Case against the Foreign Buyers Taxes and Speculation Taxes
 

Currently going through court is the case against the foreign buyers tax (which could likely be applied to the speculation tax).

Looking at the legality I think they will win on that it violates several of our international treaties and the charter challenge (not arguing here if the tax is good or not but they make several good points why its illegal). Barry Appleton who is a highly respected NAFTA lawyer gave a good explanation of why it violated NAFTA here https://www.straight.com/news/746041...violates-nafta

Lawyers update on the trial is here http://www.branchmacmaster.com/forei...-property-tax/

Amended notice of claim is here
http://static1.1.sqspcdn.com/static/...BYdp%2F15xE%3D

A reminder that this post is based on discussing the legality rather than the merits.

NAFTA is dead, the replacement deal has not been signed yet. That article is from 2016. Case over.

Summary trial ends this week.

Btw a nice comment about Canadians, I wish the government luck justifying overriding the charter based on scapegoating foreign buyers for high home prices https://business.financialpost.com/p...ers-in-the-u-s

From yesterday's Globe & Mail, the reasons for the outrageous price increases bolded:

Vancouver housing prices continue to decline, throwing cold water on the speculative buying activity of recent years.

The days of rampant flipping are over and industry specialists predict the market to further decline before plateauing, and then slowly rise again, but not with the same frenzy of the past three or four years...

Realtor Layla Yang, who has offices on the west side of the city as well as Richmond, B.C., says she just sold a house in the Arbutus area for $1-million less than the asking price. The home at 2569 West 22nd Ave. spent 98 days on the market with a listing price of $5.75-million. It sold on Feb. 25 for $4.75-million...

...Detached houses have dropped much further, particularly in West Vancouver, Richmond and the west side of Vancouver, where the inflow of foreign money has dropped off.

Ms. Yang says many of her clients are investors from China and it’s become difficult to transfer money into Canada because of new Chinese controls on the flight of capital. As well, the province’s new 20-per-cent foreign-buyers tax, among other new taxes, is putting them off.

“If we talk about the luxury market, which I am frequently in, I find most of my buyers are immigrants from China. And right now it is very hard for them to wire the money to Canada, according to my clients, and I’ve heard that from other realtor friends, too. That’s the No. 1 reason.

“And a lot of taxes are really affecting the way they buy,” she says, citing taxes as the “No. 2 reason” her clients aren’t buying like they used to.

“In the past, they buy one [house] and then buy a second one, but right now they face the empty-homes taxes. For them, that’s kind of a headache because they have to find a tenant. Sometimes they just want a vacation home, whatever..(bold mine)

https://www.theglobeandmail.com/real...-in-vancouver/

One has to wonder how many clients Ms. Yang helped snap up mutiple Canadian homes. We have seen several examples lately, not least the poor little rich girl, Ms. Meng. Looks like the taxes are working as intended.

We know major players actively market new projects in Asia. They wouldn't bother (or they'd stop) if they were only selling 5%.

Including the developers owned by the union pension funds. And the NDP is pro union. Hmmm....?


Btw just an update, the summary trial has again been extended to April 1st. Verdict is expected by October 2019. Yes, close to 2 years just to complete a summary trial before the class action even proceeds. Got to love our legal system!

I see you've found out how pension funds work, and now it's in all of your arguments.

I think this applies:

https://pics.me.me/we-should-improve...y-19213023.png

I think this case against an employer for discriminating against someone foreign illustrates why this tax is illegal (even though I do think this case is bullshit).

https://business.financialpost.com/o...idnt-even-hire

Imperial Oil offered a job only to retract it; if they'd said "no non-citizens or non-PRs for practical reasons" so that there was no application or rejection, they'd've likely been fine.

Isn't it obvious if you can't work in this country you can't work there? Whats to stop a bunch of illegals from applying to every job with fake resumes then suing when they are later rejected because it was found they lied?

Correct, so say upfront "proof of citizenship or work permit required" so that illegals need not apply (or can try to sue and get laughed out of court). The problem appears to be the lack of a disclaimer.

The BC Supreme Court dismissed the lawsuit on Thursday.

The basic gist of it is that the tax is based on immigration status and not citizenship, and therefore it doesn't amount to discrimination.

The full judgement is here.

