domus, The taxes that make the best economic sense are often the least popular.GST is a case in point. There's a pretty sound argument that an increase in GST to reduce income taxes would result in increased productivity and investment, but consumers don't like GST because they're reminded of it every day. (By the way, in response to your earlier objection to Warren, basic groceries, prescriptions and bus passes have always been exempt from GST).LVT may also have good economic arguments in its favour, but you can't escape that it amounts to a government confiscation of part of the value of your land (by reducing the benefit of future rents). The landowning majority wouldn't stand for it.

Freako:probably right, nobody wants to feel like overpaying for something.The funny thing is that you would not be overpaying in most cases…..As for house taxes: I guess part of the story is about presenting clearly the pros and cons of things to people.If you increase house taxes you should decrease something else: this is very feasible in periods of surplus at the federal level, like now!Any how, it seems that some bear bloggers (maybe VHB himself…??) will end up paying property taxes soon. The world is achanging……but I am still betting on a large downside in prices and I just have a nagging feeling that I am right on this one….

"Why then so much hostility to higher property taxes whenever mentioned in a public forum?"Because, as mentioned, we have no problem kicking people, as long as it is not us. Do an informal survey, and you will find that most believe that "the rich" and corporations should bear the entire tax burden. Since most people are homeowners (or plan to be), they look at it as an inverse Robin Hood. That will never change.

I agree with freako. Taxes eventually get passed to end users, which is customers and renters. Actually, some of this gets passed to employees, as the pool of jobs in urban centre shrinks, while pool of workers expands due to increased density. This will and have created reverse community, which I can't say if it's a good thing or bad thing.From an efficiency point of view, residential taxes should be increased, and two-tier system eliminated. That little old lady living in a SFH by herself is occupying a resource that can be better used by several working age people. Driving young people to the suburbs simply puts more strain on the infrastructure.To be fair, condos likely consume a lot less resource than SFHs, as the occupants are likely younger, the need for street maintaince per household is less, and they… Read more »

"Freako: If we went with pure consumption tax wouldn't we just get a situation where people earn here, but most of their consumption happens elsewhere? "Well, yes and no. People would have incentive to travel and shop elsewhere. But even though there is no iron curtain, you are fairly locked into our economy. How many days a year do you want to be away from home. You can't drive down to Blaine every time you need an oil change. As per wikipedia, the GST alone accounted for 17% of Federal Tax revenue and income taxes (presumably including capital gains) 40%. Thus all else the same, a 15-17% GST could replace the lost income tax revenue. That may encourage people to spend a little extra on their vacation, or cross the border for trinkets more often, but it would not drastically… Read more »

patriotz:Before I see property taxes jumping though, I'd rather see a GVRD-wide tax systemYou must be joking. Assessments are much higher in Vancouver proper than in the burbs for the same sized property. A GVRD-wide tax rate would hose city property owners.Of course, we do already have GVRD-wide taxes for GVRD services, for which Van proper taxpayers are disproportionately taxed for the reason given above.Let me clarify a little bit. As discussed on this blog in another thread, taxes aren't set by a specific rate, they are set based on the City's budget. They look at the assessments and set a rate that way. This means that the city isn't rolling in money since the massive property increases, and won't be shutting down services if/when there is a market crash.With that in mind, I think a GVRD-wide budget and payment… Read more »

What on earth are you talking about?Patriotz: I should have been more clear, I was referring to higher taxation solely on vacant speculative units, though even that I'm thinking doesn't really make sense. It wouldn't be difficult to claim that a unit isn't vacant when it really is, and these people are already very exposed to the market downside. That risk starts to become very clear when we see tv coverage like the CTV news story about prices dropping.I was also forgetting about the homeowner grant, though that hardly makes up for the difference in price between owning and renting in the current market.Freako: If we went with pure consumption tax wouldn't we just get a situation where people earn here, but most of their consumption happens elsewhere?

"That reduces supply, which increases the supply."I meant increases PRICE of course.

"in which sense is better to have a system of rebates compared to taxing 2nd and 3rd residences in a heavier way?"Well its not mutually exclusive, but administering a system which determins what is a 1st, 2nd or 3rd residence is no walk in the park.Also, it would have to be done on GVRD and FV wide basis, else you would cause displacement and all kinds of other unintended consequences.Taxes can be collected in many ways, some simple some complex. What would happen, for example, if we dropped income and corporate taxes altogether and put the entire tax base on consumption tax, property tax, sin taxes and user fees. Obviously the ultimate purpose of money is to consume it, so there would be no hiding from the tax man. Yes a person with high income who lives in a shack… Read more »

STEPHEN HARPER————–Is better than some user here.I am not agree with that argument by some user,that investment property should be tax hard.big to small companies or big to small bussiness are standing on the shoulders of Investor's.Investor means to put your money at risk that money you can enjoy easy life,To cut short on our tommy,cut short on child's need for education.and put that for Investment for better future which nobody know's just a dream.Investor put their life on risk always worried about bills then payments paying to bank loans.Working extending hours makes us weak,health on risk lots of people lost their life in investment.If we loose in Investment no body is to cover up we get frozen accounts then courts and police kind of stuff.If we make some profit there is government to share half and half.Stephen Harper's government… Read more »

Freako:in which sense is better to have a system of rebates compared to taxing 2nd and 3rd residences in a heavier way?I know I am comparing apples with pears, but I find that taxation systems with little claims and rebates tend to work better…..I might be wrong, but I feel that houses are simple to tax: and they serve a very clear purpose, before being investments. If you want to make money using them you should be free to do so. However you would have to compensate a posrtion of the population for bringing a rather unpleasant side-effect (externality) in many conjunctures of the business cycles.No rebates or consumption taxes needed.If you really need to have 3 houses, you might as well afford to have higher taxes on them……Trust me there is no punitive intention in what i am saying,… Read more »

Warren:you make some really good pints, thanks.I think your reasoning is sound, although the consumption taxes can have a general disdvantage: they are extremely regressive.If you increase GST on all goods, it means that a pensioner will have to pay more taxes for fairly necessary goods, like bread, milk, medicines, bus tickets. You cannot do without them. Now, for a poor person these consumption items account for a large share of total expenditure. For a richer guy, they are almost negligible.It is not SUV that we are toalking about, but everyday cost of life.In any case, i see your point about income taxes being distortionary: not much argument about that.However, when it comes to property taxes, I don't see much of a distrsion: you cannot rent more or less. You either do it or don't.I understand that from a landlord… Read more »

Scoop:cheers! That was really good info, thanks for taking the time to share it.So, it seems that at the local level there is not much progressivity, but this is compensated for at the national level.So, the carrying cost of an investment property in terms of taxes is quite large, if you are right. One more reason to believe that when price rises stop, people can feel the pain. Let's wait and see…..Freako:point well taken about the long-run. I agree with the equilibrium reasoning with adjusting supply. However, the housing market is stop-and-go. Large surges in supply are followed by 'dry'-supply periods. This makes the argument for repeated and prolonged periods in which the externality issue may be relevant. After all, we are not always in long-term equilibrium: we have seen that for the last 4 years things have been quite… Read more »