Could a new tax on homes worth $1M and up help fix Canada’s housing crisis?

Group says ‘modest’ tax could raise $5B a year to help pay for affordable housing
With home prices in Canada’s most expensive markets going up at a dizzying pace, a Vancouver-based think-tank is proposing a new tax on homes valued at over $1 million to help bridge the affordability gap. Although Canada’s housing market went ice cold when the pandemic began in March 2020, it soon came roaring back and spent much of 2021 on fire. Average prices across the country rose to their highest level on record at more than $720,000 in November, and despite those high prices, the year smashed the annual sales record, too, with more than 630,000 homes changing hands.
The torrid pace has prompted fears of a painful comeuppance if the market goes off the rails, but so far none of the targeted solutions suggested so far — from taxes on vacant homes, flippers and foreign investors to an end to blind bidding — have managed to slow the runaway freight train where they’ve been tried.
New numbers this week from Canada’s two most expensive housing markets, Toronto and Vancouver, show those market pushing further into the stratosphere.
The benchmark price for all types of housing in the GTA hit $1,208,000 last month, up by 31 per cent compared to a year earlier. Vancouver’s pace of increase was less torrid at 17 per cent but the overall figure was higher, at $1,230,200, across the region. Both figures are getting close to double the national average.
In both markets, single family homes for under $1 million are becoming unheard of, which is why Vancouver based think-tank Generation Squeeze used that figure as a baseline for an eyebrow-raising proposal this week: a new tax on homes worth $1 million and up.
The group is pitching a progressive tax that would kick in on homes valued at more than $1 million, and get progressively larger on homes valued at $3 million and above. The group proposing it runs out of the University of British Columbia, but received some funding from Canada’s federal housing agency the Canada Mortgage and Housing Corporation. Though the tax would be calculated annually, it would be deferred until the home is sold, so it would function similar to a land transfer tax that many provinces and municipalities already levy. Paul Kershaw, a professor at the University of British Columbia who is one of the group’s founders, says more than 90 per cent of Canadians wouldn’t pay a single penny to the tax since it would only apply to those on the very top of the real estate ladder, most of whom are sitting on massive windfalls of currently non-taxable gains. Source: cbc.ca