Canada - economic aspects of the country's land use

American Journal of Economics and Sociology, The,  Dec, 2000  by Garry B. Nixon

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It cannot be overemphasized that land values assessed are often not the current ones, but up to as much as forty years out of date. Naturally when attempts have been made (as in Vancouver, Winnipeg, and Toronto) to correct this, [12] the land owners (who show a marked disinclination to share their new found gains) band together and lobby for the status quo, or as near to it as can be allowed. [13] Property taxes are disliked out of all proportion to the effect they actually have on the population. [14] As city councilors are often in a similar land-owning position as the complainants, they have been partially successful in curbing taxes by using devices such as capping the rate of increase each year in assessments, no matter how great the actual increase in value has been. Thus, even in Vancouver, which was thought to have achieved market assessments, the assessments on the more affluent west side will be at times less than sixty percent of the properties' real value; in the less prosperous east side they wi ll be commonly over ninety percent. The landowners' success has led to a shift to higher taxation on commercial properties in Vancouver, having the effect that they are now being taxed up to four times the rate of their noncommercial counterparts. [15] Far from earning the distinction of having a property tax that taxes land more than improvements, Canada now has reversed it to the extreme that less than thirty percent [16] of all property tax is on land, capturing only a small part of the rent.

To gain an appreciation of the hugeness of the uncollected rent involved, it should be understood that in the years 1980-92 land prices in BC rose twelve fold, with certain suburbs of Vancouver and Victoria experiencing a twenty-three fold increase. In that twelve year period, the cost of living rose by less than fifty percent. In comparison, during the years 1966-96 it was not unusual for a house on the west side of Vancouver to have risen fifty fold at a time when there was less than a five fold rise in overall prices, caused in part by these very same land price increases. This is a transfer of wealth to a privileged few on the scale of Margaret Thatcher's privatizations [17] in Great Britain, causing costly urban sprawl and societal fabric erosion. Another result is that a new would-be home owner is now unable to afford land near the city center, if indeed he is able to afford land at all. It has been noticed that, for the first time in Canada's history, large numbers of young people find it impossible t o buy land--with the inevitable consequence of a two class

society. It should also be noted that most of this gain in land escapes any tax whatsoever. A taxpayer is entitled to a complete exemption of Canadian income tax on land that is used as a principal residence, and, until recently, a $100,000 exemption for land that is not. Commercial land used as an integral part of a Canadian business usually qualified for a $500,000 exemption.

Throughout the world, the public has a vague notion that not all gain from natural resources may convincingly be attributed to the application of entrepreneurial skill or effort; however, neither politicians nor academics are willing to shed much light on this matter. Canada, for example, has had conflicts arise between levels of government where the rent question has been inadvertently brought to the fore. Discord has occurred in matters pertaining to oil, natural gas, forests, mining, coal, hydro power, Indian land claims, the railways, and immigration-to name just a few.