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Vision candidate proposes speculator tax

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Vision Vancouver mayoral candidate Gregor Robertson has proposed that Vancouver implement a speculator tax to deter condo speculation. In this case speculation is defined by the condo unit being left vacant rather than by flipping or simply taking on more debt than you can handle based on the hope of future gains.

Robertson justifies the need for this tax by referring to the BC Hydro grow-op study that found 18,000 vacant condos in Vancouver, which is equal to half the total number of condos in the Downtown Westend. This number is said not to include units that are part-time occupied as second homes or vacation properties, only units that use no electricity through the year.

The obvious difficulty comes in defining the criteria by which condos would be taxed at the business rate. Taxes on speculation are often based on ‘flipping’ rather than holding an empty condo. How do you determine if a condo truly is empty? Would there be penalties for ‘faking’ occupancy? What are your thoughts on this proposal, would it help or hurt the Vancouver housing market?

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Blair Johnson

They already have a speculator tax – it's called land transfer fee.

The last thing Vancouver needs is another tax.

I call this place the land of the nickle and dime. Never seen so many taxes.

How did they ever get away with charging all the additional taxes above PST. I am talking about recycling fees, disposal fees, environmental fees, even alcohol tax in a restaurant on taxed alcohol!

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John

If there was a way to actually do it… I say YES. Screw condo owners who do this. Screw them right in their greedy ears.

Empty condos are bad for communities, and last time I checked, that's what a city were suppose to be places for people to live, not simple as an investment opportunity.

I say if people want to cause all the associated problems that this sort of practice causes. Make em pay.

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M-

To be fair, PW, there's a lot of crappy housing in town. The stuff built during the last boom was crap. The stuff built after the last boom, leading up to this boom, is also crap. The stuff built during this boom is most assuredly crap.

There's even a helluva lot of crappy 70's and 80's stuff– of the half-dozen 70's and 80's buildings that I inspected for a relative, all but one had been leaky condos, some of them even had their repaired walls go leaky again.

I wouldn't put any inherent trust into any age of buildings around here– crappy workmanship is endemic. There are good buildings, but you've got to do your own due diligence. All the Hardie siding and rainscreens in the world won't save you from incompetently-applied tar paper.

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Patiently Waiting

Too bad most of the bubble housing is crap. Whether its 400 sq ft condos or 4000 sq ft monster homes, this bubble has done a terrible jobs of providing good places to live. I will never buy this pressboard Tyvek junk. A lot of this housing also stays empty, and will degrade quickly, as we've seen in the US.

All those wasted resources, all the environmental damage, for nothing good.

This housing bubble will cause all kinds of social and economic turmoil, that will affect even the richest wisest bears.

I hope to never see another housing bubble in my lifetime and will consider a wide range of government taxes and regulations to prevent it.

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flip this

Way to parrot Daniel Gross’s book.! I thought I was parroting Robert J. Shiller, Irrational Exuberance book… I do not claim this point of view to be a novel idea. I think that there are already government institutions in place to deal with the asset bubbles. These institutions are called central banks. Isn't it easier and cheaper just to make sure that the central banks do their job? Installing another governernment burocracy very often achieves the opposite effect from the original intention (take CMHC for example). Do tell, what important role did the USA real estate bubble serve? I see that my comment came through as though I think that asset bubbles are necessary and beneficial. The point I was trying to make is that the market is the cheapest way to regulate the economy. With the housing bubble for… Read more »

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Warren

"ou neglected to clarify that the commodity is only cheap for the savvy few investors who waited til post-bust to buy the assets."

The "commodity" that you're talking about is a place to live. Savvy investors rent and invest/save their money in other ways.

You're proposing that "savvy" aka intelligent people don't deserve to benefit. You might as well support a bailout for all those "poor regular people" who bought a house that is now worth 50% of their purchase price.

Sure, some people got lucky buying when they did. Some knew what they were doing, some didn't. Its called a free market.

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van-zee

"Are you trying to tell us that the brand new technology of “housing” would never have caught on in a big way otherwise?"

I think the "technology" of the boom may have been creative financing and the pooling of debts into securities.

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Anonymous

Flip This:

I don’t think speculation should be taxed. In the long run bubbles serve an important role: they create cheap and abundant supply of a commodity in question.

Way to parrot Daniel Gross's book.! You neglected to clarify that the commodity is only cheap for the savvy few investors who waited til post-bust to buy the assets.

However, the ignorant masses who were the ones to paid for all that commodity up-front, and they have nothing to show for it.

Do tell, what important role did the USA real estate bubble serve? Are you trying to tell us that the brand new technology of "housing" would never have caught on in a big way otherwise?

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Patiently Waiting

Rampant speculation is just another antisocial personality disorder needing some laws to contain it: "By the time those measures were in place in Phoenix last fall, however, the swarm of investors descending on the city was almost too much to stop. At one of the construction sites of big builder Toll Brothers, a van full of investors from Las Vegas pulled up to a sales trailer shortly after the antispeculation measures had gone into effect. According to a Toll Brothers spokesperson, the saleswoman on call was so flustered by the group's displeasure at being denied an opportunity to invest in such a scalding market that she had to radio headquarters for backup. "They all wanted to buy multiple properties, and they wouldn't take no for an answer," says the spokesperson. "They were trying to climb in and give her their… Read more »

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Michael Randallbard

Nice to see Gregor taking MY advice. Those who know me know that I have been advocating this tax for over a year. It worked in Shanghai and it WILL work here.

