N.S. scraps non-resident property tax; deed transfer tax to remain

The Nova Scotia government has scrapped a plan to increase taxes for non-resident property owners.

Premier Tim Houston made the announcement on Thursday afternoon.

"My intention all along, and the intentions of our government all along, were to improve home affordability," he said. "That was never meant to be at odds with our core value, the core value of our government, the core value of our province, which is being more welcoming.

"So today I will put my personal pride to the side. This policy was an effort to find a solution. It was always meant to be a tool to support housing. But when you realize that the tool you have in your hand might not get the job done, you look for another tool. I commit to finding a tool to make home affordability — particularly for first-time home buyers — a reality in this province."

The government announced the new taxes for non-resident property owners in the spring budget. The changes included a tax of $2 per $100 of assessed value for non-residents, as well as a five per cent deed transfer tax for non-residents who buy a property.

The news of the new taxes was met with criticism from seasonal residents and municipalities.

On Tuesday, Houston announced changes that would see the property tax amount vary depending on the value of the property. 

But on Thursday he announced the non-resident property tax will be completely removed.

The non-resident deed transfer tax, however, will proceed as planned.

There are about 28,000 non-resident properties in Nova Scotia, according to the province. 

• 34 per cent assessed valued under $150,000
• 12 per cent assessed valued between $150,000 to $250,000 
• 12 per cent assessed valued more than $250,000 
• 42 per cent vacant residential land 

Risk of 'reputational damage'

Houston said the "tweaks" he announced Tuesday were to make the policy more fair, but as time went on, he understood that there was a broader risk.

"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'll find another way to address the housing issue."

Liberal finance critic Kelly Regan accused the government of failing to thoroughly research the plan to tax non-resident property owners.

"They didn't do their homework when they were creating this tax and they didn't consult, and now they've discovered that you can't make policy on the back of an envelope."

Regan said the damage to the province's reputation has already been done, and she hopes companies that were planning to curtail business in Nova Scotia are able to reverse those plans.

NDP MLA Claudia Chender echoed the concern that the government acted too hastily.

"I think it's part of a pattern where the premier acts quickly without enough information and then has to backtrack and clean up after himself," she said. "If you want to leap before you look, how about build some non-market housing and get some people into it? You know, there's lots of places that require urgent action where we're just not seeing it."

Houston rejected suggestions that the government leapt into the policy without enough data or scrutiny of its potential effects. He said like all policies, it was subject to plenty of analysis.

"Sometimes it's difficult to anticipate where something might go in the minds of the public," Houston said. "But we did not foresee that this would change the view of Nova Scotia in the eyes of people."

'Not worth it'

Finance Minister Allan MacMaster said the government had estimated the property tax would bring in about $65 million a year — about half of one per cent of the overall budget. 

"Sixty-five million is not a small amount of money. If there's a way we can find the 65 million somewhere else, we will."

MacMaster said part of the aim of the tax was to encourage people who own property they don't use to put it on the market and thereby make it available to Nova Scotians who live in the province year-round. But he said the backlash from seasonal residents and people who have made investments outweighed that goal.

"In the end, it became apparent … that it was not worth it to use this tool to help Nova Scotians find places to live."

Reaction from investor

Glynn Williams, owner of the Authentic Seacoast Company, said the tax had him considering pulling up stakes in Guysborough municipality, where he's owned property for more than 30 years.

The Ontario-based business operator spoke with CBC Radio's Maritime Noon on Thursday before the government announced it was ditching the tax.

"The housing crisis will get solved by building more houses, and in order to do that, we need to attract investors and not shun them," Williams said.

Later, he praised the decision.

"It's wonderful in a democracy that our elected officials are responsive to citizens when they are in a position to express their discomfort with a policy change. So I'm delighted that the premier and his government listened to us," he told News at Six.

"I was worried the business climate had fundamentally changed.… We'll take a look at the projects that we had cancelled or put on hold and hopefully move forward."