Finance Committee on Feb. 28th, 2022

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you very much, Mr. Chair.

Hopefully, we'll just get some pause for the committee to consider. This is an amendment to basically take a pause on purchases by foreign buyers in the Canadian marketplace for a two-year period, recognizing that it is not permanent. It's mostly so that we can all take a step back and try to take a little bit of the wind out of the sails of this breakneck speed that we're seeing in the property market.

It is, in our view, a reasonable amendment to put forward at this time and gives us a bit of additional time for data and opportunities to see what's happening in the housing market. Last year, as an example, we saw a 25% increase. We don't think this will be a silver bullet, but it will help to take some of the upward pressure out of the property market.

Thank you, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Chambers.

Just for members and for the record, this is part 2 of Bill C-8, which enacts the underused housing tax act: “This Act implements an annual tax of 1% on the value of vacant or underused residential property directly or indirectly owned by non-resident non-Canadians.”

Amendment CPC-1 seeks to prohibit purchases of residential properties by an individual who is neither a citizen nor a permanent resident who does not reside in Canada.

As the House of Commons Procedure and Practice, third edition, states on page 770, I will now give my ruling. It is the opinion of the chair that creating a prohibition to purchase a residential property is a new concept that is beyond the scope of the bill. Therefore, I rule the amendment inadmissible.

[Ed Fast, Conservative, Abbotsford, BC]

I would like to challenge the ruling of the chair.

[The Chair, Liberal, Peter Fonseca]

As the Honourable Ed Fast would know, this is not debatable. I would ask the clerk to please poll the members on whether or not the decision of the chair shall be sustained.

(Ruling of the chair overturned: nays 6; yeas 5)

The ruling is overturned.

Members, do you want to speak to this?

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Mr. Chair, I have my hand up.

[The Chair, Liberal, Peter Fonseca]

Go ahead, MP Ste-Marie.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

I want to comment on the amendment moved by Mr. Chambers.

First, I want to commend my colleague for his dedication, his intelligence and all his work on the committee. It's truly a pleasure to work with him.

I like the idea. However, I want to raise two issues that may lead me to vote against the amendment. I would like us to discuss these issues before we vote.

First, when this tax was discussed, some colleagues in the Conservative Party expressed the following concern. What would happen if our American neighbours, our neighbours to the south, implemented the same type of legislation? There was some reluctance in this area. If the United States were to adopt reciprocal legislation or legislation with a mirror effect, it would mean that, for two years, snowbirds wouldn't be able to buy a home in the United States. Since we're talking about a significant number of people, I'm already anticipating many calls and visits to my constituency office. Many people would be unhappy. This is one reason why I would vote against the amendment.

Second, I agree with the general idea, but what about the exceptions? For example, if a Canadian homeowner wants to sell their home to their children who aren't Canadian citizens or permanent residents and who don't live in Canada, the transaction can't take place for two years. How do we address this issue?

These factors raise enough doubts for me to reject the amendment, even though the overall spirit of the amendment is appealing.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Ste-Marie.

I have MP Beech and then MP Baker.

[Terry Beech, Liberal, Burnaby North—Seymour, BC]

Thank you, Mr. Chair.

Thanks to my colleagues for bringing in this amendment. In principle, the general scope of the amendment is very similar to something we had campaigned on in the last election on the Liberal side of the platform. In principle, the notional idea of the amendment is pretty good. There are definitely concerns around whether or not this reflects the full scope of the challenges we might have in enforcing these measures and making sure these measures are effective.

This certainly makes me believe that it would be better to have this in a separate piece of legislation than tacking it on to Bill C-8. There are several examples of this. One example that I can think of, off the top of head, is that this amendment would apply to individuals but not necessarily to entities that individuals could control. I'm sure there are others as well. I would certainly want to give more time to it and probably give more thought to a more complete and holistic approach to implementing this and making sure that it was effective.

In general, it is trying to accomplish something that I think we want to look at too.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Beech.

Please go ahead, MP Baker.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thanks very much, Chair.

We have spoken about it and looked at this issue to a great extent in our committee. We've heard from a number of economists and experts as we've looked at inflation and specifically the rise in the price of housing. I think what we've heard from folks is that largely this is a sort of supply-side problem, but there is definitely this aspect of non-resident non-Canadians, non-permanent residents, etc., buying property largely as an investment. I think my colleagues from all sides have heard me speak to this issue in the committee as part of the discussions. I'm very much in favour of something like this in principle.

Usually, when we craft legislation around things like this, we want to make sure that every scenario is thought through.

Mr. Ste‑Marie raised some issues. I'm not saying that I agree with all of them, but I do agree that we need to think about them.

I think it's important that we also consider what regulations need to be in place to enforce this. Are there some sorts of exceptions? It's something that needs to be thought through carefully. I just want to make sure we are careful about how we proceed on this.

