Province scraps non-resident property tax

Nova Scotia is dropping the controversial non-resident property tax that drew widespread criticism from seasonal homeowners.

Premier Tim Houston made the announcement last Thursday after his provincial government's cabinet meeting.

Saying the “reputational risk” to Nova Scotia is far more valuable than any policy, Houston added that the province is listening to the will of the people.

The government saw the measure as one way to help rein in the hot housing market and increase affordability but it did not anticipate the backlash or the unintended effect of painting the province as unwelcoming, he said.

“When you realize that the tool that you have in your hand … might not get the job done, you look for another tool,” Houston said. “And I commit to finding another tool to make home affordability – particularly for first-time home buyers – a reality in this province.”

Just two days earlier, during his State of the Province address at a Halifax Chamber of Commerce luncheon, Houston had said the province was going to tweak the regulations by exempting serving military members and making the tax tiered according to assessed property values.

But speaking to the media on May 5, Houston said it became clear that that was not enough.

“Really, this comes down to the reputation of our province,” he said. “I believe the risk of reputational damage to Nova Scotia is becoming more and more real and it's something I'm not willing to accept, so we will find another way to address the housing issue.”

He said he expected there would be some for and against the seasonal resident tax, but the greater impact on how Nova Scotia is viewed weighed greatly on him and his government.

“The reputation of the province – I can't state that strong enough – when I see our reputation be put at risk, it's not something that I'm willing to let stand, so that has to be at the forefront of every policy decision.”

The regulations introduced in the spring budget had called for a two per cent tax on assessed value. The measures remain in the documents, but only the portion covering the five per cent tax on non-resident deed transfers will remain in effect.

“This is a welcoming province. That's the message," Houston said. "We do have a housing crisis. We do have issues in health care. We're going to get to work on all those but sometimes you have to acknowledge which direction you're going.”

The tax was expected to raise more than $65 million for government coffers.

“We have a $500 million deficit to begin with, so we have a lot of work to do on building the economy of this province and will continue to look for ways to support Nova Scotians, protect Nova Scotians, while building the economy so there is a lot of work to be done, for sure,” the premier said.

Finance and Treasury Board Minister Allan MacMaster also answered reporters' questions. He said the money the seasonal resident tax would have brought in was “not insignificant” although it represented about half of one per cent of the overall budget.

“We always have to be mindful of looking at, over the course of the year, if there are things that don't make sense to continue doing or things that we can do differently that save money. I think we always want to be open to that,” MacMaster said. “We didn't commit to a balanced budget from the start, so I think at the end of the day, our budget was more focused on fixing health care than it was on non-resident taxation. But I will say, you know, $65 million is not a small amount of money.”

He said the policy was wellresearched and thought out before it was brought in.

But people, particularly those born in Nova Scotia or with Nova Scotia family ties, said they were having to list family cottages for sale because they couldn't afford the new tax. These were properties that had been in their families for generations. For some, it meant they'd no longer have a place to go to when they wanted to come back 'home.'

“I do believe we did do our homework,” MacMaster said. “At the end of the day, I think we have conflicting goals. We're trying to help Nova Scotians find places to live but we also see the reputational risk to the province in carrying through with this policy.”

He said he expects the fact that the tax has been scrapped will go a long way toward repairing the hit to the province's reputation.