Evidence of meeting #70 for International Trade in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was uht.
A recording is available from Parliament.
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
To that specific question, no, we have not received any notice.
Bloc
Simon-Pierre Savard-Tremblay Bloc Saint-Hyacinthe—Bagot, QC
All right. That's great.
Did you talk to your provincial counterparts before introducing the tax?
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
We, as officials, did not specifically consult with the provinces prior to the introduction of the tax. The consultation was certainly open to any and all voices, so we would have very happily received any commentary that would have been provided by municipalities, provinces, areas, etc.; however, very little, if any, was offered.
Although, Rob, did you...?
Expert Advisor, Sales Tax Division, Tax Policy Branch, Department of Finance
We didn't get anything from the provinces specifically, but we did get some submissions from a variety of municipalities throughout Canada.
Bloc
Simon-Pierre Savard-Tremblay Bloc Saint-Hyacinthe—Bagot, QC
Thank you.
The tax was introduced in 2022, if I'm not mistaken.
Do I have that right?
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
It's effective for the 2022 calendar year, so the conditions start applying as of January 2022. The first returns were to be filed by April 30, which was subsequently moved to October 31, 2023.
Bloc
Simon-Pierre Savard-Tremblay Bloc Saint-Hyacinthe—Bagot, QC
So far, have you had any feedback or heard any stories about the tax's impact?
Have you started examining the impact, or is it still too early for that?
Are you able to give us an assessment today?
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
The tax is in effect. We are receiving feedback, as I said, because people have become aware of the tax. For people who are negatively impacted, they're reaching out to us to let us know what their concerns are, and we're taking all of that into consideration and briefing the minister accordingly.
Bloc
Simon-Pierre Savard-Tremblay Bloc Saint-Hyacinthe—Bagot, QC
Have you had any feedback to suggest that speculation in the real estate market is down, that buildings have become available, that the tax has had a positive effect on the market?
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
For the most part, the Department of Finance generally receives feedback in the negative sense, and not in the positive sense. This isn't just the case for the underused housing tax, but for all taxes. It's not too often we receive positive feedback.
Liberal
The Chair Liberal Judy Sgro
Thank you very much, Mr. Tremblay. Your time is up.
We will move on to Mr. Cannings for six minutes, please.
NDP
Richard Cannings NDP South Okanagan—West Kootenay, BC
Thank you.
Thank you for being here with us today.
I represent a riding in British Columbia where we have the speculation and vacancy tax, which is quite similar to this, I would say. It has similar motives. It's a little different. It applies to both domestic and foreign owners, although there is a difference in the tax rate, depending on what your status is. It's been around for four or five years now, I think.
I am just wondering if there was any analysis done on how that was working. I know there is some good data, from what Monsieur Savard-Tremblay was asking, as to how it has affected the availability of homes and houses for locals to live in. I am just wondering if there was any analysis of that tax and how it was doing before this one was brought in.
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
I'll let Rob supplement my answer, but I will begin by saying that in general at the federal level there is a bit of a dearth of data on how this sort of tax might apply across Canada. Where there are instances of data available at the provincial level, absolutely we certainly did take that into consideration.
Is there anything to add?
Expert Advisor, Sales Tax Division, Tax Policy Branch, Department of Finance
The only thing I would add is that the experience in B.C. was used in developing our costing of the measure, but beyond that it wasn't really something that was taken into account.
NDP
Richard Cannings NDP South Okanagan—West Kootenay, BC
I would say the real difference between this and the B.C. tax is that for the B.C. tax, basically the government chose areas that were being impacted more intensely by soaring housing rates, low availability of rentals, etc., so it was mainly the big urban centres.
In my riding it's not applicable at all, even though there are cities of 50,000, 30,000, 10,000, etc.
I'm just wondering if some of the concerns about this tax could be addressed in that way.
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
The way I would answer is that when it comes to a municipally imposed tax, they have much more information and much more control to have the tax apply in very specific areas. When you're applying a tax at the federal level, it needs to be applied consistently across Canada. We try to introduce rules that would apply consistently across Canada, based on population statistics.
That was the approach we took to try to get as much consistency and fairness as we could across the various regions, which are quite different from province to province to province.
NDP
Richard Cannings NDP South Okanagan—West Kootenay, BC
You couldn't use statistics across Canada, such as housing availability, the increase in housing prices, or something like it that would trigger it, rather than just whether you're in a census metropolitan area.
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
Rob can maybe take this a bit further, but when you're developing a tax, it generally has to apply consistently. You have to use consistent and understandable measures across the country. We chose rules that were consistent and measurable across the country.
Rob, would you like to supplement that?
Expert Advisor, Sales Tax Division, Tax Policy Branch, Department of Finance
Sure.
As an exercise of the federal taxation power, the primary purpose of the measure is to raise revenues. The government decided to apply the tax on a national basis. That was a decision of the government.
NDP
Richard Cannings NDP South Okanagan—West Kootenay, BC
If there are any ideas of changing the tax or adjusting how it's implemented, would that be done through changes in regulation, or would it have to come back for amendments? What would that process be like?
Expert Advisor, Sales Tax Division, Tax Policy Branch, Department of Finance
There are broad regulation-making powers under the Underused Housing Tax Act. The legislation can also be amended as Parliament sees fit. Those are decisions that the government and Parliament must make.
NDP
Richard Cannings NDP South Okanagan—West Kootenay, BC
You talked about the feedback you got, and said you hadn't received any from the Niagara region. Where did you get feedback from? What was that feedback, in general terms?
Expert Advisor, Sales Tax Division, Tax Policy Branch, Department of Finance
On the specific issue of resort and tourism communities, which was part of the consultation, we received representations from property owners with properties in Prince Edward Island, Nova Scotia, certain areas of Ontario that were not in the Niagara region, Whistler in British Columbia, and a small community, which I can't remember the name of, in a rural area of B.C.
Those are the ones I can recall.
NDP
Richard Cannings NDP South Okanagan—West Kootenay, BC
They were concerned that they would be captured under these things, but they thought of this as more of a vacation home situation.