British Columbia’s new surtax on high-value homes has elicited outcry by many affected homeowners, calling it “radical,” “punitive,” “confiscatory,” and simply “unfair.” In contrast, opinion polls of the general public find wide support for this addition to the provincial “school tax.”

What would taxation policy analysts say about the charge that the property surtax is unfair? To begin, they would ask whether it meets the four criteria of good tax policy enunciated first by Adam Smith: simplicity, certainty, efficiency and equity. Let’s see if it does.

Simplicity

Here the surtax passes with flying colours. It is simple: surtax liability can be calculated directly from assessed valuations already undertaken for basic property tax.

Certainty

It is certain: payment of surtax cannot be avoided or evaded through stealth or sophisticated accounting.

Efficiency

It is efficient: a tax on land poses the least cost to the economy, and the value of homes subject to surtax lies mainly in land.

In short, the property surtax — like the basic property tax — scores better than almost any other tax in simplicity, certainty and efficiency. Costs of administration and collection are also low for the surtax since it is done as an add-on to the basic property tax. That leaves the more complex and nuanced criterion of equity; how does the surtax score on that basis?

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