Had my eye on this case, there's a few things the judge doesn't appear to have considered such as whether it violates our trade treaties, looks like he excluded this evidence from the case and is saying its not something a domestic court can deal with. [Full decision here](https://www.bccourts.ca/jdb-txt/sc/1...m#_Toc22721539)

​

Interesting enough he said we cannot apply the tax to provincial nominees, you can see that there was a case [here where a provincial nominee was charged the tax. It seems like we could be on the hook to refund the tax to provincial nominees.](https://globalnews.ca/news/5972101/b...rs-tax-unfair/)

>\[188\] Similarly, the Amendments do not create a distinction base on national origin. Many people of foreign national origin are not subject to the tax. Persons who originate from foreign countries but have permanent residence status or are Provincial Nominees are exempt.

As you can see in the judge's ruling, likely our higher speculation tax on foreign owned investments is illegal under our trade treaties:

>\[158\] In its second amended notice of civil claim the plaintiff refers to 33 international treaties that Canada has entered into with certain named countries, which it refers to as the “List A Treaties”. They include the *North American Free Trade Agreement* (“NAFTA”). The plaintiff submits that in these treaties, Canada has ensured that governments here will provide treatment to investors from List A countries that is no less favourable than that received by Canadians operating in a reciprocating country.
>
>\[159\] As an example, the plaintiff cites Article 1102 of NAFTA that provides:
>
>1.         Each Party shall accord to investors of another Party treatment no less favourable than it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments.
>
>2.         Each Party shall accord to investments of investors of another Party treatment no less favourable than that it accords, in like circumstances, to investments of its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments.
>
>3.         The treatment accorded by a Party under paragraphs 1 and 2 means, with respect to a state or province, treatment no less favourable than the most favourable treatment accorded, in like circumstance, by that state or province to investors, and to investments of investors, of the Party of which it forms a part.
>
>\[160\] Under Article 1139 of NAFTA, the ownership of real estate constitutes an investment that is protected by NAFTA. An investor is defined as someone who has made, is making or seeks to make an investment. Accordingly, persons who seek to make a real estate investment who are nationals of one of the contracting parties are covered by the terms of NAFTA.

Poor Misher, so wrong on so many levels.

Is Jing Li an American or Mexican? No? Case dismissed.

Is half your post count arguing against Misher or trying to bait him? You've made some great posts in the past so it's slightly disheartening that you are triggered enough to dedicate posts to petty comments like this.

#diversityofthought

If you read the judgement, which includes all the relevant arguments that were made at trial (and the ones that were rejected as irrelevent) you'll see that the judge absolutely considered - and rejected - all the arguments that Misher cited, which were the ones made by the plaintiff in the case. Among the judge's explanation are the statements "there has been no demonstration by the plaintiff that those FTA’s contain investor protection provisions. Neither do those FTA’s contain national treatment or expropriation compensation obligations relating to investments."

There are several other points to counter the claims quoted by Misher.

Oh please. For reasons ChangingCity pointed out the judiciary was never going to rule in the plaintiff's favour. Yet Misher with his undisclosed ties to the real estate industry kept pushing this as a possibility, that the good times of the China-fuelled bubble would return again. It's not going to happen, moreso because of the harsh threats Chinese nationals face in getting money out of their own country than any tax Horgan and the NDP applied. And now the Feds will be getting into the game with a tax of their own. Any project that isn't within reach of local incomes somehow will whitehr on the vine, I was reminded of that yet again today when I passed the decaying block of Barclay that Bosa and Westbank foisted off on HK's Grand World Holding for a ludicrous sum.

This seems like the most appropriate place to post this:

Which is why any hypocritical lawsuit brought against BC will fall flat on its ass.

Except for the fact that New Zealand provides exemptions to its foreign buyer ban to certain nations it has trade and investment treaties with. Treaties similar to ones we have with some nations.

This has to be challenged in specific courts rather than provincial courts though which is why the bc court refused to review it.

Did they refuse to review it? Or did they review it, and dismiss it?

