Red Herrings and the Foreign Buyer Tax

Politicians love to divert public attention from the real problems facing our society – especially ones that they had a hand in creating. 'Red Herrings' are always abundant in our BC rivers, and they are just as abundant in legislature. Case in point: The BC Government's recent implementation of the 15 % Foreign Buyer Tax.

In a Saanich News column, Andrew Weaver, Oak Bay MLA, alludes to the true genesis of our housing crisis: “Frustration, anger, and outrage about housing in BC needs to land squarely with the BC Government for actively neglecting this issue until it became a crisis.” The founding chairman of the Asia Pacific Foundation of Canada, John Bruk, puts it in perspective: “The primary responsibility for curbing this crisis lies with the provincial governments and municipalities that have taken a wait-and-see attitude toward the problem. When a similar problem arose in Singapore, its government introduced effective regulations in a bid to maintain affordable housing for its citizens.” (Canada’s housing crisis: The time for study has passed, July 8, 2016, Globe and Mail).

Weaver on political causes: In BC “The 'Bare Trust Loophole' is open to wealthy Canadian individuals, corporations or real estate speculators, allowing them to avoid paying the property transfer tax.” (BC Legislation Fails to Deal with Housing Crisis, Weaver, August 2016). Since a “Bare Trust agreement” is not registered at the Land Title Office, no change in title occurs – and no tax is paid. This type of unfettered speculation has fueled skyrocketing house prices in our province. More gasoline to the fire: “The global elite are using B.C. homes as safety deposit boxes while living and paying taxes elsewhere.” (Weaver). The BC government has fed this frenzy for years by refusing to ensure that buyers possess a social insurance number or are deemed Canadian residents for income tax purposes.

At the beginning of August 2016, the BC Government imposed an additional property transfer tax of 15 per cent on foreign buyers of Vancouver real-estate (The Foreign Buyer Tax) – to cool public fury about rapidly escalating house prices. The Liberals had finally hooked their 'Red Herring' – wicked billionaire buyers from China and elsewhere hell-bent on gobbling up our West Coast. Scapegoating foreigners - using them as a convenient target for public anger – is an effective Liberal strategy to deflect scrutiny from their massive role in this housing nightmare. Their lack of regulations, rampant political opportunism, lust for financial gain and sheer indifference go unnoticed.

The struggling mid-to-lower income earners will be affected the most: “The measure will hit the lower-end of the market the hardest, such as $500,000 condos, where the cost won’t be so easily absorbed. Some sellers will react by cutting prices to salvage deals” (Fallout from B.C. tax poised to hit more than 400 home purchases, August 8, Globe and Mail). Many BC citizens were blind-sided by the new policy and some faced financial ruin: “Not only will foreign buyers be hit but also Canadians who had contracts to sell and had already put offers on their next house.”(Globe) As property owners face skyrocketing assessments and taxes due to inflated prices, they are forced to raise rents to survive. In the end, the worst casualties are low income tenants.

Individual stories best illustrate the devastation caused by opportunistic ill-conceived public policy. The Foreign Buyer Tax unfairly penalizes foreigners who are still deemed “residents” for income tax purposes – who contribute to and enrich our communities through their work and taxes. Hamed Ahmadi, who earned a PHD from UBC and works for BC Hydro, is waiting for his completed permanent residency application to be approved. He told the CBC that he “had never felt more hopeless in his life.” A long time before the Liberals' new tax was introduced, Hamed signed a contract to buy a $360,000 condo in Coquitlam. His dreams of a new life have turned to dust with a stark choice between two precipitous options – paying Christy an additional $54,000 or possibly being sued by the seller if he backs out of the contract.

Anyone for Red Herrings slow-cooked in (scape)goat's milk?

Chuck Meagher