Solving Canada’s Housing Crisis – Victoria Times Colonist
We need a nationwide approach; restore CMHC’s mandate to build and fund low-income housing nationwide
If you thought housing policy in Canada couldn’t get any worse, think again.
The federal government is considering imposing a capital gains tax on homes worth more than $1 million.
This diet is the dream baby of a group called Generation Squeeze. The federal government called on this group to develop proposals, knowing full well where it stood.
The idea is that if you own a home worth $1 million or more and its assessed value increases from year to year, you have to pay taxes on the increase.
Now it’s almost half of the houses in central Victoria. Let’s take an example :
The price of an average single-family home in Victoria was $915,300 in December 2020. By December 2021, this price had risen 25.1% to $1,144,900.
If the new tax system is adopted, the owner of this average house will have to pay the rate applied on the price increase of a quarter of a million dollars.
It is patently unfair. First, you, the homeowner, have done nothing to cause the change in your home’s value. The market made it, and you don’t control it.
If the price of your home went down, would the CRA allow you a capital loss to offset the investment income? I doubt.
Second, as Generation Squeeze concedes, there’s a huge difference between a family that recently bought a $1.2 million house with a $900,000 mortgage and a family that bought the house years ago. at a price of, say, $200,000.
The first family has a net worth of just $300,000. The second has a capital of 1 million dollars.
Yet both would be taxed equally on the entire capital gain.
Generation Squeeze admits it’s unfair, but what’s going on? Here’s their take: “We know it’s not ideal, but we also think [this is] something we have to tolerate for the time being.
What they should have actually said was “this is something you have to tolerate for now”.
In fact, this diet has already been launched. In his 1993 budget, BC Finance Minister Glen Clark introduced a property surtax on high-value homes.
Predictably, all hell broke loose and Clark pulled the plan.
Here’s a better idea. For several decades, starting in the 1950s, the federal government used the Canada Mortgage and Housing Corporation to build and subsidize low-cost housing. During those years, Canada was considered to have some of the best housing standards in the world.
But in the late 1980s, Ottawa withdrew funding for social housing projects. This was part of the budget cuts that 30 years of annual deficits have brought about.
CMHC was reduced to the shadow of itself and remains so to this day.
So restore its mandate to build and fund social housing. Because it is a national problem, not a purely local one.
Let’s say that municipalities in Greater Victoria are working with the province to build low-cost rental housing. What happens? There is an influx of eager tenants everywhere. The housing shortage in Victoria continues.
With a national approach, funded at least in part by Ottawa, the shortfall is being attacked equally across the country.
COVID aside, unaffordable housing is our nation’s #1 torment. It is time for the provinces and Ottawa to join hands to solve the problem.