by Mathieu Powell
A few weeks ago, Victoria’s city council gave tentative approval to implement a foreign-buyer tax similar to Metro Vancouver’s tax introduced last August.
Proponents touted figures from the B.C. government stating foreign purchases in Victoria rose to 6.3 percent of all transactions in the Capital Regional District in October, compared to 3.3 per cent in September.
While that sounded alarming, a closer examination of the statistics revealed it is based on a small number, and as anyone even a little familiar with statistics knows, statistics based on small numbers are not very relevant. The number of houses sold to foreigners in this period was about 26 sales in September compared to 42 or 43 in October.
Not exactly a runaway problem. In fact, there has only been a very small uptick of foreign interest in the South Vancouver Island from foreign investors. (As a point of reference, there were 781 homes sold last September in the Victoria Real Estate Board Region (VREB) and 735 in the VREB region in October.
One of the councilors voiced a concern about the discriminatory nature of this tax; a tax that violates more than 30 international treaties wherein Canada has committed to treat foreign nationals as favourably as citizens.
In Vancouver, a class action law suit arose after the BC Government implemented the 15% foreign buyer’s tax. In a strongly worded statement of claim, plaintiffs stated the tax unfairly assumes foreigners have wealth, an assumption that perpetuates "prejudice and stereotyping." The tax also assumes that foreign nationals can outbid Canadian citizens and permanent residents in the housing market.
Many are now questioning just how effective the tax has is in light of the fact that Vancouver’s real estate is once again rising in price after only a few months of cooling. It’s also been pointed out that foreign buyers who eventually sell are obviously going to be motivated to recapture their costs, thus inflating future real estate prices in Victoria.
Would implementing a foreign buyer’s tax in Victoria effectively cool the market, or end up being a mistake?
Fortunately, Victoria City Council held a second vote and decided against it.
Victoria council gives tentative approval to 15 per cent foreign buyers tax – CBC News April 24th
B.C.'s foreign buyers tax violates Charter, proposed class action lawsuit argues – CBC News, March 3rd