Another tax on properties isn't the answer to Canada's housing woes
What is a great solution to many of our country’s issues? Well, a tax, of course. After all, taxes solve everything, right?
Climate change is an issue? Implement a carbon tax. Foreigners are buying too much Canadian real estate? A speculation tax, a purchase ban and underused housing taxes. Short-term rentals are a community problem and causing housing challenges? A prohibition on the tax deduction of expenditures. Wealth disparity is a problem? Let’s think about a wealth tax or an estate tax.
“Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it,” former United States president Ronald Reagan once said.
That’s a brilliant summary of our current government’s approach. For example, one of the “tax solutions” proposed by the federal government in the 2024 budget was that it would consider introducing a new tax on residentially zoned vacant land and would launch consultations later this year. On Oct. 8, the government released details of such a consultation, which interested stakeholders will be able to provide their views until year-end.
The paper said the implementation of such a tax would be intended to encourage the development of land into housing (rather than leaving it unused), discourage speculative holding of land (by making it more costly to keep land undeveloped) and provide a source of revenue for various orders of government, which could be used to fund the construction of more new homes.
This policy rationale is so simplistic, it’s laughable. The paper goes on to ask basic questions that it wishes interested parties to address, the first one being whether a vacancy tax would be an effective policy
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