International Trade Committee on June 5th, 2023

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

That's perfect, thank you.

In other words, you are alerting us about this so that we can shed light on it and delve deeply into the issue before we get to a dispute or a disagreement. To your knowledge, were formal discussions held before you met with us? To your knowledge, did the two governments talk to each other before we started our study?

[Brian Higgins]

I don't believe they have formally consulted as of yet. That doesn't mean they're not going to. We had also communicated with the United States Secretary of State. Like anything, there's a dispute regardless of how serious or minor the issue is between two countries, particularly two countries of this nature. You want to resolve these things diplomatically. You have a Canadian federal government that is structured in a way very similar to ours. Like most problems between governments in an international context, they can be resolved by just communicating clearly as to what the issue is and what a mutually beneficial outcome would be.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

You say that you are looking at the possibility of implementing a policy for Canadian citizens who own real estate in the United States. Is it fair to say that, in response, you recommended adopting a policy similar, if not identical, to the one in effect in Canada?

[Brian Higgins]

No. I made reference to what I characterized as a race to the bottom. That doesn't benefit Canadian citizens, and it doesn't benefit American citizens.

That's why I put an emphasis on attempting to resolve this issue diplomatically. We don't want to do that. I have brought that issue up to highlight that there are mutual benefits to Canadian citizens owning property in the United States. There is a beautiful natural environment, ski country, in Ellicottville, New York. There is the beautiful natural environment during the summer months at Bay Beach and Crystal Beach in Ontario, with close proximity to beaches and lakes. That was the purpose of why I brought that up. It was to highlight the importance of trying to resolve these issues in a diplomatic way.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Okay, thank you. I only have 30 seconds left, but I would like to ask you one last question: How many states do you and your colleagues think are affected by the problem we are discussing today?

[Brian Higgins]

Not enough. We have sent bipartisan letters from the House from both Republicans and Democrats who represent border communities. There have been a handful, 12 to 20 on any given communication just to highlight that. As I mentioned, the Peace Bridge that connects Buffalo with southern Ontario is the second-largest border crossing, so the border communities of Buffalo and Niagara Falls are disproportionately affected by this.

Others are, in fact, affected by it and have signed on. Given the size of the communities they represent along the border, I guess that would influence their level of involvement.

[The Vice-Chair, Conservative, Kyle Seeback]

Thank you very much.

We're now going to move on to Mr. Cannings for six minutes.

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

Thank you, Representative Higgins, for being with us today.

I'll just continue with that line of questioning because I represent a district, South Okanagan—West Kootenay, in southern British Columbia along the border. It's very similar in many ways to Niagara except there's no big urban centre directly across the border. We're probably four or five hours away from Seattle.

We have relatively small amounts of cross-border traffic coming from Washington for tourism. I think there was more 50 years ago in proportionate terms, but right now, I think we get more Australians visiting the Okanagan area than we get Americans coming as tourists. Certainly, I have never heard of an American actually owning a holiday home in my riding except for one founder of a big tech company based in Seattle who I will not name and who has a wonderful home in my riding. However, it's certainly not a cottage.

I guess my question on all this is this: How widespread...? It sounds like this is sort of a “north shore of Lake Erie” situation. Monsieur Savard-Tremblay just asked you how many of your colleagues have experienced this or faced this. We have a vacancy tax in British Columbia, and it's set in certain areas. We take areas that have real problems with housing costs and housing availability, and we put boundaries around those, so certain municipalities face this tax and others do not. I'm just wondering if that kind of carve-out.... It's not just urban-rural. It's certain areas.

I'm just wondering if that kind of approach might fix this if we find that it is really concentrated in your area. You seem to be at the pointed end of the stick in this.

[Brian Higgins]

I would say that a cottage is used fully on a seasonal basis, and Canadians enjoy coming to Ellicottville, New York, on a seasonal basis. I think that is a mutual benefit accruing to both countries. All communities along the northern border between Canada and the United States, which is 5,500 miles long, as you know, and has 120 land ports of entry.... There are going to be unique characteristics, and I think the unique characteristic of the situation that I'm concerned with, again, is mutually beneficial to the United States and Canada.

