A government that has spent itself into debt oblivion is a dangerous thing, because it will eventually come looking for your wallet.
With the federal debt set to hit $1,000,000,000,000 this year, the feds are sniffing around for new sources of cash, and Canadian homeowners could be the next to be hounded.
The investigative journalism site Blacklocks Reporter broke the story that the Canada Mortgage and Housing Corporation (CMHC) is spending $250,000 to participate in a research project that will explore, amongst other things, taxing the sale of principle residences – the homes that people own and live in.
After a fury broke out online about this proposal, then-Finance Minister Bill Morneau said that the Trudeau government was not considering a new tax on primary residences. Another cabinet minister put out a very rare Saturday statement trying to quash the weekend story, with Minister Ahmed Hussen tweeting “The Government of Canada is not looking at charging capital gains on primary residences. This is not under consideration by our Government. Any suggestion otherwise is false.”
However, this isn’t the first time this issue has come up for the current government. The federal Liberals toyed with the idea of a capital gains tax on our homes back in 2018 in internal documents obtained by the Conservative Party and they quickly popped the trial balloon as soon as the public caught sight of it during the 2019 election.
When politicians get caught playing with something as unpopular as primary home sales tax, they skate backwards faster than Paul Coffey. But instead of blocking the shot this time, they fell on their backsides.
Yet, CMHC is pushing ahead with the study. It’s no secret that their research partners favour hiking taxes on home sales. A 2018 report released by UBC’s Generation Squeeze raises the idea of taxing principle residences by describing it as a nearly $7 billion cost for governments because home sales are currently not taxed.
“Capital gains earned from the sale of principal residences in Canada are not counted as income for tax purposes. The federal government reports this tax expenditure costs nearly $7 billion annually, along with corresponding reductions to provincial coffers.”
Language like that assumes that everything automatically belongs to the government and should be taxed and if it’s not, it’s an “expenditure” or a loss to the state.
Moreover, Generation Squeeze’s May 2019 “gameplan” for fixing the housing crisis calls for governments to “rebalance taxes on housing wealth vs. income.” In other words: hike taxes on primary home sales.
Right now, secondary residences are subject to a capital gains tax when they are sold, similar to a form of income tax for people who buy, sell and flip multiple properties. The sales of homes that Canadians live in, however, have thus far been exempt from the taxman. Many older people are counting on the sale of their homes to be their nest egg to take care of themselves in their old age.
Former minister Morneau and his cabinet colleagues would like you to believe that this is all smoke, no fire. And maybe it is.
But the federal debt is set to hit $1 trillion within the next six months.
Somebody is going to get the bill.
If we’re to believe that the Trudeau government will never try to tax the sale of your primary residence, then why did the Trudeau government change the rules in 2018 and start requiring Canadians to tell Revenue Canada when they sell their homes and how much they got for it?
Hang on to your wallets, the road to $1 trillion could be a bumpy ride.
Kris Sims is the B.C. Director of the Canadian Taxpayers Federation
- Drive less, less risk, pay...the same. Kris Sims last made the case that ICBC should lower premiums during the pandemic.
- Roslyn Kunin also looked ahead and saw the looming iceberg: we can't dodge deficits and debt forever.
- Back in February 2019, Kris Sims sat down with Rick Cluff (in person, can you imagine?) to discuss how she'd fix ICBC.