 2020 under NDP rule.
3. Carbon taxes are going up. Car owners and truckers will all pay more at the gas pump. The NDP has declared its intention to increase the price of carbon emissions 16% and this is only the beginning. Add a nickel to the already high price of gasoline at the pump. Home heating costs are increasing too. It now costs me about $250/month to heat my home with natural gas, plus another $20/month in carbon tax. These carbon tax increases are not offset by corresponding income tax cuts, since the NDP has abandoned the B.C. Liberal policy of carbon tax neutrality. Gas prices have gone up more than 32 cents per litre – a 24 per cent increase – since last May long weekend and are currently the highest in the country. The NDP’s non-revenue neutral carbon tax increase from earlier this spring makes up a good portion of the extra dollars British Columbians are paying in fuel charges.
4. Payroll taxes are going up. Family-owned businesses beyond a minimum size are getting smacked with a new, job-killing tax to replace the MSP. Organizations which pay MSP for their employees such as municipalities, school boards, universities and health authorities, are being hit with a year of double taxation: paying both the new payroll tax and the old MSP premiums. But even after that double-dipping year is over, the cost of the payroll tax is typically higher than the old MSP. The NDP brags that it has eliminated the ½ of MSP which the B.C. Liberals had not yet cancelled, but fail to mention they are replacing it with taxes typically higher!
5. A new “Speculation Tax” has been invented. On February 20, 2018 the NDP Government comments on twitter @BCGovNews: “we’re stabilizing the housing market by adding a new tax on speculators who are driving up the cost of housing.” We now find out that 2/3 of the homes impacted by the so-called speculation tax aimed at foreigners, are actually owned by British Columbians.
“Stabilizing the housing market” translates into a new annual tax on cabin owners, weekenders from Alberta, and British Columbians who own a second property. The annual tax may be as high as 2% per year, if you happen to live in specified urban areas and if you do not pay sufficient income tax in B.C. If you purchased a vacation home with 20% down, it may be only 10 years until all of your equity has been taxed away by the NDP.
Since the original announcement, there have been a series of ad hoc policy adjustments and tax boundary adjustments in selected areas of the province. The Gulf Islands, where many expensive waterfront weekend homes may be found, are exempted from the tax. I am sure this has nothing to do with the political leanings of many citizens on the Gulf Islands.
The NDP says you can avoid this speculation tax by renting your home to others. Maybe your children? (But don’t sell it to them; having a home owned by your children is viewed with suspicion). Mike Harcourt, former NDP Premier, commented on this asset tax when first proposed by the NDP in 1993: “Are people expected to move their children into tents in the backyard, so rooms in the house can be rented?” Mike thought this was one idea which the NDP should simply walk away from in the 1990’s and they did.
Another budgeting peculiarity is that if, as advertised, the speculation tax clamps down on speculation, one would expect speculation to decline, and with it, speculation tax revenue. However, the NDP has budgeted for an increasing revenue stream from this tax, which must mean they expect speculation will be undiminished and actually grow.
To figure out the impact of this speculation tax, fine distinctions will now have to be made between (a) “foreign investors and satellite families” (definition?) who are subject to a full 2% tax rate; (b) Canadian citizens and permanent residents who do not live in British Columbia who are subject to a 1% tax rate, and (c) 0.5% for everybody else. Lots of luck with administering those definitions, Big Government!
- The Foreign Buyers Tax is going up. The foreign buyers’ tax introduced by the B.C. Liberals, as an extra 15% of assessed value at time of purchase, is being raised to 20%. It seems the volume of real estate activity is already being impacted by the cumulative weight of taxation.
Even Premier Horgan has questioned its effectiveness. I quote from Rob Shaw (The Province, July 25, 2016):
“Much of the investment that’s happening now in the Lower Mainland is being directed by cash from somewhere else by people who are already here,” said NDP leader John Horgan. “What we’ve been advocating for… is using the income tax act to determine if people purchasing homes are participating in the economy.”
Though the bill contains provisions for auditing and penalties, Horgan said he thinks it can be circumvented easily.
“You hire yourself a tax lawyer, you hire yourself an accountant and you can get by that pretty quickly,” he said of the self-declared citizenship form. “I think sophisticated investors, those are laundering money in our real estate market, will be able to get by that very quickly.”
