At the start of the year, a new federal property tax rule came into effect, banning non-Canadians, non-permanent residents and foreign companies from buying non-recreational residential property in the country for the next two years. This new tax rule and the underused housing tax (UHT) which is a 1% annual tax to be applied to underused housing owned directly or indirectly by non-resident non-Canadians, is facing some backlash from some border community leaders.
The taxes were designed to help cool the Canadian housing market and relieve some of the pressure created by housing shortages, especially in larger cities. They were to discourage foreign investors who would invest in residential real estate that would later end up sitting vacant. Part of the rules requires foreign property owners, including those with exemptions, to register with the Canada Revenue Agency (CRA) and file annual returns by April 30, failure to which they may face a $5,000 fine.
Mayor Wayne Redekop of Fort Erie has criticised the introduction of the taxes as he believes it will affect the good relationship border communities have established with seasonal residents that come in from the United States. He said that these were not only good friends and relatives but also important customers to the local businesses.
Redekop acknowledged that there was a need to stop offshore investors from buying up Canadian homes and keeping them off the market when there were so many citizens in need of permanent housing. He has however asked for a more equitable application of exemptions. He pointed out that there was unfairness at play when seasonal homes inside urban boundaries were subject to the UHT while those outside the limits were not.
With his town being a mix of both urban and rural areas, he feels that the unexpected consequences of the new taxes should encourage the federal government to review the laws and make amendments. He said that with the tax’s introduction, seasonal residents were feeling greater anxiety, anger, uncertainty and disappointment. He said that this demographic was a vital element to the richness of the communities.
Despite having sent an official two-page letter to Chrystia Freeland, the Finance Minister, outlining his concerns, the government has remained resolute in sticking to the policy but will keep monitoring its impact.
On the other side of the border, talks of retaliation are being stirred. Democrat representative of the border community of Buffalo N.Y., Brian Higgins, has said that if the situation is not resolved, there would be a need to look into measures that would boost their leverage. His office confirmed that there were ongoing talks with stakeholders, members of parliament and the US Embassy in Canada.
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