Empty homes tax — another useless Canadian import?

The latest idea to fix high housing costs is a tax on empty homes, which will supposedly encourage people to rent out (or sell) unoccupied properties. This is inspired by the recent plan by Vancouver to slap a fine of around $A10,125 annual tax on supposedly vacant properties. And there is a similar fine per day if you lie to Vancouver’s housing police.

Vancouver provides exemptions galore, which would likely be replicated in Australia: for renovations, properties subject to a court order or probate, where ownership changed during the year, where strata rules restrict rentals, and many more. But you have to provide detailed evidence to obtain an exemption. So some of the best minds in Vancouver are likely focussed on avoiding the tax, rather than doing anything useful.

And for rental properties, the property must be “rented for a total of 180 days of the year, in periods of at least 30 consecutive days.” This implies that a dwelling will probably be taxed even if it is rented for most of the year, except for two or three days every month. This will potentially hit many AirBnB landlords. If Australia imposes the vacancy tax, we might avoid these absurdities, but don’t count on it.

In any case, will it work in Australia? As at the 2011 Census night (the latest year available), 6.5% of properties in Sydney were vacant: and many of them would be unoccupied because of holidays, or for the same reasons Vancouver gives an exemption. This means the problem is not substantial, and the vacancy tax won’t raise much money.

A tax with an onerous bureaucracy and substantial paperwork requirements, creating lots of avoidance activity, and raising not much money. Perhaps we should put the Vancouver vacancy tax with some other Canadian imports we could do without, like Celine Dion or Justin Bieber.