In principle, I'm supportive of the concept, of course. I just think the right of a Canadian to get access to a home certainly should come ahead of the right of someone who is not living in Canada, and not contributing, to invest in our housing market.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Baker.

Go ahead, MP Fast.

[Ed Fast, Conservative, Abbotsford, BC]

Mr. Chair, I'm pleased to hear that there is at least some support in principle here around the table for our amendment. I note that at least two parties ran on this and included it in their platforms. Clearly, there is some merit to this, because two parties have reviewed this closely. In fact, our amendment directly tracks what we included in our platform.

Second, to Mr. Ste-Marie's point, I would note that this applies only to residential property as defined in the underused housing tax act, so this is very narrowly construed. This is not in any way focused on snowbirds. Snowbirds are coming up here for vacation properties. If in fact snowbirds are buying residential property and depriving Canadians of the right to purchase or live in their own home, that is a problem anyway, but the word “snowbird” implies vacation properties. Those are not captured by this legislation.

Finally, I would just say that this tool is not in any way replacing the underused housing tax that the government has brought forward. This is simply adding another tool to the tool kit. It's enhancing the tools that the government has available to address what is arguably the most serious affordability crisis this government has on its hands.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Fast.

I have MP Dzerowicz and then MP Chatel.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you, Mr. Chair.

I want to thank the honourable member for suggesting this amendment. I also very much support the concept behind this. I think my hesitation is just that whenever we make these types of amendments in clause-by-clause, there isn't a chance for careful consideration or to ask officials what might be some of the unintended consequences.

A couple come to mind. We do know that there are American families who own property on the Canadian side and who have done so for years and years and years. They might even have a 100-year home within the family. Because the vacation home has been there for such a long time, and because we have urbanized, it might start to fall within the narrow definition that Mr. Fast talked about. Let's say there's the death of the owner, and the family wants to transfer the home directly to a child. They have to technically do some sort of sale and purchase. That could be one of the technicalities.

Again, if you look at it from a concept perspective in terms of non-citizen foreign residents purchasing residential property, you absolutely want to do that, but I'm worried about some of the unintended consequences. I also share the concern of my Bloc Québécois colleague. You know, I'd be worried, if we put in this type of a rule, about whether the U.S. would do correspondingly the same type of a rule over on their side, and about whether or not this is the best way of going about protecting the residential properties we have.

I just think it requires further discussion. I'd want to know what the unintended consequences might be. I think we should be a little cautious about adopting this.

Thank you, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Dzerowicz.

We're moving to MP Chatel.

[Sophie Chatel, Liberal, Pontiac, QC]

Thank you, Mr. Chair.

Like my colleague Mr. Ste‑Marie, I am concerned about the precedent this may create concerning our trade partners. These same provisions could apply to Canadians who decide to purchase property in France, in the United States or in England, for example.

I am not against provisions to have foreign buyers pay more if they want to speculate on residential property, as that is really what we are trying to curb. However, I don't think we should ban those purchases without even having fully considered the potential consequences. We don't know every scenario.

For instance, I am thinking of Americans or French people who would want to purchase property in Canada so that their children can come study here. Will those purchases be banned? Will those people have to wait to be residents and be on-site before being able to purchase the residence? That would be a bit strange. It could cause pretty significant technical issues.

How will this be applied, taking into account our international agreements with partners? For example, would we be violating any international agreements by discriminating against people who are not Canadian residents?

Have consultations been held with our international partners? Should we expect reciprocal action? For instance, after seeing Canada discriminate against its people, could the United States decide to reciprocate and prevent Canadians from purchasing property in Florida to spend their retirement there or to visit?

There are many technical issues. I am rather in favour of measures to make speculation on residential property unprofitable, but we should be careful about implementing prohibitive measures. Even if it is for just two years, it can be harmful.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mrs. Chatel.

Now we're moving to MP Albas.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Thank you, Mr. Chair.

Good morning, everyone.

I would like to point out a few things.

First of all, this is a pause, not a ban; this would be two years from when the act comes into force, which would allow for studies to be done. We do know, because the government has put forward measures on its own saying that it wants to tamp down demand, that this will be demand side as well, because there will not be people bidding.

The second thing I would say is that this applies equally and is responding to a case of market conditions here in Canada. For example, we're part of the CPTPP, and New Zealand has banned foreign ownership of real estate, based on their own domestic issues. It applies equally to everyone and there has not been a challenge under the CPTPP.

What I would simply suggest is that we can rest assured that other partners.... Again, if the Americans or the French wish to put in place their own restrictions based on their own market distortions or market dysfunction, that's fine. Let's just bear in mind that we've seen house prices go up by 97% since 2015; that was put out in a PBO report recently. I think we need to start looking into this. Parties have agreed in principle, so let's put this into place. Nothing in here stops someone from gifting their property or allowing use of a property that is currently owned by a resident. It's just that they would not be able to transact it for those two years.

