Tax on luxury homes

IN addition to a new surtax on the purchase of luxury vehicles and an increase in the consumer goods tax, owners of higher priced homes in the Canadian province of British Columbia will face huge property tax hikes this year.

In an attempt to raise an estimated C$37 million (about HK$225 million) from property owners in the next fiscal year, the British Columbia finance ministry announced in its 1993-1994 budget that homes valued at $500,000 and above will be subject to a newschool surtax assessed on a sliding scale ranging from $5 per $1,000 of value between $500,000 and $700,000, to $15 per $1,000 of value beyond $900,000.

The Finance Minister, Mr Glen Clark, said this would affect only the wealthiest five per cent of British Columbia homeowners, or about 50,000 properties.

Many of these residences are situated in the exclusive Vancouver neighbourhoods of Kerrisdale, Point Grey and Shaughnessy, which have been favourite destinations for wealthier Hongkong immigrants.

The tax bill for an owner of a $600,000 home is forecast to increase by nearly 30 per cent to about $5,500, while those with homes worth $1 million will see their property taxes jump by more than 150 per cent from $5,650 in 1992 to $14,250 this year.

Echoing the concern, Hongkong firms in Canada have raised over a recently introduced corporate capital tax - which levies a 0.3 per cent tax on the assets of firms worth more $1 million - Vancouver Mayor Mr Gordon Campbell said he wanted ''the provincialgovernment to withdraw this unfair tax grab'' on the assets of property owners.

Although the average price of a Vancouver home is well below the $500,000 mark, the Canada Mortgage and Housing Corporation has revised its 1993 forecasts up, now predicting that the average price of a Vancouver home will rise by 10 per cent to $326,000.

While no statistics were available to show how many homes currently valued in the neighbourhood of $455,000 would be subject to the tax next year if they were to appreciate by 10 per cent as well, it is clear that the wealthier home owner will be snaggedby the British Columbia government's efforts to raise revenues for proposed health and education expenditures.

While the head of the Business Council of British Columbia, Mr Jerry Lampert, was quoted in the local media as saying the increase in property taxes was really a small part of a larger ''social agenda [rather] than an economic blueprint'', the leader of the British Columbia Federation of Labour and supporter of the ruling New Democratic Party, Mr Ken Georgetti, agreed the new taxes were unpopular.

However, he argued that if business groups ''were to quit whining and put their money into British Columbia instead of Taiwan'', the province would be better off economically.