When I say that I spent my summers on the Canadian shores of Lake Erie, that's consistently virtually every summer from being a kid through to being an adult. My situation is not unique. That's a thing in Buffalo and western New York.

Our ability to attract low-cost air carriers to the Buffalo Niagara International Airport is owing in large part to the fact that 30% of the people using the Buffalo Niagara International Airport are Canadians. Canadians spend $15 million in health care in my community. Our retail economy is profoundly influenced, as well as higher education and cultural organizations. It's a quality of life that I think both Canadians and Americans share, given the fact that these cottage communities were built over many years and the ownership is multi-generational.

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

Okay, I have about a minute left, and I'll just continue on with that.

I think one of the differences, again, between the situation in my district and the one in yours is that, in my district, the trend is going the opposite way. We have hundreds and hundreds of homes that had families living in them and kids going to school in my riding that are now owned by people who don't live there. They come there in the summer. It hollows out the community.

These are not Americans, I would say. These are people from Vancouver and Calgary, etc. There are a few Americans, as I said. However, this is the situation that we're facing in my riding. As I say, we have a tax in British Columbia that partially address this.

It seems very different from your situation, which involves historical, generational cottages. The situation that we're facing in my riding is homes—houses—that have turned from family-owned residential houses to seasonal houses.

[The Vice-Chair, Conservative, Kyle Seeback]

Unfortunately we're out of time, Mr. Cannings.

We're now going to move to the next round.

We have Mr. Carrie for five minutes.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much, Mr. Chair.

Representative Higgins, first of all, I wanted to thank you for all the work that you've done over the years on the northern border caucus and all your advocacy during COVID-19. I do understand, though, that there is significant international controversy about whether you're a better hockey player than Tony Baldinelli. I think some things cannot be resolved diplomatically. We may have to resolve that on the rink.

I do know that you, back in May 2022, were mentioned in an article about this issue in Inside U.S. Trade, so you were on top of it pretty much right away for your constituents. You said there were over 400 of them.

My understanding is that on May 5, 2022, USTR did discuss the UHT with Canada's Minister of International Trade, Export Promotion, Small Business and Economic Development. Do you know the results of that conversation? Have you heard anything at your end? That was over a year ago.

[Brian Higgins]

There's nothing conclusive about that. I characterize that as the initiation of a discussion that is open-ended and continues.

As you know, sometimes these issues require several meetings, several engagements, toward the goal of developing, first of all, an appreciation for the problem, and second, a solution to it that would not hurt our Canadian friends but would encourage these cottage communities to continue to thrive with American ownership.

[Colin Carrie, Conservative, Oshawa, ON]

Do you know if there's any information from that meeting available for public use? I was wondering if you know if there's any future discussions planned, if you're aware of them or if, perhaps, you may have been included in them.

Mr. Baldinelli, have you heard of anything?

[Brian Higgins]

From my part, I can certainly check to see if there's any follow-up, and if there are any communications that resulted from those meetings.

Part of my job—and my Canadian counterparts, as members of Parliament, as you know—is much like journalism. It's reaching frequency.

Oftentimes, it's very difficult to change policy that's currently in place, so you have to find ways to bring those issues to light. There are many ways of doing that. I tried to do it within the context of the legislative branch and my work as a member of the House ways and means committee, but also in my interactions among the trade representative, the Secretary of State and the respective ambassador.

I would characterize this as an ongoing discussion. When the tax was put in place, there was an interpretation. Did the tax reflect the Parliament's intent? Has that evolved? That is when it became more concerning for me and my constituents, who are lots of those cottage owners in Canada.

[Colin Carrie, Conservative, Oshawa, ON]

In fall 2021, the Department of Finance did say it consulted with stakeholders.

I was just wondering, of the people you represent, if you are aware of anybody who was consulted. If they were, could you give us a number of how many?

We had a previous witness who said he was unaware of these consultations. I was just wondering if, before this was put into place, you were aware of any consultations.

