Toronto councillor pushes for speculation tax to cool 'insanity' of escalating real estate prices
CBC
As real estate prices soar across Ontario, a Toronto city councillor is about to introduce a motion asking the provincial government to bring in a speculation tax aimed at putting a chill into the red-hot housing market.
Mike Colle, who represents Ward 8, Eglinton–Lawrence, told CBC News he'll make the move when city council meets later this month.
"$1.3 million for a starter home in Toronto. This is insanity," said Colle. "I'm asking the province to look at this as a way of slowing things down and ensuring that reasonable people with reasonable incomes have a chance at a house."
The Toronto Regional Real Estate Board reported last week that the average selling price for all home types combined rose by 21.7 per cent year-over-year to $1,163,323.
As CBC News recently reported, investors now make up the largest segment of home buyers in Ontario; 25 per cent of homes are being snapped up by investors speculating that prices will only keep rising.
Colle is calling on the Ontario government to introduce a speculation tax on the sale of homes that are not principal residences to deter speculators and what he calls "home flippers."
It wouldn't be the first time a tax like this was introduced in Ontario. The Bill Davis government brought in a speculation tax in the 1970s to cool Ontario's real estate market.
While some experts say the province needs to address sky-high prices that have outpaced incomes, they caution such a tax could have an "aggressive" impact. They further say the rate of the tax and how it's implemented are crucial.
Others warn it could crash the market and that any measure to deter investors could have unintended consequences.
Ontario already has a 15-per-cent non-resident speculation tax, which it levies on residential purchases in the Greater Golden Horseshoe region by non-citizens, permanent residents of Canada and foreign corporations.
Colle doesn't say how high he believes the proposed tax should be, but he's calling for a broader levy that would also target domestic investors who buy or flip multiple homes, treating housing like a "bitcoin-type commodity."
"We're talking about people that are in the buying and flipping of houses and condos for their income," said Colle.
"These people are just essentially blowing up the market in Toronto.… There are other factors, but this is one factor that I want the provincial government to wake up and look at."
The Bank of Canada recently acknowledged for the first time that a sudden influx of investors is the likely contributor to rapid increases in housing prices.
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