While the above indicates Mr. Horgan did not believe the Foreign Buyers Tax would work, it has now become a key plank in his housing affordability agenda.
- Your Municipal Real Estate Taxes are Going Up. This is because there will be a flow-through of higher municipal employment taxes onto real estate taxes. For North Shore municipalities will fund their employment tax through higher municipal real estate taxes.
Estimated numbers for the Municipality of the District of West Vancouver are as follows:
The tax rate impact of the increased expense for the EHT is approximately 2%; unless offsetting revenues and/or cost reductions can be found to cover this cost, real estate taxes on West Vancouver homes will rise by 2% to pay for the employment tax.
As an aside, it appears our local School Board must dip into reserve funds to find an extra half million dollars in West Vancouver (SD45) to fund extra payroll costs, and the roughly million dollars in North Vancouver (SD44) to pay for double dipping. Even after double dipping has been absorbed, the increment in payroll costs is in the hundreds of thousands of dollars.
So folks, lean back on your porch chair and enjoy your seven new or higher NDP taxes!
The Cumulative Impact of 7 NDP Taxes on North Shore Municipalities
The cumulative impact of all of these seven new taxes can be severe. I have received many calls and emails from constituents and from Canadians living in other provinces that will struggle to pay the new taxes.
Contrary to popular impressions disseminated by certain UBC and SFU academic gurus, many persons living in North and West Vancouver have fixed incomes. The letters I have received so far tell me many of our citizens will not be able to find the additional thousands of dollars each year to pay the new taxes.
If we want to maintain a sense of community while keeping a healthy balance of a wide age range in the population, then government policy should take into account homeowners on a fixed income. We can’t ignore seniors who are capable and independent who want to live in the house they have called home for many decades.
Because of their good fortune (as measured by valuations on paper), they are now asked to sell out and move on — but it is not clear to where, and to whom, since many will refrain from purchasing homes subject to harsh NDP taxation in a climate of real estate uncertainty, with sales volumes plunging and expectations of dramatic declines in market value the government is aiming to achieve. Such a sudden assault on the assets of our citizens is unprecedented in my experience.
The NDP said they were going to increase “affordability.” Something has gone amiss. The tax picture presented for the North Shore is confiscatory. One must assume this is not accidental; it is purposeful and targeted. It is part of the NDP strategy of targeted income re-distribution, whereby the louder we complain in West Vancouver, the greater the applause the NDP will receive from its electoral base.
One arrives at the unfortunate conclusion that NDP tax policy is driven by ideology. A policy of “taxing the rich” is unwise when it penalizes success and opportunity. We encourage people to get an education and save their money and when they succeed, we punish them? And we punish them again when their properties climb in value due to external capital flows from far-off lands, drawn to B.C. by our own success in building an attractive economy with desirable communities offering outstanding health care and education?
These are blatantly unfair measures, and I intend to continue to protest them aggressively.
 Source: estimates by Ralph Sultan, MLA West Vancouver-Capilano, based on mid-range valuations of homes in each price category, per B.C. Assessment Authority, and checked with municipal officials.
New Governance at Squamish Nation
I attended the Squamish Nation swearing in ceremony on Sunday, April 22 2018, appropriately at their Totem Lodge on Stawamus Road in the community of Squamish, British Columbia. With great applause, 16 newly elected Councillors took the oath of office.
The members of Council will guide the destiny of Squamish Nation over the next four years. The Nation is made up of 4200 persons residing from North Vancouver all the way up to the boundaries of Whistler.
It was a moving, 5-hour ceremony, at the end of which I was allowed to join a long list of elders and witnesses offering their encouragement and wisdom to the newly elected leaders.
They have a mandate from the membership:
- To protect and enhance the Uxwumixw cultural values and traditions through respect, equality and harmony for all.
- To be responsible to govern the affairs of the Nation as a whole and uphold their fiduciary obligation for the well-being of the members of the Nation.
- To provide exceptional services to membership, which could include community safety and security, housing, education, jobs, economic development, and cultural and language preservation.
- To provide leadership in intergovernmental relations. And
- To maintain core values of honesty, integrity, accountability and ownership, consistency and fairness, through positive attitudes, teamwork and a strong work ethic.
