The continuous growth of home prices in Toronto, coupled with the increased influx of overseas nationals fleeing the Vancouver market, will eventually compel Ontario to implement a foreign home buyers’ tax similar to that of B.C., according to the former Minister of Finance.
In a contribution piece for the Financial Post
, Joe Oliver argued that such a levy will give the Toronto market the breathing room it needs, even if the measure might prove to be unpopular in the short term.
“[What’s] at stake is much larger. Increased foreign buying is going to exacerbate an overheated real estate market, to the detriment of all Torontonians and at risk to the broader economy,” Oliver wrote.
However, Oliver emphasized that the tax should be enacted in concert with other steps to cool down Toronto’s housing segment.
“The realistic goal of a property transfer tax is to moderate price escalation. It is not a silver bullet that creates ‘affordability’ since that would only result from a market crash, which would have broader economic consequences, mostly negative,” he stated.
“I would time the implementation differently than in B.C. The tax should take effect the instant it’s announced, rather than giving buyers eight days to skirt it. Also, it should not apply retroactively to transactions that were signed but not closed, which is fundamentally unfair.”
Furthermore, Ontario should work to improve supply by eliminating regulatory roadblocks altogether.
“The most pressing need is for the provincial government to reduce red tape on housing construction, which adds significantly to cost, delays and financial risk,” Oliver said. “[Opening] up for development a mere five per cent of Ontario’s Greenbelt could provide mixed housing for 1.5 million people and generate 1.25 million person years of employment.”
Most importantly, Oliver contended that the province need not wait for a federal-level intervention to start addressing Toronto’s housing issues.
“While we wait for the prime minister to fulfill his promise to ‘take measures so that the affordability of homes is accessible for more Canadians,’ we require action at the provincial level. A tax on foreign purchases in the red-hot GTA market would address a rapidly looming problem.”
B.C.-esque tax in Toronto would be disastrous - lawyer
Exodus to Toronto and Seattle underway