Annual surtax of 0.2% on $1M+ homes could cool housing market: report

An annual surtax of 0.2 percent on houses valued over $1 million could help reduce housing inequality and cool housing markets, a report says.

An annual surtax on houses valued over $1 million could help reduce housing inequality and cool housing markets, a report says.

Paul Kershaw, founder of Generation Squeeze and author of the report published Wednesday with input from 80 experts, said it’s part of a suite of recommendations aiming to shift the cultural view of housing as an investment to housing as a place to live.

“Just as government has implemented prices on pollution to curb our carbon emissions to address climate change, so we need to have a price on housing inequity to slow down the skyrocketing housing prices that are eroding housing affordability,” said Kershaw, associate professor at the University of B.C.’s School of Population and Public Health.

The report proposes a progressive surtax starting at 0.2 per cent and peaking at one per cent on homes valued over $1 million. It would be applied annually and would be due when the property sells.

Unlike a capital-gains tax on all home sales, it would only apply to the top nine per cent of the most expensive homes in Canada, Kershaw said.

The report comes in the same week the BC Assessment authority released annual data showing home values rose across the province, some as much as 50 per cent.

The idea is for homeowners to recognize the system benefits them at the expense of younger Canadians, future generations and newcomers of any age, he said.

Kershaw said property taxes based on mill rates only go so far and other measures like speculation taxes haven’t been enough to get housing prices under control.