British Columbia

B.C. Supreme Court rejects class action suit over foreign buyers tax

A B.C. Supreme Court judge has rejected a Chinese woman's bid to certify a class action lawsuit against a foreign buyers tax designed to tackle the province's housing affordability crisis.

Judge found that 20 per cent tax on residential property did not discriminate against Chinese buyers

A B.C. Supreme Court judge has rejected a bid by Jing Li to certify a class action lawsuit against the province's foreign buyers tax. Li claimed the tax discriminated against Chinese buyers. (Peter Scobie/ CBC)

A B.C. Supreme Court judge has rejected a Chinese woman's bid to certify a class action lawsuit against a foreign buyers tax designed to tackle the province's housing affordability crisis.

Justice Gregory Bowden dismissed Jing Li's claim after finding that the 20 per cent tax levied against foreign purchasers of residential property in B.C.'s hottest housing markets does not discriminate against either Asian or Chinese buyers.

In a 43-page decision released Friday, Bowden found that the tax draws distinctions based on immigration status — not ethnic or national origin.

And that people who don't have Canadian citizenship, including Chinese nationals, don't have to pay the tax if they are permanent residents or provincial nominees.

"The structure of the tax is not responsible for any unequal burden on Asian persons," Bowden wrote.

"It is not a numbers game. Buyers from Asian countries, such as China, receive equal treatment that is proportionate to the demand from those countries."

Landmark trial

The judge's decision comes after a landmark summary trial held to determine the fate of legislation the previous Liberal government introduced in 2016 in order to cool an overheated Lower Mainland housing market.

The tax initially required foreign entities (including foreign nationals) to pay an additional 15 per cent on the purchase of residential property in Greater Vancouver.

The foreign buyers tax was enacted in 2016 in response to unprecedented growth in the Vancouver real estate market. (Jonathan Hayward/Canadian Press)

The current NDP government increased the tax to 20 per cent in February 2018 and expanded the reach of the tax to include the Fraser Valley, Capital Regional District, Nanaimo Regional District and the Central Okanagan.

Li moved to Canada from China in 2013 to complete a master's degree in public administration.

She entered into a contract to buy a half-million dollar condo in Burnaby in July 2016, the month before the tax came into effect.

Her closing date was in November, which meant she would have to pay an additional $83,850 as she was neither a permanent resident nor a Canadian citizen.

Undisputed housing affordability problem

The case was decided through a summary trial in which both Li and the government argued the case through written affidavit evidence and expert reports from an array of academics who have been among the most widely quoted voices on the housing crisis in the past decade.

Justice Gregory Bowden dismissed the suit after a landmark trial in B.C. Supreme Court in Vancouver. (Maggie MacPherson/CBC)

"It is not disputed that there has been a housing affordability problem in the [Greater Vancouver Regional District] for a number of years," Bowden wrote.

"Home ownership in Vancouver became less affordable than all other cities in Canada. Vancouver had become one of the most unaffordable real estate markets in the world."

The judge explained that the provincial government decided to follow in the footsteps of jurisdictions including Hong Kong, Singapore, Israel and Australia in implementing a foreign buyers tax.

"Local factors did not appear responsible for the inflation of housing prices and public commentary pointed to foreign demand," Bowden wrote.

Overwhelming support among Asians

Li argued against the tax on a number of different grounds. She claimed that the province was trying to usurp federal powers over immigration and citizenship.

And she also accused the province of violating Section 15 of the Charter of Rights and Freedoms, which protects against discriminating on the basis of race, national or ethnic origin or colour.

The judge found that the tax was intended to "dampen demand" and discourage foreign nationals from purchasing real estate. He said it was designed to make the local housing market more affordable without denying non-Canadian citizens the opportunity to own, rent or lease housing.

He also rejected Li's claim that the tax perpetuates prejudice, stereotyping or disadvantages of Chinese people in B.C.

"It is also notable that there was overwhelming support for the tax among Asians living in Greater Vancouver," Bowden wrote, citing the research of urban studies professor Andrew Yan.

"Professor Yan states that Canadian citizens or permanent residents of Chinese descent are equally impacted by housing affordability and equally will benefit from any measures that improve affordability."

ABOUT THE AUTHOR

Jason Proctor

@proctor_jason

Jason Proctor is a reporter in British Columbia for CBC News and has covered the B.C. courts and mental health issues in the justice system extensively.

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