Like any other government entity in these times, Squamish Nation Chiefs, Councillors and Administration must carefully manage financial and human resources, and strive for management excellence.
As recounted on their web site, Chiefs and Council receive their mandate from membership and in turn provide mandates and directives to 13 different departments to achieve collective goals and objectives, building strong relations and negotiating accommodation agreements with all levels of government.
A key cultural element for the Squamish People is the salmon. Chiefs and Council and the Band Manager are pleased to be able to provide a food fish allocation to Elders as a priority. Unfortunately, through a combination of global warming and careless habitat management, that goal has become harder and harder to achieve.
Many factors affect yearly Sockeye stock availability. For example, in 2008 it was not possible to receive any fish at all, and at other times of salmon scarcity, elders have felt fortunate to receive 10% of their traditional food allocation.
I have come to appreciate the skill, experience, and business acumen of the Squamish people. Mosquito Creek Marina and Boatyard is an example of a successful business run by the Squamish Nation. I regretted the loss of the virtual museum of old wooden gillnetters, pleasure boats, and other old vessels on display, stored “on the hard” at Mosquito Creek as more modern Squamish management took over the redeployed land to more productive uses.
Now, modern management is in charge of one of the largest and most successful First Nations organizations in British Columbia, and it was an honour to be invited to serve as a witness at the swearing in ceremony.
I repeat the Squamish mission statement from their web site: The Skwxwu7mesh Uxwumixw will protect the Amalgamation and enhance the Uxwumixw cultural values and traditions through respect, equality and harmony for all.
R2D2 Explains the Creative Industries
Recently I spoke in the Legislature about “Creative Industries Week.” I was referring to an industry employing 90,000 persons – about three times as many as oil, gas, and mining combined — and generating about $5 billion of GDP. A major economic driver. What makes up this sector, exactly?
I met up with these creative people later. At a Union Club reception, politicians and creative industry types mingled. For example, Peter Leitch who is MPPIA Chair (Motion Picture Production Industry Association of British Columbia) and North Shore/Mammoth Studios CEO. Peter, in turn, introduced me to Special Guest R2D2, who communicated in a buzzing and whistles language somewhat difficult to follow. But R2D2’s enthusiasm was contagious. I must study the whistles and buzzes language harder.
About two-thirds of our creative sector is represented by film, employing 60,000 persons. Let me emphasize that point: employing 60,000 persons. We are now North America’s third-ranked motion picture hub. One sub-component of film, our visual effects cluster, is the world’s largest.
Next in the creative sector we find interactive and digital media, with 16,000 persons working in more than 500 companies on cutting-edge augmented reality and virtual reality. While this sector is about one-quarter the size of film – with which it has a close relationship –it is growing by leaps and bounds. Up by 20 per cent since 2015.
Third ranked in the creative sector is music. We are the third-ranked music production centre in Canada, with almost 1200 performing artists, 6400 musicians, singers and conductors; tied into 282 music companies and 160 recording studios.
The fourth branch of British Columbia’s creative industry is book publishing and magazines: 3,000 employees and employment growth of 4% since 2016. British Columbia can boast famous writers such as Douglas Coupland, writer, artist, social commentator, author of Generation X — and a resident of West Vancouver whom you might bump into at Ambleside Beach, on the Spirit Trail.
While the sector includes books and magazines, it does not encompass the newspaper sector. It would be nice if we could inject some of the creative industry’s zing into print journalism, badly disrupted as it is by social media.
So we have four economically healthy, growing, and job-generating creative sectors: significant in our economy and all of them expanding. We must recognize their contribution and nurture their success.
Changing the Way We Elect MLA’s: What is the Question?
Let’s talk about proportional representation and the NDP’s Electoral Reform Referendum Act 2018 which is now the law of the land.
Under this new law, British Columbians may find themselves with an entirely different method of electing Members of the Legislative Assembly, rushed through by the NDP in collaboration with the Green Party with minimum time to understand what is going on. It will, in my view, start with a biased referendum a few months from now. (And don’t simply accept my view: read legislative journalists Vaughn Palmer, Les Leyne, and Mike Smyth).
