International Trade Committee on June 5th, 2023

[Dr. Thomas Davidoff]

The speculation and vacancy tax is essentially an empty homes tax with some other issues related to higher rates for people from overseas. If you earn overseas income predominantly, there's an additional tax, but it's largely an empty homes tax. It is, as you say, implemented in markets struggling with affordability. There was some discussion, of course, about places like the Okanagan, which are expensive for people trying to make a living, but tourism is also an important part of the economy. There's a tension in applying a tax on vacation homes, because you don't want to kill the vacation industry, but you also want to make sure there are affordable homes for locals.

The evidence, from the combination of empty homes and from the speculation and vacancy tax between Vancouver and the province, from CMHC is that something like 10,000 to 15,000 homes have reverted from vacation or temporary or empty use into the rental market. That's their belief. That's a help. For a large community, that's something like a year's worth of construction turned over to local occupancy. The other side of it, of course, is that there's a fair amount of revenue raised.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

I didn't add the fact that the rental market throughout my riding is extraordinarily tight, and part of the problem is these relatively large numbers of homes that are owned by people from elsewhere and that are put out for Airbnb. It doesn't matter how big or how small the community is within my riding. This is a big issue.

I'll turn to Mr. Halinda now. I just want to get a sense of the Niagara situation.

What kinds of homes are these? Are these expensive homes? Are they put out on Airbnb outside that 28-day period when people aren't there? It's my experience that people who own vacation homes in my riding aren't there for 28 days. They might be there for three or four weeks... I guess four weeks is 28 days. My neighbour is from Alberta, and I only see him for a couple of weeks every summer.

[Richard Halinda]

I'd be happy to answer that question.

We have a different situation. First of all, we have a variety of homes from the very low bottom of a little.... I don't want to say “shack” but a very small place to a bigger place. There's no question. We have everything in between, but the ones that are owned by the American people are summer residences. They are summer residents. They actually put their toes in the sand. We've had Canadians buy along the lake, certainly since COVID, and a number of them are not interested in putting their feet in the sand. They're interested in money, and those places have been turned into Airbnbs. We've had a real problem with that in our area as have a lot of communities across this country. The Town of Fort Erie put some bylaws in place to deal with it because of the unruliness that a lot of these Airbnbs have caused in these quiet, residential cottage areas.

There are very few of the Americans—and I'm not sure I even know one—who are in that Airbnb business, but I know the Canadians who are in there have bought these as second and third homes, not to live in but for income-producing purposes.

I don't know if that answers your question.

[The Vice-Chair, Conservative, Kyle Seeback]

That's the end. That's exactly six minutes.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you. I'm out of time.

[The Vice-Chair, Conservative, Kyle Seeback]

We'll now turn to Mr. Carrie for five minutes.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you, Mr. Chair.

I'd like to start with Mr. Halinda.

I'm from Oshawa, but my cousins were in St. Catharines. We used to go down all the time, and we were back and forth. I know in Niagara. It's a fairly big population for that area—I think it's around 400,000—but for the cottage area, maybe it's only 30,000. When the government looks at that census, they capture everybody.

Now what I really appreciate is that you're giving us some ideas on the fix. One of your fixes was on this urban-rural divide. How would the government classify those areas so they wouldn't be captured with that census? Do you have any idea?

[Richard Halinda]

In fact, I drafted that for the Deputy Prime Minister, so I will make sure you get that. It's very simple, and it gets around that issue right within the regulation that's already there.

[Colin Carrie, Conservative, Oshawa, ON]

My follow-up for you would be that the Department of Finance did say that, in the fall of 2021, they consulted stakeholders. Do you know if any of the people you represent got an opportunity to have any input on this, or did you personally? Did the government make an effort to actually get this out and to consult with stakeholders?

[Richard Halinda]

I don't know of anybody who was consulted. I know I wasn't—not that I have to be—but I'm saying I'm not aware of any of that consultation process.

[Colin Carrie, Conservative, Oshawa, ON]

You mentioned in your opening, I believe, that you were in touch with the minister. I think you said that was in February.

Did you raise this issue with anybody in the federal government before February? How long have you been in touch with the federal government on the issue?

[Richard Halinda]

My first discussion was back in March of last year.

[Colin Carrie, Conservative, Oshawa, ON]

It was in March. Okay.

[Richard Halinda]

I got to meet Mr. Baldinelli this summer. We had such a public outcry in our area from these cottage owners wanting to get information.

