On the heels of a report crowning Victoria with the most expensive real estate in the country, municipal leaders are now floating the idea of a $10 to $25 minimum property tax levy on each Greater Victoria home to help finance affordable housing.

Municipal leaders know there is rarely such thing as a bad cause - affordable housing included - but there are limits to what homeowners in Greater Victoria can afford.

The irony that another tax hike makes homes even less affordable in Victoria seems to be lost on the proponents of this latest tax levy. The Canadian Real Estate Association reported that the average price for a single family home in Greater Victoria shot up to $315,974 in March, and was $100,000 more than the national average.

Municipal politicians are right to be concerned that housing in Victoria is becoming increasingly unaffordable to all homebuyers. But they put the cart before the horse. Housing becomes affordable by lowering costs, not by hiking taxes.

The costs that keep real estate hovering in the stratosphere are not simply based on land values, materials and labour, but also on a plethora of government-mandated levies, fees, charges, taxes and transaction costs.

These ancillary costs imposed on developers and buyers to build to a new $281,700 home in Saanich amounted to $42,241 in 2001, according to a study by the Canada Mortgage and Housing Corporation. That means that local authorities are contributing to the unaffordable housing dilemma by jacking up real estate prices by another 15 percent in Saanich alone. In other jurisdictions, these ancillary costs range from a low $13,640 in St. John's to $65,099 in Burnaby.

Instead of raising yet another tax, local authorities should clean out the cobwebs of taxes and fees that keep real estate prices so dear in the CRD.

For starters, municipal politicians should conduct a review of the local charges for the land development approvals process and the development of new houses. Home builders are faced with development charges, lot levies, assessment fees, engineering fees, development application processing fees, building permit fees and plumbing fees.

The costs add up and end up in the purchase price paid by the consumer. If that weren't enough to dash hopes of ever owning a house, homebuyers are hit up again with land transfer taxes, legal fees and insurance premiums.
Lower than average property taxes have helped homeowners in the past swallow the high cost of real estate but Victoria's low property tax advantage has lost its edge. A national report shows property taxes in the City of Victoria are on the rise.
An annual property tax and utility charges survey assembled by the City of Edmonton shows that the total municipal portion of the property tax bill for a single detached house in Victoria jumped 4.2 percent from 2001 to 2002.

Before the survey's terms of reference changed in 2001, the municipal cost of an average Victoria property tax bill climbed 15.6 percent between 1995 and 2000. That's an average 3.1 percent tax hike per year.

Not to belittle the plight of low-income families affordable housing is a concern for all wannabe homeowners in the CRD. Slapping on another layer of tax makes owning a home more of an elusive dream.

Local authorities need to roll up their sleeves and find non-punitive ways to bridge the homeownership gap. Removing the burden of levies, fees, charges and taxes will put more low-income families inside a home than any income-redistribution scheme.