This referendum is designed for approval – it takes only 50% +1 to win with no minimum participation to legitimize — and it will install a radically different way of choosing MLA’s to represent you in Victoria. The NDP/Green coalition wants our existing voting system of “First Past the Post” to vanish into history, replaced forever by “Proportional Representation” which shall cure everything which annoys us.
How we choose our leadership is pretty fundamental. Many parts of the world see governments installed through cronyism or violence, while we Canadians, in our innocence, accept democracy as the normal way.
New to politics, I was cautioned to expect a Legislature made up of a cross-section of all British Columbians, representing virtually all points of view. And so it turned out to be. All of these perspectives are argued, compromised, fine-tuned, and shaped until acceptable, and that’s how the system works.
Despite our present system of accommodating a variety of views, there will always be those who feel disenfranchised since THEIR particular theories and prescriptions don’t get the attention they obviously deserve. Today, if an elected politician feels strongly about something, he or she can fight it out in caucus, in the media, or even start another political party. These are earmarks of a healthy democracy.
What is not so healthy is when such persons try to rig the voting system to ensure a multiplicity of parties, each trying to apply leverage to the survival of Government, whether their views are widely held or not.
In a fragmented parliament, parties who have elected many, must nevertheless patch together coalitions and try to placate everyone. For example, today, the survival of the NDP (41 seats) depends on the good favour of the Green Party (3 seats) — versus BC Liberals 43 — giving the Greens an outsized role in the Legislature – and rightly so from the perspective of the Green Party which believes it is morally superior and holder of a loftier vision.
But British Columbia’s mere three parties in the Legislature is a puny lineup when compared with the 27 parties already registered in BC, ranging from the Communists to the Libertarians (who generally favour no government at all.) Under first past the post, 24 of them never got to the finish line – and some might say thank goodness for that.
In other countries with proportional representation systems we find examples such as Italy with 6 major parties, 27 minor parties, 70 regional parties, and 2 parties representing Italians living abroad. Not all of them, of course, actually elect the 630 representatives of the Italian Parliament, but some may wonder why Sardinia merits 11 parties but Sicily only 3. No wonder Italy has had 65 governments in the last 71 years.
When parties proliferate, the generally unwelcome can find a voice — somewhere. For example, NDP strategist and communication consultant Bill Tieleman (The Tyee 10 November 2017) has detailed how the far-right Freedom Party won the third largest number of seats in the Austrian election last October, led by a former SS officer and Nazi Party functionary, and with a policy program which is anti-Islam, anti-migrant, and proposes slashing social programs – especially for foreigners.
Well, gentle Canadians may sigh, every point of view is entitled to its voice. The idea that every point of view in our society deserves a voice in Parliament may be noble and democratic, but every point of view covers a lot of ground. How many thousands of perspectives can be enumerated on matters scientific, social, economic, and philosophical, not to mention religious or ethnic or even gender. From a practical point of view, the place simply isn’t big enough to accommodate each of them with their own taxpayer-paid office and dedicated seat in parliament. In the real world, politicians must consider every point of view. Single-issue persons don’t seem to survive for long.
Nevertheless, such noble sentiments have resulted in the adoption of systems of proportional representation throughout the world. And we seriously consider that option from time to time in British Columbia.
Gordon Campbell, always entranced by new ideas, organized public votes on how voting should be conducted, in 2005 and again in 2009, grounded upon an elaborate Citizen’s Assembly process, conducted by a random selection of citizens, toiling earnestly in a design and consultation process spread out over many years and consuming many millions of dollars, from which active politicians were outlawed. Thousands of ordinary citizens were engaged across B.C. The Citizens’ Assembly proposed Proportional Representation in the form of STV (“single transferrable vote”). In two successive referenda, citizens chose to retain First Past the Post.
I reviewed the history of the Citizens’ Assembly with one of the 161 members, randomly chosen from every riding. He is no fan of proportional representation (PR). He patiently explained the Assembly members attended a 12 week “Learning Phase” that included lectures by experts, discussions about other jurisdictions that currently use PR and homework that required studying a range of resource materials. This former Citizens’ Assembly member emphasized the steep learning curve required to understand the concept and consequences of the various options.
The next phase for the Citizens’ Assembly was public consultation which lasted two months and included over 50 public hearings and a review of 1603 written submissions. All of this input and information needed to be considered, which took two more months. Approximately five weeks later the final report was submitted with a recommendation to accept a BC version of STV (Single Transferable Vote).
