Observers, academics voice support for Ontario foreign buyers’ tax

While several quarters have voiced strong opposition against the Ontario government’s potential implementation of a foreign buyers’ tax similar to that of B.C., other observers and academics pointed out that such a measure will prove useful in moderating Toronto’s accelerated home price growth.

The Vancouver market’s slowdown in the wake of the mid-2016 imposition of the tax “likely contributed to the cooling in prices” observed since then, Bank of Nova Scotia senior economist Adrienne Warren wrote in a recent report.

Simon Fraser University school of public policy professor Joshua Gordon argued that foreign capital is a crucial factor in Toronto’s price increases, like what happened in Vancouver.

“When you have a pretty tight market, just adding a few extra buyers can really put a lot of pressure on the system,” Gordon told The Globe and Mail.

“We may need actions that are similar to Vancouver,” Royal Bank of Canada CEO Dave McKay agreed, adding that the B.C. tax might have scared off overseas investors and compelled them to look at other hot Canadian markets such as Toronto.

“If policy makers leave this market to its own devices, there is a real risk that a still-manageable bubble is pumped by rampant speculation into something much more dangerous,” Bank of Montreal chief economist Douglas Porter stated earlier this month.

“We’re not saying that an incremental property transfer tax levied on foreign buyers is the silver bullet,” Warren Lovely of National Bank Financial Inc. said. “But its time may have come.”



Related stories:
Price of homes sold in Greater Toronto Area soars 27.7%, real state board says
Proposed class action against B.C. says foreign buyers' tax unconstitutional

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COMMENTS

  • by KrisK 2017-03-13 9:04:17 AM

    This clearly stands to reason,

    /Simon Fraser University school of public policy professor Joshua Gordon argued that foreign capital is a crucial factor in Toronto’s price increases, like what happened in Vancouver./

    The sense of urgency and importance of implementing the foreign buyer's tax has been put on hold by the decisions makers in Ontario for more than a year and the result is catastrophic.

    The housing crisis in Toronto has erupted in a volcanic style scenario where the June 2016 Bank of Canada reports stands out regarding the tenuous effect in affordability.

    The reason for implementing the tax goes beyond cooling the untenable price explosions in the Toronto market; it alludes to what needs to be done immediately.

    Ms. Kathleen Wynne has been in fierce opposition to the 15% tax and her minister, Mr. Charles Sousa is in backtracking format as he simply never presented to the province a clear understanding of what the key drivers in this crisis are.

    A proper study was never done.

    Mr. Tim Hudak is compromising whatever sense of integrity he brings to the table. He defends the financial interests of realtors that are in direct contrast to the wellbeing of the city and the province.

    How ironic that he sought the leadership of the province against Kathleen Wynne and takes a position that makes sense for the job he has undertaken as the lead person in Ontario Real Estate Agency, however, puts the City and by extension, the province in financial harm's way and at risk.

    Let us look on as the leaders play their games.

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