Indications that the federal government is considering introducing a potential capital gains tax on the sale of primary residences should be of great concern to Canadians, says the B.C. director of a taxpayers’ advocacy group.
“We think people really need to pay attention to the potential for either a capital gains tax or a form of a home equity tax on the sale of your primary residence,” Kris Sims, British Columbia director for the Canadian Taxpayers Federation (CTF), told The Epoch Times.
“So what that means is the house you’re living in right now, if it’s your only house, when you sell that the federal government is seriously thinking about nailing you with a brand-new tax.”
“The objective is to identify solutions that could level the playing field between renters and owners,” the article quoted CMHC spokeswoman Audrey-Anne Coulombe as saying.
In the wake of Blacklock’s article, then-CMHC chief executive officer Evan Siddall denied the claim that the national housing agency was funding a study looking at a home equity tax.
“Policy adaptations that will receive attention include opportunities to shift from some current or future taxation of earnings toward more taxation of housing wealth,” reads an email from Generation Squeeze founder Paul Kershaw to Siddall on June 19, 2019.
“So we do have evidence that [the Liberals] are seriously thinking about it,” Sims says.
“We think that Canadians should be very concerned about this, because the federal government [is] spending money left, right, and centre with no regard to the fact that they’re deepening us into debt and deficit spending, and so they’re going to be sniffing around for money.”
The post included a statement noting that the CHMC had contributed $250,000 to Generation Squeeze for an 18-month project “that will examine issues relating to housing, wealth, and inequality.”
‘Not Surprised’
Philip Cross, an economic analyst and senior fellow at the Fraser Institute who noted in a recent Financial Post commentary that property tax is a form of wealth tax, says a capital gains tax on primary homes is difficult to carry out in practice.“It sounds very tempting, but just like with a wealth tax, when you come down to actually designing it in a way that raises revenue, governments have found that in practice it’s very difficult to design something that raises significant revenue,” Cross said in an interview.
An example he gave was France scrapping its wealth tax after concluding that it would only force the wealthy to flee the country. Germany ruled a wealth tax to be unconstitutional, while Austria abolished its wealth tax due to high administrative costs and the burden it put on small businesses.
Cross says he’s “not surprised” Ottawa is looking at ways to increase revenue.
“I bet they’re thinking about an awful lot of taxes because they’ve got quite the deficit problem to solve and they don’t seem very interested in solving it through spending restraint, so automatically there’s going to be tax increases,” he said.
“There’s a lot of challenges with government spending and we should be looking at ways to slow down. Instead, we seem to be going in the opposite direction.”
Proceeds from the sale of a primary residence have always been exempt from federal taxes. Sims said if a home equity tax is in fact introduced, it could lead to more housing affordability problems.
“If homeowners know they’re going to get nailed with a big tax if they sell, they could stay put and not sell, taking that starter home off the market. Or they could just tack that new tax cost on to the listing price, making the home more expensive,” Sims wrote.
“Lower supply and higher prices doesn’t make housing more affordable.”
“We can fight back. We live in a democracy. Politicians are responsive, especially if their jobs are on the line.”
