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Calgary Herald

Canmore can't tax its way out of housing crisis

Article content A recent court decision has cleared the way for Canmore next year to impose a 'Livability Tax' — a 0.4 per cent property tax surcharge for homes left unoccupied for more than half the year. Article content Article content Mayor Sean Krausert called the ruling a 'big win for Canmore.' But without addressing the cause of Canmore's housing shortage — too few new homes being built — this new tax is simply a costly distraction. Article content Article content Canmore is not alone in taxing housing that is supposedly underused. Vancouver, Toronto, Ottawa and the federal government have imposed similar taxes. According to proponents, these taxes encourage part-time residents to sell or rent their properties to full-time residents. Article content Article content However, the evidence for this is underwhelming. A study of Vancouver's Empty Homes Tax found that it shifted 5,355 homes from part- to full-time residency between 2016 and 2021. Article content While that may seem like progress, during the same five-year period, construction started on more than 240,000 new homes. And despite the tax, home prices and rents continued to rise significantly. Again, because new housing construction has not kept pace with population growth, partly due to policies that discourage homebuilding — such as high municipal fees, long permit approval wait times and restrictive rules on what can be built and where — challenges that are familiar to Canmore's homebuilders. Article content Article content Taxing part-time residency is no substitute for genuine housing reform, and may in fact deter investment in new housing. Article content Vacant home taxes are also costly for governments to administer. According to Canmore's latest budget, it will cost $920,000 in the first year and $820,000 in the second year just to administer the tax. That amounts to between eight and nine per cent of the projected $10.3 million in annual revenue generated. Article content By contrast, the administrative cost of ordinary property tax administration in Canada is typically about two per cent of revenue. The Livability Tax will apply to Canmore residents who occupy their housing unit for less than 183 days a year. Article content Crucially, the stakes of vacant home taxation are unusually high for Canmore. A study commissioned by the municipality estimates that one in four homes are likely not occupied full time. That may increase the tax's reach, but also its potential harm. Article content Why? Because deterring part-time residents is a risky proposition. The underlying assumption of the Livability Tax is that full-time residents are more valuable to the community than part-time residents. But the town council's arbitrary 183-day threshold does not account for a resident's contribution to Canmore's economy or civic life.