The first I believe. Looking for it again but couldn't find it. Found it! Honestly looks like he discussed them but its way too legal for me to understand. He does mention an investor-state arbitration tribunal. In point 171 he mentions how these treaties are not part of domestic law, I'm not sure what that refers to but I assume it means that although we have treaties we haven't integrated them into domestic law?

https://www.bccourts.ca/jdb-txt/sc/1...m#_Toc22721539

From the judgement:

"[171] Of the 37 treaties cited by the plaintiff, only six FTA’s and the GATS have federal implementing legislation. Each of the seven federal implementing statues contain a provision that the treaty “is hereby approved”, however such general approval does not have the effect of incorporating the content of the treaty into domestic law. (Pfizer Inc. v. Canada (T.D.), [1999] 4 FC 441, aff’d [1999] FCJ No 1598 (CA) and Council of Canadians v. Canada (Attorney General), (2006), 277 DLR (4th) 527 (Ont. CA))

[172] As noted by the defendant, to the extent that aspects of the FTA’s and the GATS have actually been incorporated into domestic law, the implemented content does not encompass the investor protections cited by the plaintiff and has no relationship with or application to the Impugned Provisions. The implementing statutes did not effect wholesale incorporation of the treaties into domestic federal law but only specific aspects of the treaties excluding the investor protection provisions. I agree with the defendant that the provisions of the federal implementing statutes prohibiting a private cause of action are consistent with Parliament’s intention not to incorporate the investor protections into domestic law.

[173] There is also an absence of implementing legislation for the thirty Foreign Investment Protection and Promotion Agreements (“FIPAs”) referred to by the plaintiff. (Sin v. Canada, 2016 F.C.J. 61)

[174] Paramountcy requires the identification of a domestic federal law with which the impugned provincial legislation is in conflict and in my view the plaintiff has not succeeded in pointing to such a federal law. Accordingly, the plaintiff has not established that the Impugned Provisions are inoperative by reason of the paramountcy doctrine nor that they frustrate the purpose of a federal law.

XIII. Conclusion
[242] The application by the defendant is allowed and the action by the plaintiff is dismissed

Considered - rejected.

A poll out yesterday showed increasing support for the NDP government's housing measures and taxes. Worrying for the BC Libs that includes a huge chunk of their supporters. 3/4 of British Columbians would support a complete ban on foreign ownership:

Poll finds steady support for B.C. government’s housing taxes
Mario Canseco / Glacier News
JUNE 18, 2020

Last month, Research Co. and Glacier Media looked at the state of affairs in British Columbia’s political scene. For more than five years, concerns about housing, homelessness and poverty dominated the issue landscape, with residents aged 18 to 34 and Metro Vancouverites being significantly more worried than their non-urban and older counterparts.

The COVID-19 pandemic has affected the way we look at the challenges facing the province. British Columbians aged 55 and over are responsible for pushing health care to the top of the list of provincial concerns, while those aged 35 to 54 became increasingly troubled by economic matters. For those aged 18 to 34 and Metro Vancouverites, however, housing affordability remains the one issue that requires attention...

...New Zealand passed legislation that bans most foreigners from purchasing real estate in the country. There are exceptions for those who hold residency status in New Zealand, as well as citizens from Australia and Singapore, due to existing free trade agreements.

When British Columbians are asked about implementing a similar regulation across Canada, more than three in four (78%) are in favour of following New Zealand’s lead, while only 15% disagree and 7% are undecided.

Support for a new kind of legislation that would effectively forbid most non-Canadians from purchasing real estate is endorsed by sizable majorities across all demographics. The numbers climb markedly among men (80%), British Columbians aged 35 to 54 (88%) and residents of Vancouver Island (also 88%).

Once again, there is political consensus. While 73% of BC Green voters are in favour of a Canada-wide ban on foreigners owning real estate, the proportion jumps to 81% among BC Liberals and 87% among BC NDP voters....

https://www.vancourier.com/poll-find...xes-1.24154044

Glad to see the federal gov't will finally be bringing in their version of a foreign buyers tax, as per yesterday's economic statement. Sounds like bad news for companies that market their luxury condo-over-a-mall projects offshore. :rolleyes:

There are plans to introduce a new national tax that targets foreign homeowners who are non-residents and own property for speculative reasons.

On Monday, as part of its budget update and economic outlook, the federal government announced a plan to tax the unproductive use of housing by foreign non-resident owners, which is frequently attributed to rising home prices in key markets...

