The gutting of the Foreign Buyer's Tax - might it be Krusty's Achilles Heel?

In our last post we outlined how the our intrepid Premier, Krusty Clark, and the BC Liberals appear to had bowed to pressure from the Real Estate Development community and gutted the 15% Foreign Buyers tax implemented last summer.

Muckraker extraordinaire Bob Mackin advises sources tell him bigwig Developers threatened to withhold huge political donations to the BC Liberals unless they guttered that tax.

Krusty and Co. caved and not only undid the immensely popular move that addressed an out of control real estate market, but they also threw short term fuel on the housing bonfire by introducing a first time home buyers plan that gives young kids the necessary downpayment to get into the housing market. The introduction of this latest moral hazard into the housing mix is just the panacea the condo developers needed to boost a sagging real estate market in clear correction mode.

Combined with the gutting of the 15% Foreign Buyers tax, it will be interesting to see the results at the end of the month.

Just how significantly are the FB tax changes

Another growing name in muckraking media hall of fame is Ian Young, who writes for the South China Morning Post.  In a regular column titled "the Hongcouver" (a title which would have gotten any caucasian crucified by the PC crowd), Young outlines Vancouver’s foreign buyer tax and the work-permit loophole ‘you could drive Highway 99 through’

Young outlines how the rationale for the BC Liberal governments plan to offer exemptions to the tax is sound "assuming that the goal of the tax is to improve affordability by preventing foreign capital further skewing a market that had become detached from local incomes (and is not, say, a pre-election political tactic)."

The theory is that people who live and earn locally should not be unfairly punished.

But when you look at the changes, even the simple minded can see the real intentions of the changes.  As Young writes, "offering foreign-buyer-tax exemptions to work permit holders was a 'Swiss cheese' proposal. “The term ‘work permit’ is too vague to implement the intention (as) foreign-funded buyers pursue permits primarily to escape the tax. There’s a risk that new grads, backed by foreign funds and/or acting as proxies, will dive in."

With less than 100 days to the Provincial election, the BC Liberals are in full campaign mode.  Desperate to preserve political donations, they pragmatically axed the popular move they made last summer by responding to overwhelming public demand to deal with the massive amount of cash (created by the unprecedented excess credit being created in China) sloshing around the world.

But in doing so, the BC Liberals may have created a weakness in their election machine which the politically adept should be exploiting like they were the rebel alliance attacking the Death Star.

The link between the changes and Real Estate Development slush fund money slaps you in the face.  Public anger has not abated from the damaging effects all this malinvestment is having on our communities.

The only saving grace for the BC Liberals may be the inept BCNDP and the mainstream media.

Rather than fully focus on the link, the spotlight has been on a pointless harangue about false allegations of BCNDP computer hacking by the BC Liberals.

No one cares.

And in the process the real scandal that should inflame the voting public is being shoved to the back pages.

It is exactly these types of scandals which ultimately brought down the BC Socreds and Bill Vander Zalm, Glen Clark's NDP, and lead to the resignation of Gordon Campbell.

But BCNDP political ineptitude appears to reign supreme. Horgan has failed to capitalize.

The Vancouver Sun is showing signs of following up, but Krusty is deftly promoting the entry level buyer angle and is successfully throwing up teflon on the silly computer hacking story.

We'd be willing to suggest that throwing the R/E Industry the 'first time homebuyers' bone would have been sufficient to address donation slippage. Gutting the Foreign Buyers Tax and the apparent linkage to massive R/E Developer political donations is their achilles heel.

Will the BCNDP exploit this explosive connection?

The gutting of the Foreign Buyers tax is THE fulcrum that could swing the 2017 election.  

So far the Opposition has failed to capitalize on it.

==================

Email: village_whisperer@live.ca
Click 'comments' below to contribute to this post.

Please read disclaimer at bottom of blog.

Cynicism? Krusty says, "Stand aside Moonbeam and hold my beer!"

Yesterday we made note of the cynical populist political shift of our beloved Village Mayor Gregor 'Moonbeam' Robertson as he responded to the 2016 Census Data revelation that there were twice as many 'unoccupied' homes in Vancouver as the City's survey had found in mid 2016.

