Canadian politicians promoted a number of housing affordability measures during their campaign. The ones played up the most were vacancy taxes and non-resident speculation measures. Now that they’re in office, they aren’t so keen on actually implementing any of them. This might be due to a piece of paper buried pre-election — a threat of reciprocal measures from the US. Parliament is now trying to balance the interests of Snowbirds with second homes, and Millennials buying their first. From the way debates are going, Team Second Home is crushing Millennials.
Canadian Politicians Promise Vacancy Tax, Foreign Buyer Ban
During the election, major political parties promised vacancy taxes and/or non-resident speculation measures. The combination of measures ensures non-residents are taxed perpetually for non-use of housing. In addition, a “temporary” ban on non-resident purchases for two years was also made. Those promises appear to have been made without any real intention of execution.
US Congressman Threatens Retaliation If Canada Taxes Americans
Before the election, the US threatened retaliation if those measures applied to Americans. It turns out back in May, Representative Brian Higgins notified Canada of this issue. In particular, the congressman wasn’t thrilled about the 1% annual tax on vacant property.
Despite knowing the threat was made, politicians campaigned on the promise to implement the taxes. Now that it’s time to implement them, the consideration of “trade partners” is presenting a hurdle. This threatens to water down promised measures into little more than minor inconveniences.
Canada Is Weakening Non-Resident and Vacancy Measures
The vacancy tax is proposed as a part of Bill C-8, which opposition tried to tack on the non-resident ban. In the debate it’s become unclear if anyone knows what they promised, or what the terms mean.
In one debate, a member of parliament for the party that won on the promise of a vacant home tax, struggled to understand the term “vacant.” They sought to clarify that a vacation home isn’t vacant. They also didn’t think it was fair to tax a home that’s been in a family for generations. This doesn’t just imply a lack of understanding of the tax mechanics, but also makes it ineffective for regions that may need it.
Recently “resort towns” have become full-time destinations for Millennials. In fact, these small cities lead for population and price growth. The trend is driven primarily by the fact few Millennials can afford the City now. If you feel the need to eliminate the upward pressure on home prices due to vacant housing, the places with the highest price growth might be a priority to start.
In addition, this week an amendment was proposed to add a non-resident ban to Bill C-8. After all, the promise was an “immediate” and temporary ban that was urgently needed according to lawmakers. The amendment was rejected, with several members citing trade partner concerns.
Few federal politicians appear to be familiar with the promises they’re making and why they made them. Completely absent is any understanding of the mechanics behind the proposals. Of course, in a country where a Minister of Middle Class Prosperity can’t define the middle class, ideas are valued more than execution. What’s that? The Minister of Middle Class Prosperity’s role was abolished? Shocked.