Foreign buyers sue B.C. over property sales tax
A new foreign buyers tax in Vancouver introduced in August of this year has some people in a tight situation.
The 15 per cent levy was implemented 12 days after Jing Li made a non-refundable deposit on her new townhouse in Langley — a suburb of Vancouver — adding a $84,000 expense to her home.
Li is now the lead plaintiff in a class action lawsuit against the B.C. provincial government over the foreign buyers tax.
"The main problem I see with the tax is the legality of it," says Luciana Brasil, the lawyer representing Li and others in the lawsuit.
Brasil tells The Current's Laura Lynch she has issue with the fact that the levy by the provincial government is based on the nationality and residency status in Canada because she says they both "fall squarely on federal jurisdictions."
"Having chosen that as the trigger of the tax, we say the province is overstepping their powers."
Brasil says the claims in the lawsuit she is pursuing is on the basis that the B.C provincial government is treating foreign nationals worse than its own citizens.
"This is not fundamentally about xenophobia or racism," says Josh Gordon, assistant professor in the School of Public Policy at Simon Fraser University. "This is a concern about affordability and kind of understanding the true causes of it."
Gordon has written a report which points to 2014 statistics where Macdonald Realty sold 70 per cent of properties, worth more than $3 million to people from mainland China. This rose to 21 per cent when the cost of homes dropped between $1 million and $3 million.
I think the big story is land. There is no land.- CIBC's Deputy Chief Economist Benjamin Tal
The foreign buyers tax is meant to cool the housing market without crashing it. It is supposed to deter foreign buyers, allowing Canadians to feel like they can once again participate in the housing market without having to bid over asking. Gordon says this will gradually bring the price of houses down.
CIBC's Deputy Chief Economist Benjamin Tal tells Lynch foreign investment is not the main reason for the spike in the Vancouver housing market.
"I think that we have to put things in perspective," says Tal.
"Focusing only on foreign investor is wrong because that is not the main reason, especially not in the GTA where in Toronto foreign investment is much less significant than in Vancouver."
"I think the big story is land. There is no land. In Vancouver because of geography. In Toronto it is government policy."
Listen to the full conversation at the top of this web post.
This segment was produced by The Current's Liz Hoath and Ines Colabrese.