Six homeowners have launched a legal challenge against British Columbia’s speculation and vacancy tax, arguing the law is unconstitutional and the provincial government doesn’t have the power to collect revenues from the levy.
The homeowners filed their petition Thursday in B.C. Supreme Court in Vancouver.
The lead petitioners are two Victoria area residents, Denise Simpson, 72, and her husband Robert Simpson, 93. Four other homeowners from Metro Vancouver have joined the petition.
Lawyer Kailin Che, whose firm Lawrence Wong and Associates is representing the homeowners, says Denise Simpson is a Canadian citizen and has lived in her home since she was five. She inherited the home from her mother 20 years ago.
“In her words, it’s the last piece of physical connection she has to her family, who have all passed away,” Che said in an interview.
The Simpsons are joint owners of the property and both their names are on the property title, but Robert is a U.S. citizen, said Che. They live part of the year in Texas, where Robert receives a U.S. military pension, which under the speculation tax means the Simpsons are classified as a satellite family. That results in a $6,000 tax bill.
“Denise is very Canadian but her husband happens to be American,” Che said. “He’s a war veteran. They have certain connections to the States but that doesn’t make her any less Canadian than you and I. But they’re branded as a satellite family and consequently they are not eligible for any exemptions under the tax.”
The tax rate for 2018 was 0.5 per cent of a property’s assessed value, rising to two per cent in 2019 for foreign owners and satellite families, while Canadian citizens or permanent residents continue to pay 0.5 per cent.
The tax is a major component of the New Democrat government’s $6.5 billion plan to deliver 114,000 affordable homes over the next 10 years. The government said the speculation tax will target foreign and domestic real estate speculators, increase the amount of rental homes and provide revenue for housing initiatives.
Finance Minister Carole James said earlier this month the province collected $115 million from the tax in the 2018-19 fiscal year. She said 99.8 per cent of British Columbia residents were exempt from the tax.
James said in a statement Thursday she will not comment on the specifics of the Simpson case as it is likely heading to court.
“The speculation and vacancy tax is a key measure to tackle the housing crisis in B.C.’s major urban centres, and initial data shows the tax is working as intended,” says her statement. “As with any tax measure, ministry staff worked closely with legal experts in drafting the legislation.”
The court petition document says the only way for the Simpsons to avoid paying the tax, other than selling the home, is to rent it out to other people and find another home to rent themselves.
“In order to qualify for an exemption under the act, the retired pensioner intends to rent out her home,” says the petition. “The tax will cause the retired pensioner to rent out her home only to cause her to rent another one for herself and her spouse.”
