Four new Island municipalities subject to speculation tax

North Cowichan mayor Al Siebring is “a conservative guy,” he says. “I don’t think taxes solve anything.” But even Siebring has found an exception he can get behind: the speculation and vacancy tax, which was expanded this week to include his municipality—along with Ladysmith, Duncan, and Lake Cowichan.

The tax applies to vacant homes, and is levied at half a percent of the property’s assessed value (or 2% for foreign owners). It has been in place in Victoria and Nanaimo, as well as much of the Lower Mainland and Kelowna, since 2018.

In that time, Siebring has seen faster growth of house prices in North Cowichan than in Victoria or Nanaimo, amounting to 37% between 2021 and 2022. A single-family home there now costs $668,000, which is about what a comparable house cost in Victoria as recently as 2017. The result of that price growth has been people leaving the community, while others are “living in RVs,” he said. “We need rentals.”

Part of the purpose of the tax is to incentivize owners to rent out homes that would otherwise sit empty.

Siebring blames the tax—not having it, specifically—for some of the price increases he’s seeing in his community. Nanaimo is just 40 minutes away, and Victoria is an hour and a half away. He says people “who wanted nice lakefront houses” have been driving that extra distance to escape the tax.

He’s not alone in that assessment; a June review the province conducted looking at the tax found “regional drift” was a risk, especially for communities that might reasonably act as a bedroom community for a nearby city that has the tax—communities like North Cowichan.

“If you’re going to impose it in Nanaimo and Victoria, we need it too,” Siebring said.

He told Finance Minister Selina Robinson as much in a recent letter, and he says she called him before making the news public to confirm his support. In the announcement of the tax expansion on Wednesday, Robinson pointed to that local support for the move.

"People in these communities have been vocal … about the intense housing pressures that they are facing, including speculation and near zero vacancy rates,” the minister said. “This expansion will help prevent speculation from moving from one community to another in a region."

The expansion takes effect in January.