B.C. Finance Minister Mike de Jong is dumping cold water on Vancouver's call for a real-estate speculation tax, saying it could simply fill government coffers without controlling soaring property prices.
"You have got to be careful about how you use the tools of taxation and you have to be clear about what your objective is," Mr. de Jong told reporters in Victoria on Monday.
"In other jurisdictions, under the guise of trying to regulate property values, all you have really seen is governments taking in a lot more revenue and not having any impact on housing affordability."
The minister was responding to Vancouver Mayor Gregor Robertson's call for a speculation tax to dampen property flipping.
Mr. Robertson, reacting to a growing campaign to protest against the lack of affordable housing in Vancouver, said on the weekend that "rampant speculation on real estate" is driving up housing prices.
Some industry analysts say the market for high-end real estate in Vancouver has been driven up in part by wealthy foreign buyers, including from China, although that is largely based on anecdotal evidence because of the lack of data on buyers' backgrounds.
The Vancouver City Savings Credit Union forecasts that the average price of new and existing detached houses sold within the city limits could skyrocket to $4.4-million in 2030, if pricing trends of recent years continue unabated. The average price of new and existing detached properties sold in Vancouver topped $1.9-million last year.
That has sparked a public campaign, captured in the Twitter hashtag #DontHave1million.
But Mr. de Jong told reporters that it would take drastic measures to dampen housing prices, and that could easily backfire on families who are already homeowners.
"You have to be careful about having the state intervene to try to regulate pricing, or depress pricing. Those who are expressing a concern, if you really assess what they are seeking, it is a reduction in the value of homes in Vancouver and that will have consequences for a lot of families," he said.
"If property values in Vancouver were to reduce by, let's say, 5 per cent, that could easily translate into a reduction in equity for families who own homes in Vancouver of $60,000, $70,000 or $80,000."