OREA vs CMHC: The imaginary battle over a non-existent home equity tax

OREA vs CMHC: The imaginary battle over a non-existent home equity tax

OREA vs CMHC: The imaginary battle over a non-existent home equity tax

In the last week of July, the Ontario Real Estate Association tapped Nanos Research to determine how Ontarians would feel if a new capital gains tax were levied on the sale of primary residences. The resulting survey, a response to unsubstantiated rumours that the federal government was in the early stages of creating such a tax, found that “over six in ten Ontarians would oppose or somewhat oppose a new capital gains tax when someone sells their primary residence.”

That people would be opposed to paying higher taxes is hardly shocking, and the educational benefit of sharing such an obvious fact is, to put it kindly, limited. What is surprising is that OREA would undertake the survey at all considering the Canada Mortgage and Housing Corporation’s repeated denials that such a tax is in the works.

After the release of a July 17 Blacklocks article, “Feds Eye Home Equity Tax”, in which it was claimed that “CMHC is spending $250,000 researching a first-ever federal home equity tax,” the crown corporation publicly responded in a July 17 tweet directed at Wall Street Journal reporter Paul Vieira.

“This convo & headline are misleading,” reads the tweet. “Funds [the $250,000 in question] to [non-profit research organization] @GenSqueeze through our Solutions Lab, was to research solutions to #housing, wealth, and inequality. A home equity tax is an incorrect characterization of the upcoming research. Plus, research ≠ tax policy decisions.”

A statement describing the work of the Solutions Labs, an initiative under the National Housing Strategy, describes it as a forum “to tackle key issues and help foster a culture of innovation in the affordable housing sector.” The $250,000, CMHC said, was to “establish a Solutions Lab that will examine issues relating to housing, wealth, and inequality.”

It wasn’t enough for OREA’s Tim Hudak, who, a full month after CMHC’s denial, penned an op-ed in the Toronto Star calling the implementation of such a tax “reckless.”

“Every so often,” Hudak begins, “an idea comes along that is so out of touch and unfair that it unites pretty much everyone in their disapproval.”

There is little denying that establishing a home equity tax at a time when cash-strapped Canadians may be forced to sell their homes is indeed a wretched idea. But it’s an idea being entertained by Hudak, OREA and no one else.

When asked why OREA refuses to accept CMHC’s explanation, OREA media relations specialist Jean-Adrien Delicano directed Mortgage Broker News to…another paragraph in Hudak’s editorial:

“While the CMHC backpedalled from a home equity tax after the media uproar, they were clear that their goal is to level the playing field between homeowners and renters by making home ownership less attractive. Their research partner at UBC has been leading the charge for higher taxes on home ownership to make owning more equivalent to renting.”

Hudak goes on to reference CMHC’s denial in his op-ed, saying “where there’s smoke, there’s fire.”

CMHC CEO Evan Siddall characterized Hudak’s work as “making stuff up to fight a non-battle”.

“Like Bertrand Russell’s teapot, a tax on home equity isn’t in the works because vested interests say so,” Siddall tweeted on August 17. “Where there’s smoke there’s smoke, not fire.”

And yet, on August 26, OREA still felt the need to release the results of its survey. It’s fair to say that most people could have guessed that a majority of Ontarians “support or somewhat support” having no capital gains tax on gained equity, or feel as if “they have already paid enough tax already.” (Yes, that is how it’s worded in the release.) Over half of Ontarians say they would vote against a local candidate whose platform includes a capital gains tax when someone sells their primary residence? Who would have ever guessed that?

There is one interesting tidbit in the survey, though; one OREA was unlikely to expect: thirty-eight percent of Ontario residents don’t appear to know how a capital gains tax works.

The great irony of Hudak and OREA’s attempt to drum up controversy is that Hudak himself was the one accusing CMHC of “reckless” timing. But who’s the one forcing Canadians to ponder the horrific effects of a fantasy tax when they’re already worried about the security of their jobs, if their kids can go to school and whether or not their parents will still be alive after a second wave of COVID-19?

There are enough real horrors in 2020. Why make one up?