Liberals pass foreign buyer tax into law despite mysteries ahead

VICTORIA B.C.’s new tax on foreign buyers was turned into law Thursday. But nobody — not even the government — knows what will happen next.

The governing B.C. Liberals ended their emergency summer session of the legislature by passing housing legislation with what amounted to a roll of the dice on one of the biggest tax changes since 2009’s ill-fated harmonized sales tax.

Finance Minister Mike de Jong admitted he’s not entirely sure what the new 15 per cent property transfer tax on foreign buyers will do to Metro Vancouver’s superheated housing market. Developers have warned about chaos and a last-minute rush to close deals before the tax comes into effect on Aug. 2.

“I also want to be forthright about acknowledging that we don’t have an absolutely ironclad notion or forecast or prediction of what the impact of this is going to be,” he said after the bill was passed into law.

“It’s the first time this has happened in Canada, that this kind of a tax has been applied. We’ve seen what’s happened in other jurisdictions, so we can take some lessons from that. But everything about the real estate market in British Columbia and particularly the Metro Vancouver area has been somewhat unprecedented.”

The housing law also gives cabinet the ability to change the foreign tax to between 10 and 20 per cent with the stroke of a pen, as well as to expand the tax outside Metro Vancouver if government sees foreign investors driving up prices elsewhere in B.C.

“In the lead-up to this weekend, there has been a frenzy of activity, as you might expect, for foreign purchasers to get in under the wire,” de Jong said.

The Opposition NDP begrudgingly voted in favour of the hous- ing law, which also gives the City of Vancouver the power to implement a vacancy tax.

“I think you can drive a pretty big boat through some of the loopholes in this legislation,” NDP Leader John Horgan said. “We tried to close some off those up, but government wasn’t interested.”

NDP housing critic David Eby proposedsevenamendmentstothe bill Thursday, including expanding Vancouver’s power to implement a vacancy tax to all communities and linking the foreign buyer tax to income. All seven were rejected by the Liberals.