B.C. Liberal party Leader Christy Clark has defended a little-known provincial tax rebate program that was expanded in 2014 to attract international banks and investment firms to Vancouver and is possibly linked to greater amounts of overseas cash coming into the local real estate market.
“We want to re-establish British Columbia as a location for head offices around the world, and I think reaching out to Asia and getting those head offices here is a good way to do that,” said Clark on Wednesday, downplaying a New York Times report which questions the 29-year-old program’s job creation results, transparency, and benefits to B.C. residents. The report states the program has cost $140 million in tax refunds and created up to 300 jobs.
According to the New York Times report there are 82 companies in the program called AdvantageBC which may be entitled to a tax refund of up to 100 per cent of their corporate income taxes. Their names and their claim amounts are not disclosed by the province’s Ministry of Finance, which oversees the program. B.C. government documents show that under the program workers who earn over $100,000 a year and are hired from outside B.C. are given income tax breaks.
B.C. NDP party Leader John Horgan said “AdvantageBC seems to be advantage for those that back the B.C. Liberal party. We don’t know who these companies are, or how much they’ve been able to pocket over the past number of years.” The program has operated under an NDP government, but was expanded during the Liberals current reign.
Former Liberal finance minister Colin Hansen is CEO of AdvantageBC and told Postmedia News “The tax rebate program goes back 30 years and was designed to build Vancouver’s reputation as an international financial centre.”
Hansen said the program focuses mostly on companies in China because “if you were to make a list of 1,000 companies that are global in size and want to reach out globally and regionally (and don’t already have established headquarters elsewhere) 90 per cent would be in China.”
The New York Times reported that “companies can receive refunds on real estate activities with foreigners, including mortgage loans on property in Canada for international buyers. Conducting the same domestic activities for Canadians would not qualify for the refunds. This has raised concerns that the tax refunds may encourage banks and other companies to prioritize foreigners over Canadians in Canada’s overheated housing markets.”
Ministry of Finance spokesman Jamie Edwardson, who defended the value of the program in comments to the New York Times, was asked by Postmedia if B.C.’s government knows of any foreign business-people involved in the program who have become significant investors in residential real estate in B.C.Edwardson said that as a government employee he could not comment on this or other questions from Postmedia during the election period.
Earlier, Edwardson told the New York Times he couldn’t identify companies that had received refunds nor provide details of refunds due to laws that protect taxpayer privacy.
The New York Times reported that Edwardson referred them “to decade-old data in a consultant’s 2009 economic analysis, which estimated that between 2001 and 2007, the additional investment added anywhere from 124 million to 141 million Canadian dollars to the economy. Mr. Edwardson said these figures were the most recent available.”
Hansen said he is not aware of any company in the program that is issuing mortgages in B.C. even though “issuing loans to a non-resident” is an activity that qualifies companies to get a rebate.
Anbang Insurance, the Beijing-based insurance company that recently paid more than $1 billion to buy Vancouver-based Retirement Concepts’ chain of senior care homes and has spent more than $1 billion on commercial properties in Vancouver is not in the rebate program, said Hansen.
Dermod Travis of Integrity B.C., however, said that as the program includes massive foreign financial companies involved in real estate development and mortgage loans, and also B.C. real estate industry-linked companies, B.C. citizens should be asking whether AdvantageBC helped to fuel Vancouver’s hot real estate market.
“Has this become a club to facilitate deals?” he said. “If you look at when Vancouver home prices really skyrocketed, it was at the time this program was expanded, along with others. I don’t think Advantage B.C. exclusively contributed to (Vancouver’s housing bubble) but these programs have contributed to it.”
Last fall, Postmedia reported that the U.S. government named Vancouver-based PacNet a “significant transnational criminal organization” that allegedly has worked for 20 years with “direct mailer” scammers to launder hundreds of millions of dollars defrauded from millions of vulnerable victims. The Obama administration put PacNet on an international shortlist of about seven organizations including internationally-known criminal cartels.
Travis said his review of AdvantageBC’s website showed that PacNet remained a member for months after Postmedia’s reports and that the company was only recently removed, apparently in connection to questions from the New York Times. Hansen said PacNet, which had been in the program for years, did not pay its membership dues this January and, along with media reports questioning its good standing, it was removed.