Tax Conspiracy Theories: BC Home Owner Grant Edition

A recent article in the Vancouver Sun was drawn to my attention today. Here is the link. It is about an administrative change to the Home Owner Grant (HOG) in B.C. with quite a bit of gnashing of the teeth and biting of the nails about this being a signal for some nefarious change. While this tax economist can only dream that the HOG will some day be slain, it tells me, yet again, how little people in BC understand the eligibility criteria for the Home Owner Grant.

Now I know quite a bit about the Home Owner Grant. As loyal readers know, I lived in BC for 10 years (*whisper* I was also born in BC in a quaint town called Victoria). I was also one of the lucky few to be able to afford a home in Victoria, BC. The luck of having equity from selling a house in Toronto and then again in Winnipeg (a rolling stone, my friend, a rolling stone). I was also the Chair (yes, I was the Chair, not Paul Ramsey as originally reported in the Vancouver Sun article) of the MSP Task Force. We were tasked with finding ways to replace the revenues from the MSP premiums which the BC government was, rightfully, eliminating. While our work was derailed, long story that includes a tale of ICBC dividends, our final report made recommendations related to the HOG.

For those of you not aware, and here I will quote my own report:

“The HOG is a provincial grant that offsets property taxes on the principal residence of most homeowners in B.C. The basic HOG amount is $570. An additional amount of $200 is available everywhere in the province except Capital Regional District, Metro Vancouver, and the Fraser Valley Regional District. There is a further additional amount of $275 for seniors and additional grants for veterans and persons with, or living with a person with, a disability.”

The HOG is intended to reduce the School Tax portion of the property tax bill which is a provincial tax levied on the annual property tax bill. A homeowner qualifies for this grant if their property is assessed below a threshold [currently $1.625M] AND you meet the eligibility requirements which are that you must: 1. be the registered owner 2. occupy the residence as your principal residence 3. be a Canadian citizen or permanent resident of Canada.

Until this year, home owners applied for the grant through their municipality despite the grant being a provincial grant being applied against a provincial revenue source. Quoting again from my own report: “As a result of the mismatch of administration with the impact of the tax, municipalities have little or no incentive to audit HOG applications and to ensure that applicants are in fact entitled to the grant. Information sharing arrangements being implemented with the B.C. Assessment Authority will allow for better enforcement of eligibility criteria in future, but there is an expectation at present that many people receive the HOG who are not eligible, an efficiency and fairness concern.”

Starting this year, home owners now apply for the grant directly through the province, the entity giving the grant for the tax being levied. Makes perfect sense actually. And to apply, you will obviously need to know your property information and, gasp, horror of horrors, you will need your social insurance number. Why, oh why, would you need that, the pearl clutchers ask? To verify your eligibility, my friend. See look above. You can’t just be a home owner. You have to be a Canadian citizen or permanent resident of Canada. How is that easily verified? By your SIN number. But the municipalities didn’t ask for that information? Correct, that was a problem as it was known that the grant was going to people that were not eligible. See above. But you can’t just willy nilly ask for my SIN number! Correct. That is why moving the application to the province and, poignantly, to the Ministry of Finance, who is responsible for the tax and the grant, is important since that Ministry already has the authority to ask for your SIN number.

Now, as someone who has now twice recommended changes to the HOG, not only as part of the MSP Task Force, but also as part of the BC Basic Income Expert Panel I’d be more than happy if this administrative change signals something more. But as someone who knows a lot about tax, tax policy, tax administration, and politics, I highly doubt the HOG is going anywhere. The HOG is bad policy, we can do better, much better, and get better bang for our buck, but man, home owners like their cookies and politicians are too scared not to bake this one up every year for them.