Imposing a 15 per cent sales tax on home purchases by foreign buyers is selling well with folks throughout Metro Vancouver, according to a recent poll. The Angus Reid survey found nine in 10 respondents supported the provincial government’s tax — although 42 per cent had little faith that it would do much to address the region’s housing crisis.
It’s hard to say if we’d see the same results if the poll was taken just in Richmond, where we’re seeing almost two times the number of home sales to foreign buyers. In a 34-day period in June and July, 10 per cent of homes sold throughout Metro Vancouver were bought by foreigners; in Richmond that number jumped to 18 per cent, according to the province. In other words, Richmond will be impacted more than most. Home sales might slow, but so might the proliferation of empty mega-homes used not to live in but park money.
I would like to see the tax focus more on speculation and less on nationality, but it’s about time the government did something. Some may argue housing prices are cyclical and the market will eventually balance itself out, but we’ve waited long enough. Forest fires also run their course, but when homes and lives are at risk, we intervene to limit the damage — and we shouldn’t underestimate the damage resulting from this overheated real estate market.
Moreover, the notion that the market is some natural force unto itself is a bit like equating dams and canals with rivers and oceans. Granted, the market allows for the flow of money, but how and where that money flows is determined by various man-made structures — and, of course, taxes.
That said, this tax alone won’t solve the issue of housing affordability. For that, we need a multi-pronged approach that includes investing the new revenue stream, and then some, into housing co-ops, social housing and projects such as the Habitat for Humanity complex currently being built on Ash Street, which allows entry into home ownership.
Vancouver has proposed a vacancy tax to limit the number of homes sitting empty when there’s a housing shortage. Australia had banned all foreign home purchases, save for new homes, to help curb house-flipping yet kept the economy chugging. England introduced a progressive capital gains tax impacting only the top selling homes but that has put a downward pressure on the housing market as a whole.
The point is, if we’re serious about this issue, and we should be, there are a myriad of solutions we could at least think about trying. Enough of this can’t-mess-with-free-enterprise mantra. We’re already messing with it in all sorts of ways. It’s time we messed in a way that makes it a little freer for us all. Housing is a basic need, it’s hard to feel free without it.