Said Moonbeam, “Seeing data that shows there may be even more underutilized homes than BC Hydro suggests gives us more reason to aggressively move on the empty homes tax, and other measures that will help bring homes back within reach to residents in all corners of the city."

Giggidy.

Course, such exhortations are a little hard to swallow given his mid year pronouncement that he was against any suggestion of a housing tax targeting non-residents.

But is that real cynicism? Enter the BC Liberal's shouting "hold my beer!"

In July 2016 the BC Liberal's weren't afraid to support a housing tax targeting non-residents. In a surprising move, our beloved Premier Krusty Clark boldly declared a 15% tax targeting foreign buyers and implemented it without much warning.

Now everyone and their dog in the real estate industry (except this dog, of course) was feeding the public the line that foreign buyers were such a small portion of the market that all the fuss about them was a non-issue.

We all knew it was bullshit, but you have to wonder if the BC Liberals thought the tax would be a simple vote-getter without fully appreciating the reality of the situation.

Because the tax had an immediate impact.  A massive immediate impact.

By the end of January 2017, real estate sales in the Village on the Edge of the Rainforest fell off a cliff. Luxury sales were down 91% and Vancouver home sales plunged 40%. The market was cratering.

Did we mention a provincial election is less than 100 days away?

It didn't escape the attention of muckraking reporter extraordinaire Bob Mackin. Bob put his ear to the ground and heard that wealthy developer donors were letting it be known to Krusty, Shrimp de Jong et al that political donations would dry up if they didn't address this catastrophe.

Such news was highly disconcerting to the BC Liberal accountants.

And just who are these $100K+ donors from Feb 2016 that Mackin refers to?

In a recent article, Mackin outlines how the BC real estate development community funnels massive amounts of cash to the BC Libs.

Chronicling one fund-raising extravaganza in February 2016, Makin noted:

The Feb. 26, 2016 haul was thanks primarily to eight individuals and entities that kicked-in a whopping $1.1 million:

• $200,000 x 2=$400,000: John Redekop Construction and his cousin Peter Wall’s 2300 Kingsway Residences. 

• $100,000 x 7=$700,000: Peter Redekop, Peter Wall’s PWO Investments and Wall nephew Bruno’s BJW Investment; Townline Homes owner Rick Ilich; Rossano De Cotiis’s RPMG Holdings; Berts Electric; and Seaspan ULC.

Those high rollers are no stranger to writing big cheques to the BC Liberals. Six months before the last election, some of them also injected six-figures into the BC Liberal kitty.

Peter Redekop — whose donations since 2005 now stand unofficially at $609,800 — gave $150,000 on Nov. 8, 2012. His brother John Redekop ponied up the same amount on the same day as a similar windfall from other real estate and construction concerns. 

Also contributing to the party’s Nov. 8, 2012 haul of $833,728 were: Rob Macdonald ($101,200); Intertech Construction Managers/ITC Management/ITC Services ($75,000); Townline Homes ($55,000); Holborn Developments/TA Management and Dayhu Investments ($50,000 each) and Francesco Aquilini ($23,375). The Sheraton Vancouver Wall Centre Hotel donated $4,700. 

Peter Wall and Bruno Wall each gave $150,000 on Nov. 23, 2012, when the Liberals counted another $829,780 in donations. Along with the $300,000 from the Walls came $40,000 from Hassan Khosroshawhi and $20,000 from Colin Bosa.

So it comes as no great surprise (albeit highly disappointing) that with the threat of having the taps turned off on this massive amount of cash that the BC Liberals blinked.

Thus, on Jan. 29, Krusty suddenly announced during Chinese New Year that the BC government would be amending its tax on foreigners buying property in Metro Vancouver. Clark says the levy will be lifted for "those who have a work permit and pay taxes in B.C., in order to encourage more people to come to the province."

The slight change to the Foreign Buyers tax was promoted as a minor adjustment to make the tax fairer so British Columbia can continue to attract the best and brightest to BC.

But given Mackin's revelations about the behind the scenes threats of withholding political donations as the province counts down to what could be another extremely close Provincial Election, it's hard to see the move as anything but selling out to the development community.

Next we will outline just how significantly the BC Liberals have gutted the tax.

==================

Email: village_whisperer@live.ca
Click 'comments' below to contribute to this post.

Please read disclaimer at bottom of blog.