4. SPECULATION TAX
ONTARIO BROUGHT IN a speculation tax in April 1974 and realtors maintain it crashed the market overnight, although former Premier Bill Davis told the Financial Post it worked just fine. The tax was repealed in 1978.
“The devil is really in the details of how you design it,” said Craig Alexander, chief economist at the Conference Board of Canada. “Are we trying to stop people from flipping properties after three to six months or is two years still a speculation purchase?”
He said you could discourage foreign buyers, who are often thought to be speculators, by imposing a tax that is ultimately deductible off any taxes they pay in Canada.
“When a foreign buyer purchases a house, they’d have to pay the tax when they purchase, but then when they file their income taxes, they would make the tax they paid deductible,” he said.