Beware the siren call of sovereignty in B.C.

Real Estate Ng Weng Hoong

In the ongoing debate over Metro Vancouver’s housing challenges, the Vancouver Sun’s populist columnist, Douglas Todd, has once again played the nationalism card.

In a recent commentary, Todd warned that Canadian sovereignty is under threat from a lawsuit filed by some foreigners against the British Columbia government for imposing a tax on their purchase of homes in parts of the province.

The NDP minority government, propped up by the B.C. Greens, recently raised the tax to

20 percent and expanded where it will be applied.

It started in Metro Vancouver at 15 percent in August 2016 under the previous B.C. Liberal government.

Who can argue against the sovereignty cause when the housing story is often framed as an unfair contest between Canada’s hard-pressed middle class and the invading horde of wealthy foreigners?

Certainly, the B.C. government is well within its right to impose without warning a tax on foreigners buying real estate—and just about anything— within the province.

This is what sovereignty is about. Case closed, if we accept the argument presented by Todd.

Not so fast.

Here are four factors to consider, especially in the manner and circumstances in which the B.C. government of then premier Christy Clark dropped the tax on unsuspecting foreign buyers.

First, nationalism is a game that others can play. Throughout history, governments have used the principle of sovereignty and nationalism not only to impose taxes on foreigners without warning but also to seize and nationalize their assets.

The unpredictable Trump administration would be within its right to introduce new special taxes on Canadians for owning property in the United States. The states of Florida and Arizona could impose a “snowbird tax” or an empty-home tax on Canadians for “exploiting” their warm weather during the winter. B.C. should be warned that it has laid the argument for America’s numerous debtburdened states to hit Canadians with future arbitrary taxes.

Secondly, trust and goodwill: when Chinese national Jing Li bought her townhome in 2016, she did so in complete trust and good faith that the B.C. government did not distinguish her as a foreigner. Indeed, up to the middle of 2016, the government had given no signs that it was blaming foreign demand for Metro Vancouver’s rising home prices. Then, in a show of unpredictability that would make Trump proud, it hit Jing Li and many middleclass foreigners with the tax.

Let’s be clear: this tax was born out of resentment and anger. It culminated a rising political tide that blamed foreign buyers for Metro Vancouver’s housing problems.

The influential group of journalists and academics who sold this story line to the world have downplayed, even ignored, a host of other factors in the region’s runaway housing prices—supply constraints by incompetent government at all levels, restrictive regulations on construction, surging domestic demand from within Canada, B.C.’S strong economy, the intergenerational transfer of wealth, the lending practices of Canada’s banks and secondary mortgage lenders, the prolonged low-interestrate environment, et cetera.

For foreign investors, the sudden tax represents innocence lost. B.C. actively courts foreign capital and skills to grow its economy, but, hypocritically, it harbours distrust and ill will toward the same foreigners who want to invest and live in the province.

Many of those affected had intended to become Canadians, hardly the footloose jet-setting wealthy portrayed in the media.

Now that the trust is broken in the name of sovereignty, what other betrayal lies ahead?

When in opposition, the NDP criticized the B.C. Liberal government for the harshness of the law, in particular for its failure to consider a “grandfather” exemption for those snared by the timing of the tax between announcement and implementation.

But once voted into power, the NDP government not only retained its predecessor’s position, it went further to betray the trust and goodwill. Today, it has extended its target to include Canadians with an unexpected school tax for high-end homes and the extension of the emptyhome tax beyond Vancouver.

Some have argued that the school tax is a small sum for the lucky few, but it completely ignores the point about breaking trust and setting the precedent for more and worse measures to come.

This leads to the third consideration: the rule of law. Desperate to “do something” about the housing issue, the Clark government imposed the knee-jerk tax to appease populist sentiments without improving affordability for anyone. As nonvoters, these foreigners had few rights and no political representation to counter this decision.

No reasonable person begrudges the state’s right to tax, but the B.C. government’s heavy-handed decision was bound to invite a challenge. Jing Li’s lawsuit is her only recourse, and law-abiding Canadians should applaud that.

Even more importantly, and contrary to Todd’s assertion, the suit deeply affirms Canadians’ sovereignty by underlining that this country operates on the rule of law.

The B.C. government is not running Venezuela, but it has shown that it has just as much power to appropriate the wealth of investors, foreign and local. The lawsuit—by foreigners, ironically—serves to defend Canadians’ sovereign right to wealth protection against the encroaching and arbitrary powers of the state.

Lastly, the wrong evocation of sovereignty will only encourage further pig-headed Canadian populism emboldened by years of unbalanced reporting in the mainstream media. While government failure brought about the affordable-housing problem in Vancouver and Toronto, the media played accomplice by directing public anger at the most identifiable target: foreign investors and offshore capital, particularly those from China.

Anyone who thinks that blaming Chinese migrants and capital has no impact on race relations in Canada is deluded.

The discussion on Chinese capital needs to happen within a broad framework, taking into account Canada’s growing need for funding, and how it ought to manage trade and investment with the world’s secondlargest economy.

Sadly for Canada, the simpletons are in charge. They have reduced all discussion on Chinese capital to that of a national threat to Canada’s sovereignty.

The call to rally the people against Jing Li’s lawsuit is a serious threat to Canada’s sovereignty. It serves to entrench belligerence in government and encourage jingoism among Canadians at a time when the country’s uncompetitive economy badly needs to attract talent and investment, both local and foreign.

Canada’s sovereignty is at risk when its economy is weak and its policymaking is guided by public anger built on unbalanced media reporting.-

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