By Kathy Michaels Kelowna.com Thursday, February 4th, 2010
Representatives of the Urban Development Institute are asking that one of the provincial organizations tasked with assessing property values be shut down, alleging they serve little purpose other than inflating values as a means to bilk developers of cash. “The Ministry of Finance’s Property Transfer Tax branch is inflating the value of development sites to increase the property transfer tax that has to be paid,” explained Maureen Enser, the executive director of the UDI’s Pacific Region, during a stop in Kelowna last week. The UDI came to this conclusion when their top minds were working to mitigate the damage anticipated by the July 1 implementation of the Harmonized Sales Tax. The new home industry is anticipated to be one of the hardest hit from the new tax as consumers are expected to balk at the newly inflated price of a new property.
Turning their focus to narrowing the gap between the new and used market, the UDI took a closer look at the PTT branch and the costs it levies on development sites. Pointing to one Lower Mainland property as an example, Ensler said it was initially valued at $13,750,000 in February, 2008 and registered the following March. By July, the BC Assessment Authority appraised it at $12,832,000. Shortly thereafter, the property transfer tax branch gave the same property a value of $23,295,000 and tax was levied at that rate. “For all intents and purposes it’s a tax grab,” said Ensler. “We’ve written letters and held meetings and we can’t figure out why we have two branches of government appraising the property.”
The UDI is proposing that the government fold the PTT branch and instead use Crown Corporation, The BC Assessment authority, for all valuations. “Then the property transfer tax should be based on the lesser of either the purchased price of the assessed value by BC assessment,” said Ensler, noting that it will take legislative change and obviously some time.
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