We Should Repeal the Foreign Buyer Tax in Vancouver Housing Market

We Should Repeal the Foreign Buyer Tax in Vancouver Housing Market

            The foreign buyer tax in the Vancouver housing market was developed to ensure that foreigners pay more money on real estate to solve the housing affordability problem. This issue has brought controversial debates on whether the policy will impact Metro Vancouver’s housing affordability. As a result of these debates, some individuals support their suitability in ensuring economical purchase of real estates, while others are against it. In this case, the government should not add a foreigner tax in the Vancouver housing market. Also, there are many ways for people to avoid this tax, and adding a foreign buyer tax might harm Vancouver economics. However, this Foreigner tax seems like racism.

First, the foreigner tax is not an efficient way to solve the housing unaffordability problem. According to Posadzki (2016), he claims that an assistant professor at Simon Fraser University, Josh Gordon, explored the issue and established that a foreigner could buy a house using the Canadian resident child. Through this action, he/she gets a chance of buying the house without paying the extra tax. This claim indicates that there will be a minimal chance of policy to be beneficial since foreign buyers will adopt the proxy buyer’s method. Besides, this extra tax will contribute towards unnecessary questions, which will be mandatory to ask the individuals if they are local workers. Also, this law will not add any value since it lacks the necessary evaluation framework that will assess if the price movements are as a result of the policy or other factors. Rather than adopting such a policy, it will be essential if the government will establish new laws that require local buyers to show that they are fulfilled this requirement of local income taxes.

Second, increasing the supply of the housing market might be a better way to solve this problem (Givetash, 2016). This claim is intended to bring benefits since the tax policy is a way of demotivating foreign buyers, which will restrict them from engaging in real estate. In addition, as a result of this purchase disengagement, increasing the supply of the housing market will bring more loses in this industry, for instance, a four million pound priced house will fall to three point five million pounds or even less. Another striking effect is that the policy will bring down the metro’s property transfers since foreign investments are the main profit boosters. Due to such outcomes, there is an alternative method of bringing affordability, which needs Vancouver’s city to implement its tax vacancy. This implementation will offer benefits, which will contribute towards increased house supply. Another tax vacancy’s advantage will be luring more investors to purchase houses in Canadian cities since foreigners will be assured of accompanying benefits, such as the low dollar and satisfactory mortgage rates. Givetash (2016) further states that the housing unaffordability will not be solved by extra tax policy since the municipalities have restricted further developments. My position is also supported by Marr (2016), who outlines Goldin’s claim that the shortage of the Vancouver housing market is the main reason that causes the high housing price. Golding explores his claim by highlighting the possible effects of this law, which he states that it leads to a price reduction of single-family detached homes. This situation is as a result of foreigners’ inability to purchase the homes, thus making the sellers reduce their prices.

Finally, Young (2014) believes that this policy does not associate with racism by citing other people. First, he quotes a spokesman for Chinatown’s Ming sung benevolent society, Mr. Wong, who claims that those who are linking extra tax policy and racism are individuals who want to make profits. He further gives an example of Singapore, which passed a similar law without being accused of being a racist state. Also, he quotes Prof David Ley, who claims that a large number of luxury purchase (74%) is contributed by the Chinese, therefore limiting the claim that extra tax on foreigners will lead to high loses.

The foreign tax to be imposed on foreign buyers will adversely affect the economy of Vancouver since most Canadian buyers will not afford the houses. Generally, there will be uncertainty as the players in the market will be deciding on the best reaction to the additional taxes imposed on houses. The move may affect property transfers by 10% as nearly 10 foreign nationals are involved in the business. The foreign investors may be attracted to other Canadian cities where the market tax on the property is favorable, as they seek cheaper rates and lower tags on houses (Hoong, 2019). Some of the foreign buyers have already held up their deals on property purchases, which negatively affects many businesses as this additional tax scares away the foreign investors. Also, the local real estate dealers are pulling off, hoping that the prices will decline. In turn, the economy of British Columbia will be shaken for several months, as most residents depend on the housing sector for business. Some foreign buyers intend to settle permanently so they could avoid this tax. The purpose of this additional tax to lower the housing affordability may not be achieved, instead it may affect negatively as the local buyers will not be able to pay their dues to the local authorities (Mendez, 2018).

The fact that foreign citizens, such as the Chinese buy property in Vancouver, spur the idea that they cause inflation on real estate property, which is untrue. Foreigners had to pay more for their Canadian citizenship earlier as they seemed to be overtaking the investments in the house property. This requirement was unfair treatment and out of mere discrimination. The Canadians blame the wealthy Chinese for their economic status, and it has nothing to do with them. Also, politicians blame the Chinese migrants for justifying their racism allegations. When Chinese citizens migrate or visit British Columbia, they are mistreated at the entry points by being asked disturbing questions, such as whether they speak English (Chiu, 2017). The Chinese investors should be welcomed as long as they abide by the immigration and tax laws of Canada.

In conclusion, the foreign buyer tax in the Vancouver housing market that was meant for foreigners to pay more on real estate should not be implemented. This claim is supported by the existence of many ways for people to avoid this tax, such as using the Canadian residence’s child. As a result of the availability of other alternative measures, such as the increasing supply of the housing market, the policy is ineffective. Besides, the government should not add the tax due to its harmful effect on Vancouver economics by discouraging investment and developments in provinces, such as British Columbia. However, those who support the implementation of the housing policy claim that it is not meant for racism, as a result of Chinese being the main targets, and its effective application in other regions, such as Singapore

References

Mendez, P. (2018/19). Economic restructuring and housing markets in Vancouver: The Role of  Secondary Suites. B.C. Studies, (200), 195-196.

Chiu, J. (2017, Winter). CHINESE HOME BUYERS UNFAIRLY TARGETED. Herizons.

Retrieved from http://proxy.lib.sfu.ca/login?url=https://search-proquest             com.proxy.lib.sfu.ca/docview/1877704912?accountid=13800

Affordability. The Globe and Mail. Retrieved from https://www.theglobeandmail.com

Posadzki, A. (2016, July 25). Housing market observers question whether Vancouver’s foreign buyer tax will work. The Canadian Press. Retrieved from http://proxy.lib.sfu.ca

Givetash, L. (2016, August 02). B.C. Foreign buyer tax won’t make a big dent in housing affordability,    experts say. The Canadian Press

Marr, G. (2016, August 06). Vancouver’s new property tax on foreigners won’t work: Economist. National Post (Index-Only) Retrieved from http://proxy.lib.sfu.ca/login?url=https://search            proquest-com.proxy.lib.sfu.ca/docview/1809294864?accountid=13800

Hoong, N. (2019, September 21). Vancouver housing crisis with Chinese characteristics. The         Asia Times. Retrieved from https://www.asiatimes.com/2019/09/opinion/vancouver- housing-crisis-with-Chinese-characteristics-2/

Young, I. (2019, September 21). In Vancouver, race undercuts the discussion on real estate