WEST KELOWNA - One of the province’s fastest growing communities is facing a huge threat to its economy if the speculation tax introduced by Victoria continues to include West Kelowna.
Mayor Doug Findlater and chief administrative officer Jim Zaffino are going to deliver a strongly-worded condemnation of the tax to finance minister Carol James, after councillors heard from Zaffino about the potential impact of the two per cent tax due to take full effect next year.
Zaffino says the province’s speculation tax is not that at all, but more of non-resident owner tax and not likely to discourage property flippers at all.
“This announcement of this tax has caused a great deal of uncertainty and concern in the community,” Zaffino wrote in his report to council. “The tax has potential to negatively impact the City of West Kelowna’s development cost charge revenue, tax income and economy."
From the information made available by the finance ministry, Zaffino estimates non-resident owners in West Kelowna will pay over $10 million to the province, money that is destined for general revenue.
He predicts owners who are asset rich but cash poor may have to sell their second homes, some at a loss, when the tax adds as $20,000 to the cost of owning a $1 million home second home.
Those that stay will have to raise the rent they charge students during the times they aren’t staying in the property in an attempt to recoup the tax.
Zaffino predicts developers will cancel construction of short-term vacation rentals and retirement residences, hitting the local job market and directly affecting the amount of development cost charges the city collects.
In 2017, West Kelowna accrued over $900,000 in extra money from growth in construction allowing the city to fund two additional RCMP officers.
The report also contains anecdotal examples derived from correspondence and social media of already cancelled construction projects, disrupted real estate deals and general dislike of the proposed tax.
Findlater ripped the new tax and said the uncertainty it is causing has already lead big banks in the area to refuse funding for construction projects.
The mayor pointed to previous property tax increases held between two and three percent almost since incorporation and said the new tax could cause revenue declines that would require much higher property tax increases.
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