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Gregor Robertson speaks during a press conference in Vancouver on June 22, 2016.

John Lehmann/The Globe and Mail

Vancouver's mayor says the city will introduce a new business tax penalizing those who profit from sitting on housing stock amid a rental crisis – unless the province steps in with a tax of its own on thousands of empty homes.

Mayor Gregor Robertson said at a news conference on Wednesday that the city will give the B.C. government until Aug. 1 to begin collaborating on a new vacancy tax.

He noted that about 10,800 empty homes were identified in a recent report and "there's obviously a lot more than that that are empty most of the time."

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A tax on those empty homes would be aimed at persuading several thousand of these owners to rent out their properties. Otherwise, the money collected from the new business tax would be diverted toward other affordable housing initiatives, Mr. Robertson said of a session next week, when council will vote on a report recommending this approach.

He predicted such a tax could have a profound effect on the city's rental vacancy rate, which has hovered near zero for months. For context, he said the city has attempted to bring about 1,000 new rental units online each of the past several years.

After the announcement, Premier Christy Clark thanked the city for its proposal on Twitter, and B.C.'s Finance Minister committed to discussing the issue with the mayor next Monday.

If the provincial government declines to intervene, Mr. Robertson said staff would have to consult with experts and the public to determine at what point a vacant or under-occupied home would be subject to the new business tax.

He added that an obvious place to start would be the units – the vast majority of which are condos – identified in the recent report as having used very little electricity over the course of the year.

"We want to be sure it's fair – that's the bottom line," the mayor told a news conference in Coal Harbour, a tony neighbourhood where a 2013 study found that almost a quarter of all properties used little to no electricity.

"If we're looking at partial vacancy, it's going to be difficult to draw the line," Mr. Robertson added. (The city is also studying how to regulate the impact of Airbnb on the rental market.)

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A preliminary staff report, which will go before city council next week, recommends that property owners could exempt themselves from the proposed business tax two ways: proving they are the primary residents by producing government identification that shows they live there, or disclosing a tenant's long-term lease agreement.

Mr. Robertson said the business tax would decidedly be more costly and complex for the city to implement compared with a provincial tax, which, he argued, B.C. already has the data and administrative levers to create and enforce.

Under the preferred route with the province, however, a joint levy would be administered as a new "residential vacant" property class through B.C. Assessment, the organization responsible for property assessments throughout the province. The government has already collected large quantities of data on primary residences and rental income through the province's Home Owner Grant and income tax collection processes, Mr. Robertson said.

A year ago, he sent a letter to the Premier asking the province for a tax on luxury housing and measures to fine property owners who do not live in the units they own. Ms. Clark rejected the requests and suggested the city could find solutions in better land-use planning.

Hours after Mr. Robertson's news conference, Finance Minister Mike de Jong said he's making arrangements to meet with the mayor on Monday to further discuss the idea.

"There's a genuine concern on the part of all of us about the rental vacancy rate and the difficulties people are having locating rental accommodation, certainly in Vancouver," Mr. de Jong said in an e-mailed statement. "I think the mayor is providing a thoughtful suggestion – one we're going to study closely."

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The Real Estate Board of Greater Vancouver recently said the benchmark price in May for detached houses increased to more than $1.5-million, a jump of nearly 37 per cent from a year earlier. From 1986 to 2011, the average resident's income increased about 7 per cent, while the median price of a condo on Vancouver's more affordable east side rose by 280 per cent, according to a staff report.

Mr. Robertson said taxing vacant homes is the quickest way for the province to increase affordability for the city's renters, who make up more than half of Vancouver's residents.

"If we can get several thousand [of these empty units] on to the rental market in the near term, that's an enormous new supply that typically would take many years to build out," he said.

With a report from The Canadian Press

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