OTTAWA — Parliament’s spending watching suggests in a new report that the federal government may not bring in as much new revenue as it expects from a proposed tax on foreign homebuyers.
The Liberals are proposing a one per cent tax on vacant homes owned by foreign non-residents to cool an overheated housing market across the country.
The government’s recent budget estimated the tax would bring in $700 million between 2022 and 2026, once the details are finalized and the tax put in place.
But in a new report, parliamentary budget officer Yves Giroux estimates the government may not get as much as that.
Giroux’s office estimates overall revenues over that time at just over $500 million after taking into account how some buyers may respond to the imposition of new tax.
But he warns that his and the government’s estimates could change depending on who has to ultimately pay the tax, and who is exempt, such as Americans with vacation homes in tourist destinations like Whistler, B.C.
Throw into the mix what Giroux calls poor and incomplete information on foreign ownership of residential real estate in Canada and the final numbers could be far different than what he expects.
In a separate report made public Thursday, Giroux’s office estimates that a budget proposal to collect federal sales tax on some goods sitting in Amazon warehouses would net the government just over $1.6 billion over the next five years.
The proposal would try to close a loophole for unsold goods foreign-based sellers ship to Canada, then house until they are sold and shipped domestically to local buyers.
GST is collected on the wholesale value of the goods when they come across the border but the federal sales tax isn’t always collected by sellers when the goods are sold to consumers.
This report by The Canadian Press was first published May 13, 2021.
The Canadian Press