“Their skylines have become stacks of safety deposit boxes for persons unknown,” Financial Post
editor-at-large Diane Francis wrote in a February 26 piece.
“Letting rich people play fast and loose in Canada is nothing new. Billionaires can move offshore and never pay taxes again, like the Irving patriarch of New Brunswick did and countless others,” she added.
Francis, who noted that she has tried to put the national spotlight on the issue of illicit money in what she called “conceal estate” for years now, said that the noticeable growth observed in the Vancouver and Toronto is masking the actual situation—namely, that the middle class is bearing much of the heavy cost.
“The reality is that anyone who owns or rents property in these two cities pays a penalty — call it a Kleptocrat Tax. People are saddled with mortgages that are $200,000 or more higher than they would have been if the bubble hadn’t been allowed,” Francis said.
The article contrasted the Canadian situation with the U.S., where hard figures on the proportion of foreign real estate ownership (approximately half of luxury apartments in New York City) were publicized thanks to the efforts of a sleuthing press.
“By comparison, in Vancouver or in Toronto’s condo cluster the percentage of cash deals by anonymous offshore entities and/or “see throughs” or empty laundering vehicles, is unknown. And nobody’s gone to the trouble to ferret out this information,” Francis lamented.
The analyst is not optimistic of the government’s decisive action in the matter any time soon.
“Clearly, Canada’s legal, developer, banking and building lobbies are too powerful and making too much money off these activities,” she stated. “But letting them turn our real estate into ‘conceal estate’ must stop because it’s becoming a serious social, taxation, policing and economic burden.”
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The hottest real estate markets in Canada—namely, Vancouver and Toronto—have seen unprecedented levels of activity the past few years, but a long-time market analyst stated that this development has mainly benefited upper-crust buyers and foreign investors.