....The report adds that the federal government will take steps over the coming year to implement a “national, tax-based measure” over the coming year that targets the “unproductive use of domestic housing that is owned by non-resident, non-Canadians, which removes these assets from the domestic housing supply.”

Such a tax could particularly impact the new upscale condominium market, considering this is one of the most common residential property types tapped by foreign investors. The developers of these projects have been known to push their marketing activities overseas...

https://dailyhive.com/vancouver/caan...ome-buyers-tax

I understand the intention of trying to reduce non-productive use of real estate in select desirable urban locations, (Currently in BC it's Victoria, the Lower Mainland, Nanaimo, and Kelowna), but is it really a benefit nationwide? Is it really a problem if some foreign citizen maintains a rural vacation property? And is it suddenly not an issue if domestic land speculators park cash in non-productive real estate?

Penticton is currently seeing an increase in building largely (I speculate) because nearby Kelowna has the vacancy tax.

Penticton does not seem to be complaining.

Penticton is seeing a lot of building I think because of big real estate demand for the Okanagan right now. It certainly isn't because people are fleeing from investing in the Central Okanagan. Kelowna is building like crazy.

Very true. For example, there's lots of Albertans with cash relocating to the Kelowna region due to its interior lifestyle that is closely connected with Alberta (access to fishing, hunting, and outdoor sports, while being close distance to Alberta family members). Jacked up pickup trucks and tailgating are rampant in the Kelowna area, which is a testament to who is also buying up the real estate.

This was true 5 or 10 years ago, but no longer the case. Albertan money has dried up, the influx of buyers now, when you look at the data, are from coastal BC and mainly the lower mainland who have fled the housing prices here. So are many of the new businesses, like the new breweries, or new restaurants (e.g. Frankie We Salute You, started by the former owners of the Acorn who sold their business and fled Vancouver).

While there have been a ton of Albertans moving to the Okanagan in recent years, jacked up pick-up trucks have been here long before the Albertans came. Kelowna/Central Okanagan has always had a rural/cowboy/country segment of its population. Go to Costco on the weekend, and it can get full-on hillbilly at times.

I think the buyers in Penticton are different. Kelowna is more metro Vancouver young families. And Penticton is more vacationers and vacation investors. It seems all the new stuff along the Okanagan lake side can be immediately AirBnB'd.

I absolutely love Penticton. 5 breweries now!!!! Who cares about the wine!

Judge tossed out the appeal of the FBT this week:

Ajudge in BC ruled yesterday that the Foreign Buyers Tax was not discriminatory and indeed was warranted given the number of buyers at the time.
Foreign buyers’ tax upheld; not discriminatory: B.C. Court of Appeal
Tax deemed valid under provincial legislation and not discriminatory against any one nationality
By Graeme Wood | June 29, 2021, 4:08pm

The Court of Appeal of British Columbia has upheld a prior ruling that the provincial government’s foreign buyer’s property transfer tax is lawful and not discriminatory.

People’s Republic of China citizen Jane Li had her appeal unanimously dismissed June 29 by Justice Barbara Fisher with Justice Susan Griffin and Justice Peter Voith in support.

Ultimately, Fisher determined B.C. Supreme Court Justice Gregory Bowden was correct in his key assessments of the facts put before him in 2019.

First, the province has broad and significant powers over land rights. Second, “the use of foreign capital to purchase residential real property within a province does not fit within the normal paradigm of trade and commerce of commodities across borders.” And third, Li “has not established that the tax provisions create a distinction, whether direct or indirect, based on citizenship or national origin.”

Fisher found the prior ruling sound, as it relied on the fact the tax applies to all foreign nationals and its primary goal is to help achieve housing affordability.

“The view that foreign nationals significantly contributed to the escalation of prices of housing in the GVRD is neither a stereotype nor a continuation of racist policies from the past,” ruled Bowden on October 25, 2019. “The experts have agreed that the inflow of foreign capital has significantly contributed to price increases in the GVRD.” .....(bold mine)

https://biv.com/article/2021/06/fore...c-court-appeal

^^^^^^^^^^^
 

I think that's a pragmatic step in the right direction. Too often plaintiffs cry foul on gorunds of "ad hominem" and "disrcrimination."

Ontario to hike tax on foreign homebuyers while expanding it provincewide

The Ontario government is hiking its tax on foreign homebuyers ahead of a provincial election campaign where affordability is expected to be a key issue.