Lastly, if there are clarifications or exemptions, this act comes into effect only when the government says it comes into effect, so why would we not then use that time? If there are exemptions that need to be made, the government can simply put that in place in a future bill. The government controls the timing on this.

We've all run campaigns on this very pledge. I believe that when we're given the opportunity to fulfill our election promises, we should take the opportunity. I can understand that there are some questions from some members, but again, the government has the ability to time this and to amend the act in an upcoming budget bill if there are any issues that may arise.

Let's just vote in favour of this. It's something that many parties have committed to and, again, this is to deal with the domestic case where it would apply equally to everyone. I don't think any of our trading partners would hold that against us. If they want to put in place their own policies, that's in their sovereign interest to do so.

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Albas.

Go ahead, MP Blaikie.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

I wanted to provide a few thoughts for the record. This is something that I'm generally supportive of. We've heard some reasons why the ban may not be quite as complete as one might think on a first read, including the fact that it invokes the definition proposed in the underused housing tax act. Folks who have been following the meeting will know I've been supporting the elements of that tax on clause-by-clause. I've been doing that because it's a step in the right direction, even though I think that the tax is not, ultimately, going to be adequate to the task, partly because I think there are a lot of loopholes and some of those have to do with this very definition. This is another step in the right direction.

There's no one silver bullet that's going to cure the problems of the housing market, but there has been a lot of talk about the role of foreign buyers in the Canadian housing market. This would at least create a window to see a relatively light definition of what a “foreign purchase” would be, given that we're using the definition in the act. It would give us an opportunity to see if putting a hold on some of the activity has a meaningful effect on prices in the housing market. As it has been said in many ways by many folks on all sides of the aisle, this is something that there is support for in principle.

I have to say that one of my frustrations over the last six and a half years has been the slow pace at which the Liberal government undertakes to meet its own commitments. I am pretty committed to trying to push for swifter action on certain things. We need to move on some things to get information on what policies are going to work and what aren't.

I'm prepared to move ahead with this amendment today, because it's a push in the right direction that the government clearly needs in order to get moving on some of its own stated commitments. If folks on the government side think that it needs to be done in another way, I would urge them to look at this and other platform commitments on housing, like banning blind bidding and other things, that they've talked about but they haven't moved on. If they think they know how to move on these things better.... As Mr. Albas just said, they control the timing on all of these things, so these are things for them to prepare and then to bring to Parliament in a more timely way. Where the government doesn't, it's appropriate for parliamentarians to push. This is an example of that kind of appropriate pushing, and it's why I'm happy to support this one.

It's a slightly different situation than in the case of Monsieur Ste-Marie's amendment, when I was happy to support his ability to motivate that amendment and to have a debate on it, although I had some concerns about the substance of that amendment and would not have been voting in favour of it today. I was happy to sustain the challenge.

I see Monsieur Ste-Marie. In this case, the shoe is on the other foot, but perhaps the debate around this amendment will have convinced him to support it after all.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Blaikie.

Go ahead, MP Ste-Marie.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

This debate has certainly been interesting. I gave two examples to illustrate why I may have reservations about the amendment. I really appreciate everyone who has contributed to this debate.

I understand that, if we were to adopt this kind of legislation, our partners and our neighbours would not immediately adopt reciprocal legislation. However, I feel that, by deciding to adopt this kind of a legislative measure, we must accept the possibility that our partners may pay us back in full.

Mr. Fast made it clear that this two–year period applied within the context defined by the legislation. So if our American neighbours were to adopt a similar piece of legislation, it would be a matter of four weeks for people who travel to warmer regions in winter. The arguments that have been put forward have convinced me as far as those people go. That was one of the concerns I expressed

However, I have still not been convinced on the issue of the parent–child connection, in a case where parents want to sell their residence to their children. Ms. Chatel actually brought up a good example of children who may want to study here. I don't think that problem has been resolved.

I would like to ask the legislative clerks what impact adopting such an amendment would have on international agreements. Unless I'm mistaken, Mrs. Chatel raised the possibility of this amendment contravening certain international agreements. I would like to ask the legislative clerks for their opinion on this.

I invite my colleagues to convince me on the issue of the parent–child connection when it comes to the sale of a residence.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Ste-Marie.

I did look over to the legislative clerks, and they feel that it may be best answered by some of the officials we have with us today.

Do any of the officials have some information that they can share?

[Phil King, Director General, Sales Tax Division, Tax Policy Branch, Department of Finance]

Mr. Chair, I can attempt to answer that question. I'm not sure if it will be a satisfying answer. We're here from the tax policy branch at the Department of Finance, and I think the issue at hand here is that it's not so much a tax as it is a total ban or prohibition. A tax is something used to raise revenues. You would use something else to effect that ban or prohibition.

So I don't think I could speak to it. I'm not qualified to speak to what the international implications of that would be.

That's all, Mr. Chair.