We have an election coming up on May 9th here in British Columbia, and things are heating up. The NDP (centre left New Democratic Party) is polling very close to the incumbent Liberals. Lindsay Tedds, who teaches economics in the University of Victoria School of Public Administration, has written a blog on the NDP platform, comparing it to the Liberal platform.
Because I have a particular interest in the subject (like Professor Tedds, I’m a renter), I will copy and paste most of what she says about the NDP proposal for a Renters Rebate. For a look at proposed changes in other subsidies and taxes, see her full blog. I have added her to my blogroll, something I should have done long ago.
A key point is that in Canada, as in most countries, homeowners receive a lot of subsidies, whereas renters receive nothing. This makes no economic sense, especially since homeowners on average are much wealthier than renters. (See the first chart in the blog to see just how wealthy BC homeowners are. In Greater Vancouver and in Victoria, average incomes of homeowners are nearly double those of renters.)
In Canada, home ownership is subsidized up the yin yang, whether it be through the principal residence exemption from capital gains taxation, mortgage insurance backed by CMHC (ahem, taxpayers), the various tax credits to support buying or renovating a home, and the various ways we subsidize property taxes including through the Home Owner Grant (HoG) here in BC. The HoG allows those who live in their homes to obtain a minimum $570 grant that offsets their property taxes. Rental property does not qualify for the reduction in property taxes so renters, who pay the cost of property taxes through their rental payments, bear the full cost of property taxes while home owners do not. The proposed renters rebate then simply extends the HoG to renters to address the issue of fairness. Of course, the better way would be to eliminate the HoG, but while that is good economics that won’t win you an election.
For whatever reason, people who on one hand applaud the HoG and all the other subsidies we throw at home ownership for no good economic reason, came out guns a blazing against this notion of extending the HoG to renters, including the biggest proponents of home owner subsidies, the BC Liberals. Christy Clark [the BC Liberal Premier] said it would “line the pockets of wealthy tenants…” Hmmm, I guess she does not realize that most of her policies in fact line the pockets of wealthy home owners. Oh right, home owners good, renters (like me!) bad. ….
The BC Liberals also said it was unaffordable. Hmmm, the HoG costs the treasury more than $800M a year and applies to more than 91% of homes in BC, but that is affordable. The renter’s rebate is expected to cost about $265M a year, but that is not affordable. Okay!
Lindsay Tedds, “BC Election & the NDP Platform“, Dead for Tax Reasons, 20 April 2017.