REAL ESTATE NEWS

Tax Canadians Housing Wealth, Group Urges

Written By: Jim Adair
Tuesday, July 2, 2019

In the lead-up to the federal election this October, an advocacy organization for young people is calling for Canadian political parties to commit to taxing housing wealth.

Generation Squeeze, which describes itself as a ldquo;national research, education and advocacy organization for Canadians in their 20s, 30s and 40srdquo; is calling on all parties to address housing affordability in their platforms by taxing ldquo;housing lottery winnersrdquo; who have benefited from home price appreciation. ldquo;Wersquo;re calling on all parties to adopt a guiding principle of Homes First: because housing should be a place to call home, not a way to get rich,rdquo; says the organization.

ldquo;Going forward, federal policy shouldnrsquo;t encourage owners to expect more wealth from the sale of their home than they put in through principal payments and home renovations, plus inflation,rdquo; says a blog on the Generation Squeeze website. ldquo;We shouldnrsquo;t encourage landlords to expect more income than is warranted by the total cost and ongoing labour of providing a rental home.rdquo;

The group says the rise in home prices, particularly in urban centres in B.C. and Ontario, has outpaced changes to the tax system.

ldquo;For example, annual revenue from municipal property taxation is down 4.4 billion measured as a share of gross domestic product by comparison with 1976, despite the 2.6 trillion in additional net wealth accumulated in principal residences over that same time period.

Similarly, federal estimates show that non-taxation of capital gains from principal residences will cost the federal coffer around 6 billion in 2019, with corresponding losses to provincial coffers as well.rdquo;

Federal politicians have been >

ldquo;As housing values have spiralled out of control, huge new inequalities have been created between renters and owners, and young and old. Our tax system has yet to catch up, which exacerbates housing costs and burdens many of us more than is fair,rdquo; writes Eric Swanson, executive director of Generation Squeeze. ldquo;Thatrsquo;s why Gen Squeeze has been advocating for a tax shift: less tax on local incomes, more tax on speculation and unhealthy housing values, and better investments in young and old alike.

ldquo;B.C. has made the most strides here with its new Speculation and Vacancy Tax, the expanded foreign buyer tax, and increased taxes on homes worth more than 3 million.rdquo;

The organization recently >

It says for housing to become affordable by 2030 where people are spending less than 30 per cent of their pre-tax earnings on housing, average home prices in Canada would need to fall 223,000 ntilde; about half their current value ntilde; or full-time earnings would need to increase to 93,400 per year, which is almost double current levels.

In Metro Vancouver, prices would need to fall by 795,000 or three-quarters of current levels, or earnings would have to quadruple to 200,400 per year. In Toronto, they would have to fall by 523,000 or earnings would need to triple, to 150,000 per year.

The study says it takes a 25 to 34-year-old 13 years to save a 20-per-cent down payment on an average-priced home in Canada, compared to the five years it took back in 1976.

It says affordability has not yet been lost in most of Saskatchewan, Manitoba and in Atlantic Canada except for Halifax, but those provinces are home to less than 10 per cent of the countryrsquo;s population.

Canada must protect housing and residential land ldquo;against egregious uses by money launderers, cheats, speculators and those parking money in empty homes,rdquo; says Swanson.

The taxation proposals form only part of the organizationrsquo;s housing policy. Itrsquo;s also calling for a second phase of the federal governmentrsquo;s National Housing Strategy that would expand from the current focus on social housing to include the entire housing market.

Itrsquo;s calling for a strategy to reduce ldquo;harmful demandrdquo; by ldquo;tracking and restricting global capital flows into local real estate, eliminating hidden ownership, penalizing excessive speculation and lsquo;flippingrsquo;, cracking down on money laundering and fraud, taxing empty homes, restricting and regulating short-term rentals, and holding the line of mortgage stress tests and amortizations.rdquo;

It would increase housing supply by opening up low-density zoning to make room for more housing, with an emphasis on family-sized units and purpose-built rental.

ldquo;Itrsquo;s important to recognize that there is no silver bullet that will solve Canadarsquo;s housing problems,rdquo; says the study. ldquo;Instead, silver buckshot is needed to address these issues across several fronts.rdquo;

Generation Squeeze was founded by Paul Kershaw, a professor in the University of British Columbiarsquo;s School of Population and Public Health.





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Updated: Monday, July 15, 2019

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