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Despite B.C. government revisions, critics of a planned housing tax continue to denounce the measure, saying it will still unfairly target people with vacation homes and hinder development.

“The changes lessen the pain, but we remain non-supportive of the speculation tax, even in its amended form,” Doug Gilchrist, director of community planning and strategic investment for the City of Kelowna, said Tuesday.

The NDP government, which had acknowledged the tax on homes that are left empty as initially proposed could have “unintended consequences,” outlined changes on Monday designed to ensure most British Columbians will be spared from paying the tax, which had been set at 2 per cent of a property’s value.

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The government reduced the number of regions where the tax applies, limiting it primarily to urban centres and exempting rural areas where lakeside cabins and vacation homes are common. Canadians outside B.C. will pay 1 per cent, while British Columbians with second homes will receive a tax credit to offset the 0.5-per-cent tax on properties worth less than $400,000.

B.C. Finance Minister Carole James is also hoping owners of some vacant homes will be more willing to rent them out to avoid the tax. Homeowners with properties in designated urban centres who rent them out long term are exempt.

Mr. Gilchrist said the tax could deter investment by out-of-province buyers, a significant constituency in the Okanagan region.

He said Kelowna Mayor Colin Basran will be taking his concerns to the provincial party leaders, echoing council votes of late that have denounced the tax.

Doug Findlater, the mayor of West Kelowna, said in a statement anything that discourages investment will hurt his relatively young municipality, which is looking to upgrade its infrastructure.

The B.C. government had sought to appease its critics with the changes it announced this week. The details were a significant shift from what the government announced in its budget last month, although Ms. James said the original plan was released so the government could get public input.

Brendon Ogmundson, an economist with the B.C. Real Estate Association which represents about 23,000 realtors, said the lowered rate for Canadian buyers is not low enough, particularly for areas such as Kelowna, which rely on buyers from Alberta.

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“I am not sure why we have to start penalizing buyers who have been a traditional source of demand in a place like Kelowna,” he said.

He acknowledged the NDP government concern about encouraging rental opportunities, and using tax revenue to finance its housing agenda amid high costs, low vacancies and expensive rentals. But he said there is new construction of rental accommodation in Kelowna and other markets.

The tax will be applied to people who own homes but don’t live in them, as well as what the government describes as satellite families, who report high worldwide income but pay little or no taxes in B.C.

The tax applies to Metro Vancouver, the capital regional district around Victoria, West Kelowna, Kelowna, Nanaimo-Lantzville, Abbotsford, Chilliwack and Mission. The Gulf Islands and Juan de Fuca, which were originally covered by the tax, and the Vancouver Island communities of Parksville and Qualicum Beach will now be exempt.

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The Regional District of Nanaimo said it was pleased with Ms. James’s actions, with its chair saying he appreciated the minister hearing out the district’s concerns.

“We are pleased that further consideration was given to how, who and where the tax will impact, and that the Province will continue to study the impacts of the tax,” Bill Veenhof said in a statement.

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