Government plans foreign buyers tax in bid to create affordable housing

By The Canadian Press

TORONTO — The Liberal government says it will take steps over the next year to tax foreign homeowners who live outside of Canada as part of a plan to lower housing prices.

It’s an idea that has been growing in popularity over the last few years in provinces such as British Columbia, Ontario and Prince Edward Island, but some experts question how effective such a plan would be.

The government says the plan will benefit first-time homebuyers and put more homes on the market by taxing homeowners who use Canada to passively store wealth in housing.

Tsur Somerville, an associate professor at the Sauder School of Business at the University of British Columbia, says foreign buyers are not a nationwide problem for home affordability, pointing to Canadian vacation destinations that encourage visitor spending.

Andrey Pavlov, professor of finance at the Beedie School of Business at Simon Fraser University, says the proposed taxes are also unlikely to raise the money needed to offset government spending.

Prime Minister Justin Trudeau said last year his government would introduce such a tax, praising a similar measure in British Columbia during his most recent election campaign.

This report by The Canadian Press was first published Dec. 1, 2020.

The Canadian Press

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