Vaughn Palmer: Political calculation keeps homeowner’s grant safe, for now

Opinion: Even the NDP, famously lukewarm to the 70-year-old tax break, wouldn’t dare tinker, at least not just before an election

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VICTORIA — The New Democrats are sticking with the “status quo” on the homeowner grant, rejecting for another year calls to reduce or phase out the widespread break on property taxes.

The basic $570 grant will continue to be available to reduce property taxes for 92 per cent of homeowners, Finance Minister Katrine Conroy announced this week.

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“It’s something that helps people, supports people, so it’s something that we’re going to continue to do,” Conroy told CKNW’s Simi Sara on Wednesday.

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“We’ve been known to say that it’s not the best tax (break),” she conceded. “But, right now, it does provide relief for eligible owners.”

The New Democrats who’ve characterized the grant as “not the best tax break” include Paul Ramsey and Joy MacPhail, both finance ministers in the 1990s NDP government.

Back in 2017, Ramsey was part of an NDP government-appointed commission which found the homeowner grant was “inconsistent with principles of progressivity, administrative efficiency and fairness.”

Four years later, MacPhail chaired a separate commission that recommended the grant be phased out in the name of “more equitable treatment of renters relative to homeowners.”

The additional revenue to be gained from property taxes by phasing out the grant — then $850 million, today more like $1 billion — could then be diverted to fund social housing, the MacPhail-led panel suggested.

The left-leaning Canadian Centre for Policy Alternatives has branded the homeowner grant as a “pointless tax reduction to those with the privilege of home ownership.”

Despite those and other criticisms, the grant continues to survive under the NDP as a modern-day successor to the version created by Social Credit Premier W.A.C. Bennett almost 70 years ago.

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“It’s historical,” as Conroy acknowledged in announcing this week’s modest tweak to maintain the eligibility threshold. “It was brought in to help people out to support them with their taxes on their home and it’s been around for a bit.”

Conroy noted that the grant offers greater relief — in the $770 to $1,045 range depending on eligibility — for seniors, veterans, the disabled and residents outside the main urban centres.

“Actually, it helps about half a million seniors who’ve seen costs rise but their incomes have stayed the same, and it does still remain helpful.”

Her defence echoed that of her predecessor as finance minister, Selina Robinson.

“The homeowner grant for sure is a part of affordability,” she said, rejecting MacPhail’s call for a phase out.

Before David Eby assumed the NDP leadership last year, he also rejected a call to reduce the eligibility threshold or means-test access to the grant.

“What’s suggested is an increase in taxes on homeowners and we’re not currently interested in increasing taxes that way,” said Eby, then serving as housing minister in the John Horgan government.

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He noted that the majority of British Columbians were homeowners, including those living in the most expensive housing market in Vancouver where his own riding is located.

“So you’re talking about a broad-based middle-class tax increase at a time when costs are going up across the board for British Columbians. We’re not going to do it.

“No tax policy is going to put a roof over someone’s head.”

None of those political calculations have changed, particularly with an election looming later this year.

One can readily gauge the NDP government’s lack of progress on the promise to improve housing affordability by tracking what has been happening to the eligibility threshold.

The threshold is pegged at the assessed value necessary to ensure that 92 per cent of homeowners will continue to have access to the grant. Every year it is adjusted upward (or rarely downward) to track changing property values.

This year the grant will be accessible for primary residences assessed at $2.15 million or less, up from $1.525 million in 2020. The increase has been $625 million or 41 per cent since the last election.

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The New Democrats have changed one aspect of the homeowner grant regime that would allow the province to means-test eligibility if it chose to do so.

Starting in 2022, the province took control of the application process for the grant in what was described as a bid to reduce the administrative burden on local government, reduce fraud and ensure that people were paying the right amount of tax.

When applying for the grant, people have to submit their social insurance number. That could clear the way for the Finance Ministry to link taxable incomes to eligibility, should the government direct that to happen.

This time last year, Housing Minister Ravi Kahlon indicated that the homeowner grant would be part of an overall review of housing policy to ensure “that it is supporting the people who need support the most.”

Conroy hinted that something along those lines might be in the works when she was asked if the ministry were considering ways to make the grant “more equitable” this week.

“We look at that, but this year we’re keeping the status quo because we want to continue to provide support for people that need it. So it’s going to stay as it has been for awhile.”

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Leastways until after the election.

[email protected]

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