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Michael Randallbard

The New Spec Tax in Shanghai
http://french.hanban.edu.cn/english/2005/Mar/1219…

Immediate Results
http://www.atimes.com/atimes/China/GF04Ad04.html http://russian.china.org.cn/english/2005/May/1298…

Were Speculators Chased Out of China Only to go Elsewhere (Vancouver?)
http://www.overseaspropertymall.com/trends/intern…

Shanghai Bubble Pops-L.A. Times
http://economistsview.typepad.com/economistsview/…

Still Problems, More Government Intervention on the Way
http://www.npr.org/templates/story/story.php?stor…

A Second Tax, This Time on Pre-Loved Homes
http://www.china-embassy.org/eng/gyzg/t265953.htm

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browntown

hey bear nutslappers! yeah waiting for cmhc to go bankrupt yeah rockets coming back down too! look out in neighborhood for rocket drachen! who needs job nasa man, get rich renting course coming soon!!

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Thums up2

"the bear faction saw this coming two years ago"

It would be shameful to admit four year!

"a) You assume we are ‘little guys’"

Oh maybe he got no idea that bill gate join the blogs four year ago!

"b) You assume that we aren’t ready for what is coming"

Rental increase stress are on the card and we were already priced out not long ago!

"we’re ready. Save your pity for overleveraged overmortgaged overconsuming fools'."

And enjoy 133 percent appreciation every five year and live your life bear and mortgage free at the end of mortgage term!

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alexcanuck

Apropos of Holgs comment:
http://tinyurl.com/43skto
"June 18 (Bloomberg) — Bill Ackman was right: the world's largest bond insurers aren't worthy of a AAA credit rating and may be headed for the bottom of the scale."

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holgs

Don’t hope for too big of a bust. If CMHC goes insolvent, we the taxpayers will be footing the bill through inflation/deficits… in which case your savings are not safe. This is actually what I am scared of! In the states, they had MBIA, MGIC, AMBAK, and other idiotic companies insuring mortgage paper (with almost no reserves to back up that insurance.) Now, when those companies go bankrupt, it will take out a lot of other idiots who didn't have the foresight to 1.) Sell their stock (Mish has been talking about these guys since before their stocks peaked… I have no pity for anyone who didn't bother to research the bearish arguments.) 2.) Realize that the "insurance" was just a false confidence builder (see 1. re: mish). This applies to all of the entities that the failures of these… Read more »

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blueskies

Um, normally we’re accused of being ready too early. Believe me, we’re ready. Save your pity for overleveraged overmortgaged overconsuming fools.

the bear faction saw this coming two years ago

very few will be standing around to face the onslaught, as for the "fools" well very Darwinian

you have the quick and the dead…..

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VHB

"Anything that hurts the economy always hurts the little guys the most. Be very careful what you all wish for."

a) You assume we are 'little guys'

b) You assume that we aren't ready for what is coming. Um, normally we're accused of being ready too early. Believe me, we're ready. Save your pity for overleveraged overmortgaged overconsuming fools.

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Anonymous

Speculator tax is the best thing in the world. This should be implemented in the federal level. Speculative tax shouldn't apply to principle residence.

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alexcanuck

Anything that hurts the economy always hurts the little guys the most. Be very careful what you all wish for

If wishes were horses……

I don't "wish" a crash to happen. I believe it is going to happen and I have no control over it. Happy talk won't stop it. All I can do is position myself to survive it as best I can. The time to prevent a crash was BEFORE the boom. I truly do "wish" those with real power had pursued a slower growth policy that wouldn't have led to this point. This excellent article says it far more eloquently than I ever could.
http://tinyurl.com/6xeyh6

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Strataman

"Anything that hurts the economy always hurts the little guys the most. Be very careful what you all wish for."

Very true of course the little guys would be the FTHB that bought in the last three years, they are going to hurt something awful. Some of them are even EMPLOYED in the real estate or condo building industry! OUCH!

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Me2

Maybe the bears should wish for a recession too that would lower price. *kokokoko*

Anything that hurts the economy always hurts the little guys the most. Be very careful what you all wish for.

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Drachen

Rob A.

You know it's really not my fault your condo isn't selling. I know it's hard to blame yourself or to acknowledge your mistakes. Perhaps if you just dropped 25% or so off your asking price?

Seriously though *relax* you're going to wind up committed pretty quickly.

Just repeat after me, "It's only money. It's only money. It's only money." Ahh who am I kidding, listen if you end up living in a dumpster somewhere let me know and I'll come by with five bucks and an, "I told you so!" for ya.

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Anonymous

Don't hope for too big of a bust. If CMHC goes insolvent, we the taxpayers will be footing the bill through inflation/deficits… in which case your savings are not safe.

It is definitely better not get into the problem in the first place.

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Burden of Broof

"rather have seen prudence exercised regarding the monetary policy and lending conditions that facilitated the bubble in the first place."

If this was a government induced bubble, why should it not be a government induced bust?

Besides, the bust is now a certainty. It is only a quesiton of time. Shouldn't every bear welcome anything that may hasten it?

We are talking about money here. It is unprofitable to get ideological about "government intervention". It is all about the $$$money$$$!

Anything that deflates asset values and corresponingly inflates the value of my savings is good. And anyone with a big wad of money in the bank should agree.

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bdk

As if Rob A. has ever said anything meaningful except that he works at Starbucks and thinks cafe's are exciting?

Rob A. you're a goof

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