At the September 22 City of Vancouver (CoV) Council meeting, Councillor Anton will attempt to move a motion to exempt Landlords from the Provincial governments planned harmonization of the provincial sales tax with Federal government’s Goods and Services Tax (GST).link to the actual motion The Motion speaks to the new Harmonized Sales Tax (HST), which is a Provincial initiative and how it adversely affect Landlords by increasing operating expense and cut into their profit margins.
The Provincial initiative is to harmonize the provincial sales tax with the GST. In effect what this “harmonization” means is that whatever goods and services the Federal GST is currently charged on, so too will be the new HST tax. To us poor consumers it means we are going to have pay more for things we buy. For example we will now have to pay HST on hydro. Think of what a burden this will be on lower income renters.
Another consequence of this new tax initiative is the Provincial government gives up its ability to target areas to tax and likewise exempt certain things from taxes to create incentives. For example bicycles have been exempt from the Provincial sales tax. Presumably the provincial government wants to encourage folks to live a healthy lifestyle and also wants to promote more sustainable transportation.
Marg Gordon and the BC Association of Apartment Building Owners.
As soon as the Hon. Colin Hansen announced the HST one of the first groups out of the gate to slag the tax was Marg Gordon, the Executive director of the British Columbia Apartment Owners and Managers Association (BCAOMA)(BCAOMA statement). Marg Gordon argued that Landlords should be exempt from the HST because their profit margins are already razor tight (hook story). Further, Marg Gordon argued that because rental increases are capped to 3.7% by the RTA, Landlords have no way to pass on the increased cost they would incur to tenants and therefore would have to absorb the cost. BCOMA statement on HSTprint
It is important to remember that the RTA regulates rental increase. The allowable rental increase is a formula of 2% of existing rents plus the Consumer Price Index (CPI). If they were any increase in operating cost to Landlords this would be capture in the CPI and rents would increase accordingly.
In addition to the mechanism that increases rents according to increase in the CPI, Landlords under the terms of the RTA have recourse to apply to the Resident Tenancy Branch (RTB) and request an increase in rents if they are able to submit creditable evidence that they should be granted an additional rental increase.(Section 43.3 of the RTA and Section 23.1 (b) in the regulations) Typically Landlord don’t like to go the RTB to apply for an additional rental increase on the grounds of extraordinary increase in operational expenses because they have to go before an arbitrator and open up the business books to public scrutiny.
The question is why should apartment building owners and Landlords be singled out for an exempt from the HST? Would not lower income folks being exempted from paying HST on Hydro have more merit in a progressive tax system?
Why is Councilor Anton moving a motion at CoV Council on an issue that is clearly a Provincial jurisdiction? Will any of the other nine councilors second the motion or will it die on the docket?
