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 MortgageBrokerNews.ca. “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.”