On the one hand, I’m not sure what to make of Tim Houston’s full-frontal face plant last week.
“So, today I will put my personal pride aside,” our premier declared Thursday as he humble-pied his way through a humiliating and complete run back of his government’s month-old, ink-barely-dry plan to hike taxes on non-resident property owners.
On the other hand, I know exactly what to make of it.
Same old, same old. Still. Again. Always.
Let’s start with the taxes themselves. There were two of them. One would have required non-residents who buy property in Nova Scotia but don’t move here within six months to ante up a one-time transfer tax of 5% of the property’s value. The second would have tacked an extra two dollars per $100 of assessed value on their property tax bill every year from now until the debt is paid off, which is to say… never. (The 2% non-resident property tax will be removed for all non-residents who own residential property in Nova Scotia, while the 5% non-resident deed transfer tax (5%) will go ahead).
The measures, which the government claimed would raise up to $65 million a year for the treasury, were introduced on March 29 as part of the $13.2-billion 2022-23 budget. Here’s how the finance department explained the purpose behind its plan at the time:
The government is creating a provincial residential property tax applicable to non-resident owners. We want to make sure people can afford a place to call home and build their lives here. (My emphasis.)
But here’s the rub. There was never even the flimsiest link between these new taxes and the “afford-a-place-to-call-home” purpose for which they were ostensibly created.
For starters, of course, the government never had any intention of designating its $65-million tax windfall to build desperately needed affordable housing.
And the notion that using new taxes to discourage non-residents from buying up pricey oceanfront “cottages” in Chester would magically make those same multi-million-dollar properties “a place to call home” for needy Nova Scotians was… well… magical thinking.
My guess is that this tax idea was the pet project of some finance department functionary who’d been pitching it — unsuccessfully — to past political masters and had decided to try one more time with this new crowd.
You will recall that this new crowd, who’d barely uttered the words affordable housing on their path to power, had been smacked in the face by the urgent need to do something — anything — about housing after Halifax police razed a homeless encampment on the day they were elected.
They’ve been scrambling ever since. My guess — again — is that the Tory brains trust saw raising taxes on non-residents as a painless way to raise some of the new money they planned to spend on health care and, oh yes, to claim at the same time they were doing something about affordable housing without actually having to do anything at all.
Except it wasn’t.
Tim Houston is an accountant, an astute politician, a Tory. He didn’t see this coming?
That’s the part I still don’t know understand.
What happened after? Well, that’s the no-brainer.
The Chronicle Herald’s usually somnambulant letters to the editor section woke up, overwhelmed with outrage:
- smash-and-grab taxation, and a sneering contempt for those who lack the grace and good sense to get born and raised in the province…
- this punitive tax policy will kill the goose that lays the golden eggs of non-permanent resident spending. It may be satisfying to have a nice goose dinner now, but those golden eggs will be sorely missed!…
- the plan is unjust and un-Canadian and should be vanished…
There were threats of lawsuits and charter challenges, warnings of investments that would now never happen and golden eggs that would never hatch.
In an April 14 report, the CBC’s Michael Gorman summarized a meeting of the province’s law amendments committee this way:
More than two dozen people from across Canada and the United States with connections to Nova Scotia virtually told the legislature’s law amendments committee that new property tax measures for non-residents are unfair, punitive and won’t achieve the aims set out by the government.
Houston’s increasingly standard-issue initial response was to bulldoze past all criticism but — given the source of the criticism — it wasn’t hard to see what was coming.
These weren’t ordinary Nova Scotians complaining. These were mostly rich and powerful folks — not only come-from-aways, but also local worthies with whom those locals share golf games and yacht club lunches and political and economic interests. This was John Lennon’s “just-rattle-your-jewelry” crowd. Tory voters, in other words.
It was no surprise then that Houston began his inevitable climb down in a speech to the Halifax Chamber of Commerce last week.
“We’re working hard to make real change for Nova Scotians and, as the government, we’re moving pretty fast,” Houston told the normally friendly business crowd. “But when you move fast sometimes you need to pause and adjust course. We are not so arrogant that we can’t admit when we need to adjust.”
But when the government’s “adjustment” — tiering the new tax bite to the property’s tax assessment — failed to mollify his critics, Houston abandoned the taxes altogether just two days later.
“I believe the risk of reputational damage to Nova Scotia is becoming more and more real, and it’s something I’m not willing to accept. So, we’ll find another way to address the housing issue.”
This was, of course, never about housing. Nor was it about creating a fairer tax system.
Which may explain why there was so little public support for it from ordinary Nova Scotians when it was introduced. And why there was no outcry when it was abandoned.
Same old, same old. Still. Again. Always.
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An informed opinion piece by Gerard Naddaf in the Herald today shed more light on this issue. He gave an example of a property on Port Hood Island – assessed at $170,000, capped at $126,000 and for sale at $625,000! I think the sale value of properties is taken into consideration in assessing the value? If so, Nova Scotians can expect their assessments to go way up.
Stephen, Interesting piece. Just as a clarification it was a platform commitment clearly expressed in the party platform and implemented as proposed. Not right to pin it on “some finance department functionary”. Most that I met are thoughtful and analytical. A different question is how a law duly passed by the legislature and given Royal assent by the Queen and therefore in force as a law of Nova Scotia can be repealed by a press release. As taxation legislation, my fading memory of the constitution is only the legislative assembly had authority to make laws ( or repeal laws) in relation to taxation.
Although benefitting from it I agree that the cap is unfair and when it is removed as property is sold it creates particular unfairness for first time buyers. However, to set the record straight it was brought in by the Hamm-MacDonald Conservatives, albeit with all party support, as history has shown. Like the universal home heating PST rebate from the same era it is poor public policy that will likely remain in place because was good politics at the time and tough politically to fix now.
Last time I looked, more than 5 years ago, a couple owned 13 residential properties which were all assessment capped. And along with siblings they owned over 30 capped residential properties. I used tax rates and assessment records to calculate the a amount of tax savings over a 5 year period. I spoke to the HRM Finance & Audit Committee but they showed no interest in the matter.
It is absurd that the cap applies to anything other than a primary residence.
The cap was brought in by the former NDP government. It was a response to the increasing value of 2nd properties which were to be passed on to the children/relatives of a deceased parent and the claim by an elderly owner in Lunenburg that he could not afford to pay the taxes on a 2nd home unless the property was capped. I opposed the cap at the time. Apartment buildings are not capped and tenants see no benefit from the cap. Down in Chester a wealthy Nova Scotia couple owns several properties which are capped. Out of province owners are not capped.
I laughed at your reference to the “just-rattle-your-jewelry” crowd = perfect . 🙂 Also your last sentence = perfect again. Money talks. It’s too bad Mr. Houston can’t do a similar u-turn on his no-mask-wearing policy. But then again, money talks.