'Reverse Robin Hood': Vancouver developers get $3.8M tax break

A retroactive exemption to Vancouver's Empty Homes Tax will see millions returned to developers whose newly built units were unsold and unoccupied last year.

At a meeting Wednesday, council approved a number of changes to the tax regime, including freezing the rate at three per cent instead of proceeding with a planned increase to five per cent and establishing a number of new exemptions.

While a report from city staff  did recommend exempting new condos that had been built but not yet sold from the tax for 2023, ABC Coun. Mike Klassen introduced an amendment to return taxes already paid or cancel those due for 2022.

Citing cooling market conditions due to higher interest rates and the financial fallout form the COVID-19 pandemic, Klassen said properties were taking longer to sell. Taxing those empty units, he claimed, would discourage developers from building in the city.

"Additional charges on unsold inventory is counterintuitive to our quest for more housing attainability," he said at Wednesday's meeting, adding that these empty homes are not charged the provincial speculation and vacancy tax.

According to the city, taxing these units for 2022 was set to bring in $3.8 million and $2.4 million has already been paid. The impact of exempting these types of empty units for 2023 was estimated by staff at roughly $3 million.

Introduced in 2017, the goal of the Empty Homes Tax was to reduce the number of vacant properties as one way of addressing the housing and affordability crises. Initially imposed at one per cent, the tax has generated $115.3 million in revenue, which is earmarked for social housing.

OneCity councillor Christine Boyle was the first to object to the amendment, describing the move as "writing a cheque" to developers while simultaneously decreasing the amount of money available for social housing.

"I am almost speechless, which is uncommon for me. It's like a reverse Robin Hood tax and I am strongly against it," she said.

Green Party Coun. Pete Fry said the proposal left him "incredulous" and also opposed it along with fellow Green Party councillor Adriane Carr.

The ABC majority on council voted in favour, with other councillors echoing Klassen's claim that the tax would discourage development, and the amendment passed.

Other exemptions to the tax that will come into effect for 2023 include vacancies resulting from people leaving their homes due to disaster or hazardous conditions and from people leaving their homes to seek medical treatment.

Those exemptions are not being applied retroactively.