Canada cannot tax its way to housing affordability
Governments imposing more taxes to improve housing affordability is a wrong-headed strategy at best, according to Tim Hudak, the chief executive of the Ontario Real Estate Association (OREA).
Although the Canada Mortgage and Housing Corporation (CMHC) recently said that claims that it is researching a home equity tax are spurious, the rumours have pointed to an undesirable undercurrent in the federal government’s approach to the affordability problem, Hudak wrote in a recent contribution to the Toronto Star.
“Where there’s smoke, there’s fire,” Hudak said. “A home equity tax would be unfair and hurtful to Canadians during the best of times, but at this very moment – during a global pandemic – it is reckless. Across the country, people have lost their jobs or a significant portion of their income and are struggling to make ends meet. For them, their home equity could be a lifeline during these uncertain times and beyond.”
“While the CMHC backpedalled from a home equity tax after the media uproar, they were clear that their goal is to level the playing field between homeowners and renters by making home ownership less attractive.”
Hudak cited a recent OREA poll finding that around 63% of Ontarians are opposed to a new capital gains tax on sales of primary residences. More than 72% of the province’s homeowners are also averse to new CMHC taxes.
“This is hardly a surprise,” Hudak said. “Homes are taxed enough as it is. Hardworking Canadians already pay taxes on their income.”
Ultimately, the most effective solutions would stem from policies addressing the supply and consumer sides, Hudak said.
“Lowering the tax and red-tape burden on homes – especially for first-time home buyers – would be a helpful step toward affordable home ownership,” Hudak said. “Creating more affordable options and greater choice in the marketplace should be a focus of all governments. Increasing housing supply and accelerating the approvals process would make a big difference.”
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