Well, it’s property tax time again and with it comes chatter about the Home Owner Grant.
That’s the $770 grant that homeowners can claim on their property tax, or $1,045 if you are a senior. It’s a massive program, costing the province an estimated $892 million for this tax year.
Back in a former life I wrote my master’s thesis on this thing. That was pushing 20 years ago now, but not much has changed. It’s still a mess.
First off, a few details. The Home Owner Grant is first and foremost a tax break for the school tax. That’s what your grant goes towards offsetting, and if there’s any left over, it can be used for your local government taxes. But mostly it’s for the school tax.
Now a weird thing is it’s not a school tax. It was only prior to 1990 that your school taxes directly financed your local school district. You can call it that if you want, but the grant is a property tax relief policy on a provincial property tax. This is an important point for questions of tax equity.
In my thesis, I focused on the inherent inequality of this program. And the most glaring is that it is not equally available to renters, it does not correct regional disparities based on where provincial property value is concentrated, and it is not linked up with income.
Yes, renters pay property tax. It’s effectively included in the rent. And yes, the B.C. government introduced the BC Renter’s Tax Credit this year, which is a refundable tax credit worth $400 you apply for on your income tax return.
This is a positive step, but it’s still not equitable.
For every dollar above $60,000, you lose more of your renter’s tax credit, down to $0 at $80,000.
But if you are a homeowner? Well first off, you get almost double the credit, and there is no income test. Although there’s a cutoff based on home value ($2.125 million), you can be a billionaire and you will still get that whole amount.
There’s a pretty simple solution and that is to simply fold the homeowner grant and the Renter’s Tax Credit into one program, available to all through your income tax return, with an income and tax burden test.
Ontario does this, and has done this for decades, with their Ontario Energy and Property Tax Credit (OEPTC).
It’s based on two things - the amount of property tax you pay, and the amount of income you earn. If you are a renter, the property tax is simply calculated as a percentage of your rent.
It’s a pretty straight forward policy and would do a far better job ensuring the billion dollar Home Owner Grant program goes to those who need it.
James Steidle is a Prince George writer