The Citizens’ Assembly approach was very different than the current preparations for the referendum. “People will be enjoying their summer. They will be getting on with their lives and when we come back in the fall, there will be a question,” John Horgan told reporters at the legislature. It seems we will have days, not years, to consider what the Greens and NDP have in mind.
The contrast between the earlier large and broadly based citizens’ project, and the narrow, hasty casualness and “don’t worry about it, we’ll look after all the details for you and inform you at the last minute” attitude embodied in the NDP’s current plan and behaviour, not to mention such dismissiveness as “trust us, we are completely impartial” is disquieting, and disingenuous.
I actually believe the model for the present NDP process had Marxist roots – I kid you not – as embodied in a brief to the Canadian Parliamentary Committee looking at election alternatives in 2016. That brief describes proportional representation as follows:
“Despite misinformation campaigns, the Mixed Member Proportional voting system is very clear, involving one ballot with two votes. With one vote, a local Member of Parliament is elected, and with the second vote, the people select a party. The Member of Parliament can be with the party you vote for, or not. Local MPs would be elected in exactly the same way as they are now. The second vote would go toward electing a Member of Parliament from a party list…
“By making the composition of the party list a political concern, MMP could also help elect more Indigenous candidates, people from racialized, groups, women and Trans-persons. It will also contribute to the break-up of the dominance of the big parties by fostering coalitions, which are susceptible to public opinion and mass pressure.”
Hmmm. “Mass pressure.” Does this mean a little bit of mob intimidation could be part of the governance equation? Recall that Mr. Eby built a career around mobilizing mass protest movements.
Large parties operating on the “big tent” model can fragment, or as the brief cited previously argues, “contribute to the break-up of the dominance of the big parties.
Vaughn Palmer has tweeted “Great moments in proportional representation. Iceland election. 200 K voters, 8 parties, 63 seats.”
Under proportional representation, accountability suffers. PR coalitions fuzzify who’s in charge, and make it more difficult to hold individual factions to account.
When key decisions are negotiated in a back room among coalition partners whom do we blame, exactly?
It becomes difficult to remove a party from power. Some parties develop nine lives in governing coalitions under PR, even as they evolve into zombie organizations whose most important support is taxpayer funding, regardless of electoral performance. The NDP has already installed taxpayer funding as the principal political party funding source – perhaps you weren’t aware of that good news.
The most democratically disastrous consequence of a frequently promoted method of Proportional Representation call Mixed Member Proportional Representation (MMP) would be the selection of MLAs by political parties, rather than by citizens, through the workings of “lists” put forward by each political party.
Party bosses will choose the “top-ups’ from their list after the regional constituency seats are decided, not local citizens from within the community. Upon realizing this, the astonished MLA from Skeena blurted out in the Legislature, “Do we live in Russia?”
Furthermore, since each riding will be much much bigger, with multiple MLA’s, my riding of West Vancouver-Capilano will probably be renamed Deep Cove-Lonsdale-West Vancouver-Whistler-Pemberton-Powell River-Bella Coola-Texada Island-Desolation Sound-Goldbridge-Seton Lake. I can’t wait!
Does this sound familiar? I wrote about the Proportional Representation referendum five months ago thinking we would have the question by now.
We do not have a question yet. Mr. Horgan clearly plans to spend his summer on the BBQ circuit, not on spelling out and explaining his voting system of the future.
The most recent scheme emanating from NDP’s proportional representation controllers in Victoria, might have us vote on a simple question such as “Should we replace first past the post with proportional representation?” If 50% plus one agree, the exact model of proportional representation to be adopted would be turned over the university academics friendly to the NDP. Some journalists are now saying this would be so anti-democratic and outrageous, that the NDP must be secretly plotting to design a referendum which will fail, all the while living up to their PR agreement with the Greens.
So put away your BBQ tools and start your search for information on Proportional Representation, where it is being used, is it working well, how does MMP work, what is STV? Most of my constituents want to be informed about their decisions and it doesn’t appear the NDP government will have the time to explain it to you.
As for the Greens, from their perspective the less they inform the rest of us the better. Their powerful position in the future depends on it.