Homeowners fearing sweeping measures that could have over-corrected the housing market likely breathed a sigh of relief on Monday after hearing the details of the federal budget.
Despite growing calls from numerous bank analysts in recent weeks for the need to tax the sale of principal residences, in some form or another, the government left the primary residence capital gains exemption untouched.
One key housing measure introduced in Finance Minister Chrystia Freeland’s first budget was a 1% vacant property tax to be levied on properties owned by non-residents. The tax will take effect January 1, 2022, and the government says it anticipates $700 million in revenue over four years starting in 2022-23.
“The idea here is that homes are for Canadians to live in…They are not assets for parking offshore money,” Freeland told reporters after tabling the budget.
But critics suggested the tax is likely to be ineffective at stopping non-resident money from entering the country.
The budget also earmarks $3.8 billion to accelerate the building, repairing and support of 35,000 affordable housing units, with $2.5 billion of that specifically earmarked for the Canada Mortgage and Housing Corporation (CMHC).
Government Takes a Hands-Off Approach to Housing
After months of strong house price gains and dwindling housing inventory, which has been putting the pressure on first-time buyers, there were expectations that the federal government might respond with policies aimed at cooling the market.
Just last week, the Canadian Real Estate Association reported a 31.6% annual gain in the national average home price, which hit a new record high of $716,828.
“Notably absent [from the budget] were demand-side measures addressing skyrocketing prices and climbing indebtedness,” wrote senior RBC economist Josh Nye.
The government also chose not to align the insured stress test (under the jurisdiction of the Department of Finance) with the recent proposal to tighten the uninsured mortgage stress test, announced last week by the Office of the Superintendent of Financial Institutions.
Also absent was any announcement of a revamped First-Time Home Buyers Incentive (FTHBI), which CMHC said recently is still expected this spring.
First announced late last year, the proposed changes would mean first-time buyers in Toronto, Vancouver and Victoria could use the shared-equity program to purchase a home up to 4.5 times their household income. The government estimated that would raise the maximum house price eligible under the program to $722,999 from its current $505,000 in those markets.
“The government resisted stoking demand by helping first-time buyers…” Hogue wrote.
Mortgage Professionals Canada, the country’s national mortgage broker association, released a statement to members saying it was supportive of the initiatives announced.
“Our continual focus has been on ensuring aspiring first-time homebuyers and the supply side issues in housing aren’t ignored in this budget and future policy discussions. They are essential to Canada’s economy,” MPC noted.
“While the measures announced today that impact the housing market may be moderate responses, MPC is supportive of these initiatives and will be engaging policymakers and fellow stakeholders in the coming weeks.”
budget Department of Finance housing market regulations
Last modified: April 20, 2021
Promised universal medication coverage (though it would likely be for generic-brand only) is again conspicuously missing from a federal Liberal budget, as it has been with some past Grit governments.
After the last promise was made, following the 2019 election, the pharmaceutical industry reacted with threats of abandoning their Canada-based research and development (R&D) if the federal government went ahead with the plan. Why? Because universal ‘pharmacare’ would negatively affect the industry’s plentiful profits. Of course profits would still be great, just not as great, which bothers the industry greatly.
In late 2019, an Angus Reid study found that about 90 percent of Canadians — including three quarters of Conservative Party supporters specifically — champion universal medication coverage. Another 77 percent believed this should be a high-priority matter for the federal government. The same study found that, over the previous year, due to medication unaffordability, almost one-quarter (23%) of respondents decided against filling a prescription or having one renewed.
Not only is medication less affordable, but many low-income outpatients who cannot afford to fill their prescriptions end up back in the hospital system thus costing far more for provincial and federal government health ministries than if the generic-brand medication was covered.
So, in order for the industry to continue raking in huge profits, Canadians, as both individual consumers and a taxpaying collective, must lose out huge. And our elected representatives, be they federal Liberals or Conservatives, seem to shrug their figurative shoulders in favour of big corporate interests — yet again.
Considering it is such a serious health affair for so many people, impressed upon me is the industry lobbyists’ potent influence on our top-level elected officials for the sake of large profit-margin interests. Frankly, I find it to be plainly immoral lobbyist manipulation that our mainstream news-media apparently fail to even try to expose, let alone condemn.
I believe the strong should help the weak. There is so much wealth held by the strong that it would make sense to spread it at this point. They keep a good chunk to maintain their comfortable living. Give up percentage to our ever so growing deficits. No one needs billions or even alot of millions to survive. This is greed for the love of money. Some wealthy did not even work for it. Inherited and by running successful businesses with little to almost no taxes. Its the poor lower and middle class that sustain the brunt of taxes. I was a victim of fraud through businesses partner. Let me tell you it devestated me and my family. However with a strong loving family to support me through my difficult journey. I was able to pull up my socks and put life into perpective. However leaving me financially behind and falling ill. Greed was the factor and money was the motive. There was plenty of money to sustain three families comfortably. I would like to start a group chat with victims of fraud. Everyone I tell my story to say they know of someone that had same experience. However in the mist of life with pandemic upon us. We survived Covid 19 entire family. I received my first vaccine and life goes on. Thank you, Vince