More taxes not the way forward - former Finance Minister

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In response to the long-running home affordability crisis in Canada’s red-hot markets, any policy revisions on the federal level should focus on more fundamental solutions such as supply-side changes instead on the imposition of new taxes, according to the former Finance Minister.
 
Writing in a contribution piece for the Financial Post, Joe Oliver argued that the growing calls to levy additional taxes are misguided, especially considering the ever-rising costs of living.
 
“The goal should not be to drive down house prices. That would penalize homeowners, lowering the value of some houses below their mortgages. It could also trigger an economic downturn,” Oliver said. “Policies should avoid impacting regions where price increases are moderate (that is, pretty much anywhere not in the Greater Toronto and Greater Vancouver areas) and where both domestic and foreign investment is needed to counter sluggish growth.”
 
“[The] last thing we need is for government to use a hyped-up crisis as an excuse to impose new taxes that would reduce housing affordability,” he added.
 
Contrary to the common perception that new taxes would curb foreign ownership, such a toll would instead hit already-disadvantaged sectors the hardest.
 
“Retirees on fixed incomes worry they may be forced out of their homes. For most millennials, buying a home where they grew up is out of reach without family support or a job running a hedge fund. Their sad fate is to rent indefinitely, purchase a minuscule condo, commute a great distance or try to find employment elsewhere,” Oliver wrote.
 
Fortunately, federal authorities have no shortage of viable alternatives that they can consider.
 
“CMHC can increase down payments for homes under $500,000. It can make credit standards more stringent, for example by ascribing a higher rate for fixed-rate mortgages,” the former Finance Minister said.
 
Oliver also pointed at increasing the existing housing stock as an effective solution, although he noted that it might engender no small amount of controversy.
 
“Five per cent of the 1.8 million acres protected by the Greenbelt could be re-designated for zero-emission development. Those 90,000 acres would permit construction of about half-a-million mixed-development residences, housing approximately 1.5 million people,” Oliver stated.

Related Stories:
B.C. supports housing vacancy tax in Vancouver to assist with rental shortage (Real-Estate-Tax)
Vancouver's proposed housing tax won't ease prices - analyst

 
  • Savio V. on 2016-07-25 9:19:54 AM

    This has been going on for a while- in a drive to curb foreign ownership , the Government deprives the average Canadian of homes in their own country . Try buying a home in other countries.
    A recommendation - Canada wants to curb foreign ownership, how about a minimum 50% downpayment required, and qualifying a client at the benchmark rate at 25 years amortization with the relevant GDS/TDS ratios ?- employment verification required (i don't know how they can do this-but find ways of a solution to the verification process)
    How about increasing the amortization for Canadians - like most European countries, so it eases their lifestyles, and they enjoy life more , and afford a home as well- doesn't matter if it take them a while to pay it off- and there are ways to pay it off faster anyways.
    Why not have lawyers take on the onus of verifying foreign ownership- no Canadian passport / citizenship card at signing? higher taxes for foreigners ?
    Why are we making difficult for our own to qualify ?

  • Alister MacLean CCIM on 2016-07-25 12:37:55 PM

    Perhaps the Government could help Canadian buyers afford their first time home by amending the income tax rules - giving the 1st time buyer the option to get tax relief against their income tax, whereby their mortgage payments could to be temporarily tax deductible up to say $2000 per month. Eventually when the buyer chooses to sell the house the government could either recover their tax relief as a capital gains tax on sale or, on the accrued deferred sum of income tax sheltered, which ever is the lower!
    Now if a Buyer does not opt for the Mortgage tax deduction, then obviously no capital gains tax would be calculated as is the present norm.

  • 2D from TO on 2016-07-26 9:41:12 AM

    Why is Joe Oliver talking about make it harder to own for Canadians? When affordability is already so hard. BC has finally taken a step in the right direction with the new land transfer tax, at least this will have these absentee owners pay their share of taxes since we all know they don't earn income and don't pay income tax. Mostly it is the elderly, housewives, and students who actually occupy the McMansions being bought by foreign owners as a way to hedge their money against volatility in their own country.

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