Foreign tax too small, says broker

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The proposal to rein in foreign influence on housing prices will pass but it isn’t enough, according to one industrial professional.

“Do I think it will go through? Yes. I know the government is strongly considering it but whether it will have an impact is the question,” Jessi Johnson, a broker with Dominion Lending Centres in Vancouver, told “It likely won’t; it would have to be a very high tax rate to have an actual impact.”

Economists at UBC’s Sauder Business School and Vancouver School of Economics, as well as economists at Simon Fraser University have banded to together in a bid to encourage B.C. government to tax foreign owners in a bid to cool the hot housing market.

The group is suggesting the government create the B.C. Housing Affordability fund, which would provide a payout to local residents from funds charged to foreign owners.

The proposal is to charge a 1.5% surcharge to foreign owners of vacant properties.

The economists estimate the tax would raise over $90 million per year in Vancouver alone. But that sum just isn’t enough to have an impact, says Johnson.

“With the economic turmoil in China, there is going to be even more interest in parking money in Canadian real estate,” Johnson said. “(The tax rate) just isn’t enough (to offset that impact); they need to pick a higher number. Maybe even 5%.”

Still, Johnson supports the idea of taxing foreign owners.

“I think they should do it.”
  • Walid Hammami on 2016-01-20 9:40:36 AM

    There is a different way of doing this. Right now foreign investors are just parking their money in our real estate. We need to make sure it's an investment that benefits the economy and not a trojan horse that will trigger a bubble.
    We need a loading plan and an off loading plan.
    The solution is not that simple. These politician can't an inch farther from their nose and we put our fate in their hands. Crazy.

  • Nick Bachusky on 2016-01-20 3:27:00 PM

    I agree with Jessi. I would love to see a higher tax as well. These foreign buyers are just hurting Canadians in many areas too much with not enough added benefit for us.

  • Nick Bachusky on 2016-01-20 3:30:41 PM

    Can it really be believed that ONLY 5% of the real estate sales in Vancouver are from foreign owners as per this article: ?? That seems way too low from what I hear from friends/family/realtors in that part of the country.

  • Dave on 2016-01-20 3:47:58 PM

    Well said Walid. 1.5% tax means nothing to a foreign holding a suitcase with $2 million cash in it.

  • Appraiser on 2016-01-20 5:17:29 PM

    And by foreign you mean Chinese not American, right?

    Oh, the fear of the "yellow peril". Such incredible xenophopia.

    Let me guess. It's still o.k. for Canadians to leave their Florida vacation properties vacant for most of the year with no special foreign tax - eh?

    Because Canadians aren't "evil" money laundering criminals - amirite?


  • Jessi on 2016-01-20 8:12:53 PM

    I agree with me too :)

  • Derek Austin on 2016-01-23 1:52:56 AM

    Maybe they should stop leading them money from our Banks , RBC removed the ceiling on mortgage amounts . In the USA a foreigner can't get a Mortgage from a American Bank or Credit union. I would think that should slow things down a bit . As well as make the average Canadian debt load lesser .

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