A report done for the CMHC is now recommending the federal government tax home equity.
The report says bringing in a home equity tax would raise $5.83 billion for federal coffers.
It’s something the governing Liberals, including Prime Minister Justin Trudeau, vowed they would never do.
A new report Wednesday from a Canada Mortgage and Housing Corporation-funded lab recommends “Housing Affordability Solutions” to the government.
“Put a modest price on the housing inequity created by runaway home prices, via an annual
(deferralble) progressive surtax on the top 10% of homes valued at over $1 million,” the report recommends.
The report was produced by a lab of University of British Columbia School of Population & Public Health
“There is no silver bullet to solve housing unaffordability,” report head Dr. Paul Kershaw Kershaw said in a release.
“Instead we need silver buckshot to address the range of policy tools that shape the housing system, beginning from the recognition that restoring affordability for all requires home prices to stall so earnings can catch up.”
The lab studied input from more than 80 housing experts to explore how to address the large and growing gap between home prices and local earnings that’s fueling Canada’s housing affordability crisis.
“If a pandemic-induced recession is insufficient to slow down home prices, then we can no longer ignore the probability that our housing system is actually structured, even if unintentionally, to grow housing values out of reach for local earnings,” said Kershaw.
The reported noted “the hard work Canadians do every day in their jobs is taxed far more than housing wealth windfalls gained by many home owners while they sleep and watch TV.”
The thought of a home equity tax infuriated Franco Terrazzano, head of the Canadian Taxpayers Federation.
“They’ve got it backwards. Higher taxes won’t make homes less expensive, higher taxes make everything more expensive,” said Terrazzano.
“If there’s a housing problem then we need to build more homes, so governments should be reducing taxes and red tape on homes and the materials needed to build those homes.
You build new homes with hammers, not tax hikes. We can’t tax our way to more homes.
“Both the Liberals and Conservatives spent the last election telling Canadians that they wouldn’t hammer us with a home equity tax. Now we find out that the government is using our tax dollars to dream up new ways to hammer Canadian homeowners and that’s unacceptable.”
The report said the recommended $1-million would mean 91% of Canadian households don’t have homes worth more than that.
But it would affect 13% of Ontario households and 21% of BC households.
“It’s very easy to be living in a home assessed at more than a million dollars in Vancouver and Toronto, so this is going to hit homeowners and potential home buyers hard” said Kris Sims, B.C. Director for the CTF.
“This could increase the listing prices of homes because this tax will just be tacked on.”
Dave Naylor is the News Editor of the Western Standard