Will Houston learn from tax climbdown?

GAIL LETHBRIDGE glethbridge@herald.ca @chronicleherald Gail Lethbridge is a freelance journalist in Halifax.



SaltWire Network



Premier Tim Houston dropped the bombshell before getting out of Dodge. It’s probably a good thing for him. Go to Europe, promote Nova Scotia tourism and foreign investment and let things simmer down at home after his big climbdown on the non-resident property tax. It’s sort of ironic, too. Just as he was heading out to promote tourism and foreign investment in Nova Scotia, he was facing a real possibility of an exodus of foreign investment and tourism in Nova Scotia because of the tax burden. And yes, out-of-province cottage owners are foreign investors. Just ask the restaurants, renovation businesses and municipalities in rural Nova Scotia that benefit from their spending. The whole sorry saga of the out-of-province taxation folly is over now, but it left our newly minted premier with one whopping shiner. Sadly, it left our province with a few bruises, too. His foreign taxation plan dealt a near-fatal blow to Nova Scotia’s reputation for being open and welcoming to outsiders and prompted accusations that we are hostile to “come-from-aways.” Hopefully, he can “fix” that with potential investors while he is away and earn back the trust of out-of-province residential and business investors who were already here, some for many years. In case you missed it, the plan was to impose a two-percent tax increase on out-ofprovince seasonal property owners. Some property owners were looking at tax bills that would spike threefold. Cottage owners were talking about selling and leaving the province because they couldn’t afford the new tax. On May 3, the premier backed off on the small-hold cottage owners, announcing a tiered system in which the first $150,000 of assessment would get a free ride on the tax increase. That quelled the nerves of some seasonal landholders, but the problem didn’t go away for those assessed at more than $250,000 who would still face the twoper-cent increase. Then on May 5, Houston hit the eject button on the whole thing, except the fiveper-cent deed transfer tax. And it was over. He will have had an earful from businesses that threatened to cancel developments, sell and walk away from the province. None of this was good for Houston or Nova Scotia. It divided people and left the bitter taste of unfairness in the mouths of many. It even prompted the threat of a Charter challenge. It also left the impression that Nova Scotia is not open for business. I don’t know whether it was naivete, lack of homework or plain cynicism that motivated this policy. Houston says analyses were done. Well, if they were, they weren’t done well. They might have run the numbers that would be generated by the tax, but they didn’t run the numbers on the reputational damage and the blow to future investment. Houston was bargaining that he’d be politically insulated because non-residents don’t have a vote. What his analysis didn’t consider is that many of those out-of-town property owners and businesses have friends and family in Nova Scotia who do vote. He also didn’t consider the many voting business owners who would be hurt by this tax. To his credit, the premier showed humility when he swallowed his mistake. It’s just too bad he didn’t go out there in the first place and consult with stakeholders before he pushed the tax legislation through during a short legislative session with many late nights. The goal was noble: raise money to “fix” the problem of affordable housing. The problem was that the plan lacked a plausible explanation of how taxing rural cottagers and businesses would solve the housing problem. And so it just ended up looking like a cynical tax grab. Now Houston still has the problem of affordable housing and the problem of “fixing” the broken trust. It’s not always better to beg forgiveness than to ask permission.