Economist Tom Davidoff proposed a really interesting taxation approach to make property development more elastic to demand [1]. In essence, he proposed that pro

Economist Tom Davidoff proposed a really interesting taxation approach to make property development more elastic to demand [1]. In essence, he proposed that property owners pay property tax calculated on the potential rent they can derive from their property, rather than on the value of the land and buildings, as is more typically the case. “This is really a way to help renters. For example, under the current situation, if you’re a tech sector worker and you have a good salary but you’re really struggling to find a rental in Vancouver, even with your high salary, you’re thinking: “I’m paying really high income tax and really high rent, but my landlord is paying very little in property tax. If we switched that, I’d be better off.” So by raising property taxes and lowering income and sales taxes, you could have a more dynamic economy. People recognize that unaffordability is currently hindering the economy, due to how hard it is to draw workers here to Vancouver who can’t be comfortably housed. But lowering income and sales taxes will also bolster the economy, because people will have more money to spend and more incentive to work and do business. It’s this extra incentive due to lower income and sales tax rates that is behind the theoretical result.” If you extended this concept into the realm of short term rentals, then property taxes on the unit you are able to rent out on AirBnB would be vastly higher than on the unit in a building that prohibits STRs. The market would take care of the rest. [1] https://news.ubc.ca/2018/12/05/ubc-economist-proposes-solution-to-vancouvers-affordability-crisis/ https://news.ubc.ca/2018/12/05/ubc-economist-proposes-soluti...