Just like governments have introduced a price on pollution to lower our emissions and tackle climate change, this report recommends putting a modest price on housing inequity to apply downward pressure on the skyrocketing housing prices that have landed Canada in an affordability crisis. We can start down this path by adding a small surtax (starting at 0.2% and peaking at 1%) on homes valued over $1 million.
The surtax would help to disrupt Canada’s addiction to high and rising home values by signalling that earnings from hard work shouldn’t be taxed more than wealth home owners gain from rising home prices while they sleep and watch TV.
This surtax would help disrupt the tax shelter that protects the trillions in added housing wealth home owners have gained since 1977. Just like offshore tax shelters motivate moving money out of Canada to preserve assets, the home ownership tax shelter motivates us to bank on rising home prices to gain wealth. By turning home ownership into an investment strategy, this system is crushing affordability and harming younger and future generations. It’s time to protect real shelters, not tax shelters.
Taxing home value over $1 million isn’t new or scary. It’s not a blanket home equity tax, it’s not a capital gains tax, and it doesn’t require a big new government program to implement. Putting a price on housing inequity requires only small adjustments to property taxation practices already in place across Canada.
Some people will argue that putting a price on housing inequity is unfair. Unfair to ‘house rich, cash poor’ seniors with fixed incomes. Unfair to new home owners with big mortgages. Or just generally unfair, because why should people who worked hard to put a roof over their heads now be penalized with new taxes?
What do these concerns have in common? They’re all about the circumstances of those who already have homes. Putting a modest price on housing inequity addresses the unfairness of a housing system that is preventing younger generations, renters, and newcomers, from finding a place to call home at all.
It’s a reasonable step to ask the 10% owning Canada’s highest value real estate to tolerate a small price on housing inequity in order to demonstrate allegiance to the Canadian dream that a good home should be in reach for what hard work can earn, whether in rental or co-op housing, or as owners.
To restore affordability for all, we need home prices to stall, so earnings can catch up. A Million Dollar Homes Surtax is an important step toward this goal.
Price on Housing Inequity Infographic
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Housing Wealth and Generational Inequity | Blog: Breaking Canada’s addiction to high and rising home prices: a price on housing inequity | Blogue : Rompre avec la dépendance du Canada envers des prix élevés et croissants pour les maisons : un prix sur les inégalités dans l’accès au logement | Media Release