Of course, everyone was directed to the helpline. The helpline can be helpful for some things, but not many things. People are on the phone—including me—for two hours or more before we get to talk to anybody, and then we're talking to a low-level worker. In fairness to her or him, they don't even have the information to answer the question. A lot of those calls really went unanswered because no one could give an answer.

We have been working on trying to get answers. I have been constantly working with CRA in that regard.

[Colin Carrie, Conservative, Oshawa, ON]

I find it a little disturbing, because you mentioned that, in February 2023, you were in touch with the minister, but you have been working on this for over a year.

Have you gotten any written response? Did you say her office has not even gotten back to you yet?

[Richard Halinda]

I have not received any response.

[Colin Carrie, Conservative, Oshawa, ON]

Yes, that is concerning, because it seems like there is a regulatory fix here that we could be implementing that would really lower the stress levels for everybody. Maybe we can see if we can help in that regard.

One of the worries I have.... I have a cottage, and I have American neighbours. They're great neighbours. I worry, though. In Oshawa, we have a lot of people who fly down to the States. I'm worried about reprisals and retaliation.

With your being in these conversations, have you heard of any thoughts that there could be action taken by Americans on Canadians, like a reciprocal type of thing?

[Richard Halinda]

Definitely. Again, it's not that they want it.

You're going to be hearing from Congressman Higgins this afternoon. I think he's on your agenda. I'm sure he's going to talk to you about that, because he has tabled that in Congress. He has tabled that at numerous meetings in New York state, where he's a congressman, particularly in the Buffalo area. He's saying, “Look, we don't want to be retaliatory, but we want to be dealt with fairly”, and this act has not been....

The problem is that the brush that was used to paint this act was too broad, so we have lots of collateral damage that I don't think was ever intended. By regulation, we can get it fixed, and we need to get it fixed. It's the right thing to do.

[Colin Carrie, Conservative, Oshawa, ON]

I agree with you. I don't think there is any intention, but we don't want to have any bad relations with our best neighbours. That's for sure.

[The Vice-Chair, Conservative, Kyle Seeback]

You have 30 seconds, Mr. Carrie.

[Colin Carrie, Conservative, Oshawa, ON]

Okay. I'll ask a quick question.

Mr. Davidoff, you mentioned the difference between taxing for earned income versus the property tax value.

One of the things I know in the GTA is that sometimes we have seniors who are very elderly, so they have owned this house for a long time, but the value now has skyrocketed. I also know of people from other countries whose cottage may be a condo in Toronto. On the weekends, instead of going to a rural area—they live in a rural area and they like the arts and entertainment of Toronto—they come by and they have a little condo there.

With your recommendations, would you have a...?

I'm way over.

[The Vice-Chair, Conservative, Kyle Seeback]

You're now 20 seconds over.

[Colin Carrie, Conservative, Oshawa, ON]

Anyway, perhaps that's something to ponder, Mr. Davidoff.

[The Vice-Chair, Conservative, Kyle Seeback]

We're going to have to move on to Mr. Sheehan.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Thank you very much, Chair.

Thank you to the presenters.

I'm the MP for Sault Ste. Marie, a border town. Before this, I used to be on city council—for four terms. Back in the day, when non-Canadians were buying property in the area, the concern wasn't about housing availability. Quite frankly, it was about MPAC, the Municipal Property Assessment Corporation, which, as I'm sure you're aware, is the provincial arm that assesses properties.

Back in the day, they used to have assessors who would go out, take a look at your property and figure it out. They changed all of that. They cut a whole bunch of staff and went down to a model where they would take a look at how different properties would sell, what the value was and then create a circumference. It was driving up taxes because the local council would then set their mill rate against the assessed value of those properties going up.

Fast-forward to now. The housing market is super hot. My son looked at purchasing a bungalow about a year and a half ago and was outbid overnight by $85,000. It's hot all over Canada. It's not just happening in Sault Ste. Marie. I think what we're looking at are border communities, but really Canada is a border community to the United States. Ninety per cent of our population lives within 100 miles of the U.S. border.

I'm going to start with my first question to Thomas. I wanted to talk about the different exemptions that exist. If you want to talk about the exemptions and the tax that is there now, the intention is to make housing more affordable for Canadians. Is that happening? I'll start with Thomas.

It's a two-part question. In the second part, I really want you to drill down on what exemptions there are. We've been talking about rural versus urban, but what else is there?