Why would we impose more taxes on Canadians when we could instead put limits on foreign speculation?
Canada’s housing market has become dramatically distorted for three main reasons:
- Restrictions on development that artificially constrain supply.
- Foreign speculation, particularly money flowing into Canada from China distorting the market.
- Money printing by the Bank of Canada.
So of course, the proposed ‘fix’ for Canada’s housing market being mused about by the Liberals and NDP is to completely ignore those three issues, and instead push a new tax.
There is growing talk of taxing capital gains on the sale of homes in Canada, as a way to address rising house prices.
Yet, that policy wouldn’t achieve that goal, because it doesn’t address the three main reasons for the distorted market I mentioned above.
Instead, it would simply take more money out of the pockets of Canadian Citizens, and making the government even bigger.
If the government is looking at a ‘tax solution’ to address these distortions, they should be looking at foreign speculation.
Large swathes of our housing market are increasingly bought up by non-citizens, including large purchases by individuals from China.
This drives up prices, and pushes Canadians out of the housing market, further distorting a market that is already distorted by development restrictions and excessive money printing from the central bank.
A large tax on foreign purchasers of housing in Canada, or an outright ban like New Zealand imposed, would be a far better idea.
That’s where the focus should be, not taking more money out of Canadians who are already overtaxed.
To their credit, the Conservative Party strongly rejected a capital gains tax on housing at their convention, and we need pushback from across the country against yet another tax our country can’t afford.