He’s the man a lot of Canadians like to hate — their favourite political punching bag.
He owns the most expensive house in British Columbia. He created an international company that’s led the way on trendy athletic wear. And he has many in-your-face opinions.
The website of billionaire Chip Wilson, founder of Lululemon, proclaims he is “right of Attila the Hun economically, left of Greenpeace environmentally.” Anti-capitalists frequently deface his Vancouver mansion with graffiti. Even B.C. Premier David Eby takes shots at him.
One suspects Wilson, 70, doesn’t overly sweat the attacks. Still, it's possible to make an argument the longtime B.C. resident is not exactly the best target for tax-the-rich ideology.
One reason is that Wilson is a rare example of a Canadian business innovator who has created a tremendous number of jobs for Canadians and others.
Lululemon, beginning with its first outlet in Vancouver, now has 711 stores. And that’s not to mention the tens of millions of dollars Wilson has poured into philanthropy, mostly Canadian ecological efforts.
The second reason — which is more to the point of this piece — is that he must pay a tremendous amount of income taxes in Canada.
In a counterintuitive way, Wilson’s taxation profile illustrates why it would be beneficial for politicians to consider an important reform of the way expensive properties are taxed. Here's why.
This January, Wilson’s estate on Point Grey Road was again ranked the most costly residence in B.C. It’s assessed at $82 million.
When B.C. Assessment lists the addresses of the 10 most expensive properties in B.C., the media routinely report Wilson is top dog. The odd thing is, virtually no other owners get named.
That help explains why COPE, the left-wing Vancouver civic party, has used him as the poster boy for its campaign to make rich homeowners pay a surcharge on property taxes.
“Chip Wilson pays the same tax rate for his home as a family with a home (of 1/100th the value),” said one of COPE’s earlier platforms. “That is outrageous. Vancouver needs progressive property tax brackets!”
Many economists have sympathy with COPE on progressive taxation. But in using Wilson to make its case for a “mansion tax” of one to two per cent per year on pricey properties, COPE has, in a way, been picking on the wrong guy.
Wilson, who pays at least $550,000 a year in property taxes on his Point Grey Road home, is a poor target because he lives and works locally.
He makes his money while a resident of B.C. and thus must pay a great deal of taxes to Revenue Canada.
Many Canadian policy specialists want to target a different cohort of owners of expensive properties: Those who don't pay significant Canadian income taxes.
That's because they believe there is a big negative side-effect when foreign capital pours into real estate: Often the bulk of the homeowner's earnings is not subject to Canadian income tax.
Here’s a snapshot of how a "more aggressive" property surtax would work, as outlined in a new paper by Josh Gordon of McMaster University, David Ley, author of Housing Booms in Gateway Cities, and Andy Yan, director of SFU's City Program.
The authors propose a better way to go would be "property surtaxes that can be offset by income tax paid, with exemptions for seniors.” That, they say, would “more comprehensively tax foreign-capital-based home ownership.”
Such surtaxes could collect significant revenue and put downward pressure on house prices by further restricting foreign ownership, in a different way than already done by various foreign buyer and speculation taxes, say Gordon et al.
“The surtaxes would also contribute to addressing the basic tax fairness questions raised by foreign ownership: that international buyers with sources of wealth or income abroad can purchase property without paying the high, ongoing income taxes that local buyers must pay, putting the latter at a disadvantage.”
That’s just a bare-bones summary of their proposal. But it suggests how advocates for fairer taxation should be aiming at the owners of expensive B.C. homes who pay only a “tiny” amount of income tax relative to their wealth.
The owners of Vancouver-area homes with a median value of $3.7 million pay income taxes of just $15,800 — the lowest correlation of property values to income tax contributions of any North American city, according to analysis by UBC business prof. Tom Davidoff, which explored offshore capital.
Back to the list of the 10 most expensive homes in B.C., what do we know about the owners of the other nine?
Some are Canadian business owners. Nezhat Khosrowshashi, co-director of Canadian development company Wesbild, owns 4719 Belmont, valued at $42.4 billion. Surrey-born Tara Bosch, founder of SweetSmarts, owns 1450 Blanca, worth $41.2 million. B.C. entrepreneurs Robert Disbrow and Kim Kawaguchi own 2999 Point Grey Rd, valued at $38 million. Vancouver businesswoman Jacquie Cohen holds 2815 Point Grey Rd., worth $43 million.
A person named Ding Chen owns 4838 Belmont in Vancouver, assessed at $40.1 million. Won Fung Lai owns 4773 Belmont, worth $35 million. It’s not easy to find online profiles of them.
Three of the most expensive properties are owned by corporations.
The entity that owns James Island, valued at $57.5 million, is headed by James McCaw, an American telecommunications billionaire.
The fourth priciest home in B.C., at 4743 Belmont (worth $44.1 million), is owned by a numbered company, whose sole director is Peter Chung.
Finally, the most expensive mansion after Wilson's is a $71-million estate at 4707 Belmont, which is under the control of a company called Pisoni Ltd., which names no directors and has an address in the Virgin Islands, a well-known tax haven.
We don't know what kind of taxes each homeowner pays. But there's a possibility that those who are foreign nationals or linked to tax havens might not be paying significant income taxes in Canada.
Don Wright, former head of B.C.’s civil service, supports the surtax ideas put forward by Gordon et al, and earlier by dozens of scholars in a document called the B.C. Housing Affordability Fund.
Wright believes property surtaxes would help curb foreign wealth in Canadian housing, which he said is distorting property markets and contributing to making it almost impossible for many middle-class Canadians to own homes.
A lot of Canadian property developers, who have relied on offshore investors, won’t like the idea. And most politicians will be leery of it. But it’s a recommendation whose time is overdue.
With research by Postmedia librarian Carolyn Soltau