[Brian Higgins]

No, I'm not. I guess you wouldn't expect that, because you're imposing or creating a new policy as it relates to taxation. The Canadian government's primary concern is going to be Canadian citizens, as would be the case when the United States takes actions. This situation is unique, because it affects a northern border community that I represent.

I don't know that there was any consultation on the part of the Canadian federal government with American counterparts.

[Colin Carrie, Conservative, Oshawa, ON]

My colleague, Ms. Gladu, has a quick question for you.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Thank you, Representative Higgins, for being here.

Certainly I agree that we're very thankful that you're here to work with us. Nobody wants the race to the bottom to put more taxes on either Canadians or Americans.

In trying to scope out who should be exempted, would you be able to provide the committee with a definition of who you think should be exempted in order for this to be equitable?

Secondly, my opinion is that, if people are exempt, they should not have to file taxes at all. Would you agree?

[Brian Higgins]

I would agree that.... I use Toronto and Vancouver as densely developed areas, and one of the members of Parliament who spoke previously indicated there are other more densely developed areas. I understand that.

I think a cottage is a small house that's near a lake or a beach and that's used on a seasonal basis. I think—

[The Vice-Chair, Conservative, Kyle Seeback]

I'm going to have to interrupt there. We're already almost 30 seconds over. Maybe in the next round, you can continue to answer.

We'll now go to Mr. Sheehan for five minutes.

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

Thank you very much, Congressman Higgins.

We met quite a few years ago. I was in Washington, and we attended a public works working group session together. We had the opportunity to discuss.... I'm from Sault Ste. Marie, and obviously you knew my good friend, Teddy Nolan, who was coach of the year in Buffalo. Before I go too much further, I wanted also.... We also discussed the 232 tariffs, and I wanted to highlight that and to thank you with the deepest thanks for coming out against them. I think your quote was “these misguided tariffs on our neighbors to the north,” and I really do appreciate that.

I'm in Sault Ste. Marie. We have the sister city, Sault Ste. Marie, Michigan. There was a Jeopardy question one time about what the third-oldest permanent settlement in America was. It's Sault Ste. Marie. The unique difference is that we're larger than the American side. Our city is much larger than their side, so we have people who own property on either side of the border there.

Congressman, on your statement that you made, I want to make sure that we have it perfectly clear for our analysts to record it. One of our previous panellists, who in my opinion obviously represents the people he represents very well, had indicated that there should be an exemption for rural and urban. It should be just carte blanche for Toronto, Vancouver and Montreal when purchasing a home.

In your testimony, you really seemed to be talking about rural areas. Number one, I want you to clarify that is what you're looking at. You're not looking at exemptions for larger urban centres in Canada. Also, there exists a 28-day exemption right now. This is what the gentleman was getting at—the 28 days. Those people who are here for 28 days are in rural areas, and they are exempt from this tax.

I want you to make some comments on my questions and about the difference between rural and urban, and the 28-day exemption.

[Brian Higgins]

The 28-day exemption I was not familiar with, because the people who we're hearing from typically spend time in their cottages, as I mentioned, from Memorial Day at the end of May through the beginning of September. A lot of those folks are subject to that taxation.

You make that distinction between urban and rural. I understand that. To me, it's a cottage community. The homes there, the structures there, are disproportionately seasonal in nature. That would be the objective—to hold those folks harmless so that they can continue to enjoy their cottages on a seasonal basis, which would be considerably more than 28 days.

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

I don't know about the housing situation in New York State. Is there a housing shortage there as well? Can you talk about...? I know you used to, and still might, be the co-chair of the northern border caucus. Are housing shortages being felt in the northern part of the United States?

[Brian Higgins]

There are what they would refer to as “affordable housing shortages”. There's a lot of housing. Much of it is not accessible to people of modest means. That's an ongoing issue in New York State, but it's an ongoing issue in the United States generally. When you see areas like San Francisco, they're going through a lot of urban challenges. The basis of that is the lack of affordable housing. There's a lot of homelessness and issues related to that.

It would be fair to say that we could use more affordable housing not only throughout Buffalo and New York State but also throughout the entire country as well.