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What? Another 2% Tax?
One of the key elements of the NDP’s election agenda – a 2% tax on speculative investment in real estate in B.C. may not be implemented. Speaking on this aspect, the housing spokesman for the party said that implementing taxes is just one of the many rules available to the party’s policy makers and they may not always be the most appropriate path; other options may be more fitting at solving the speculative investment problem currently taking over the real estate market in B.C.
These comments from David Eby came just a day after Canadian Real estate Association’s chief economist Gregory Klump had hinted at the possibility of the introduction of the tax in the Greater Golden Horseshoe area, including Toronto.
Efforts at cooling down the Ontario market has been on the tables since April this year when a 15% tax was introduced for foreign buyers, quite like the efforts taken by B.C. about a year ago.
According to Klump, a speculation tax may not be a long-term solution to cool down the real estate market as, such taxes usually change the sentiments of the buyers temporarily and they may come back to the market after observing the impacts for a while. Some may even find out loopholes to evade the tax.
Advising the public in Ontario, Eby said that the behavior of the real estate organizations in B.C. has been really disappointing and that they should be more cautious while accepting advice from realtors in the region.
However, he is of the opinion that the tax may not be the appropriate solution for the heated real estate market. If experts can come up with better solutions that will not negatively impact the business growth that the area has been seeing, then such solutions will be taken up to put an end to the speculative investment in the area.
Though there is no specific information about how the NDP-Green Party government is looking offer affordable housing solutions in B.C., yet it is clear that they are eager to take action to end speculation and fraud that’s triggering higher prices.
The NDP has proposed a 2% tax to be levied on real estate transactions where the buyer doesn’t work or live in B.C. and the property would be left empty. The tax is expected to collect approximately $200 m/year and would be added to the Housing Affordability Fund in BC which was introduced in March.
Andrew Weaver, Green’s leader, had commented a week earlier that dealing with speculation is the most important issue on the table and they are willing to put an end to the situation of houses being considered as a tradable commodity. Green Party has brought to the forefront as many as six methods that can discourage speculation and that includes a 30% foreign buyers tax and tax on the transfer of speculation property.
However, Klump states that a lot of issues need to be addressed before a tax is introduced, like the scope and depth of the market’s speculative activity, define speculation in exact terms, take into considerations whether there would be any negative effects of the tax and so on. Stay tuned to RealtyFocuz for more updates!
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