In a news release issued on Tuesday afternoon, the province confirmed that it would increase its non-resident speculation tax from 15 to 20 per cent as of tomorrow.

It said that it would also now apply the tax provincewide. Previously it only applied to properties purchased in the Greater Golden Horseshoe Region.

https://www.cp24.com/news/ontario-to...wide-1.5839862




how long till the BC NDP Matches this?

Freaking soon, I hope. What all this "good for the economy" investment has wreaked on Vancouver is horrific from the non-wealthy home-seekers POV. Extortionist rents and long waiting lists for any accomodation.

I'd be VERY curious to see if they extend it to Whistler

Can't they just skirt any foreign buyers tax by using a Canadian based enterprise (incorporated) to purchase property? Anyone that wants to invest in real estate will go through whatever barriers to get in.

It would be a bit silly if they did. The whole raison d’être for Whistler is tourism including international tourists. Since its the province’s only designated Resort Municipality”, its pretty easy to carve out an exception for them.

A reminder that Whistler has locals too. Might be a good idea to have "duty-free" zoning where foreign buyers are free to come and go as they please.

Vancouver to hike empty homes tax to 5% in 2023

B.C. expands speculation and vacancy tax

BC's new home flipping tax comes into effect next week:

B.C.’s home-flipping tax comes into effect Jan. 1, 2025
By Charlie Carey
Posted December 27, 2024 6:52 am.

If you’ve owned a home in B.C. for less than two years and are now looking to sell it, your profit from the sale may be subject to a new provincial tax beginning Jan. 1.

The Residential Property (Short-Term Holding) Profit Tax Act — also referred to as the home-flipping tax, will take effect in B.C. at the turn of the New Year.

This means if you bought a property as early as May 2023, you may be subject to the fee...

....The government has explained that, under these proposed rules, homes sold within the first year of being purchased will face a tax rate of 20 per cent of the profit, declining to zero per cent over the second year.

Approximately seven per cent of homes sold in B.C. between 2020 and 2022 were resold within two years, the government noted in February....

https://vancouver.citynews.ca/2024/1...ts-jan-1-2025/

Only bureaucrats are dumb enough to think that a tax will lower the price of housing. Housing is so expensive in BC/Canada because of government, not from a lack of it. There needs to be a serious discussion about removing red tape and taxes/fees. Crap like this IS the problem.

That's not going to lower housing prices either.
Believing that is just a blinkered as believing govt. intervention is the solution.

Lack of regulation and oversight has never in history of industries or economics resulted in lower prices for consumers in any industries and in anything whatsoever.

You obviously know nothing about the industry if you think red tape and more government tax isn't causing the affordability crisis. Governments make almost 4 times more then what a builder makes on single-family homes. This is insane!

Lack of regulation and oversight has never in history of industries or economics resulted in lower prices for consumers in any industries and in anything whatsoever.

This quote is laughable. I guess our government should just tax us more eh? I mean it has no affect on consumers right? :koko:

There’s no question local government regulations and fees add to unaffordability. Funny the NDP have done nothing about that…

However that doesn’t mean house flipping doesn’t also contribute to unaffordability. Flippers exist solely exist to drive up housing costs. They take a house and often to do a minimum of cosmetic upgrades SOLELY to sell it for more than they paid for it. A family looking for an affordable house could have bought it and done those same upgrades on their own over the course of ownership.

In the 1970s, North Korea and China looked extremely similar economically. Then in the 1980s one decided to deregulate. Anyone who thinks more regulation = more better is stuck in a world of ideology.

It's hard to get through to these types because in an extremely closed system of one development, reducing regulations probably isn't going to reduce the cost. You have to take into account the fact that if all developments are subject to fewer regulations more developments are likely to chase the profits resulting in supply chasing an equilibrium price.

I'm sure some genius is going to come out of the woodwork now and say something dumb about trickle down economics or labour supply. :rolleyes:

Why is it okay for a family to do renovations on a house but not someone else? Shouldn't we ban all cosmetic upgrades to houses because they reduce affordability?

Because the family is using it as housing. A flipper is using it only as a means of making a quick buck. As I said, if a flipper doesn't drive up the cost of the property they bought above and beyond the actual value of any reno's, they're doing it wrong.