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Toronto Mayor Olivia Chow's executive committee has given approval to the creation of a new municipal tax targeting foreign home buyers in the city. The proposed "municipal non-resident speculation tax" (MNRST) would impose an additional 10% tax on the purchase price of residential properties by foreign nationals, starting in January 2025. The move aims to discourage international buyers, protecting housing supply and maintaining affordability. Chow acknowledged that while foreign buyers contribute only slightly to the housing crisis, the tax is part of a broader effort to address Toronto's housing supply and affordability challenges.

The proposed tax is designed to mirror the Ontario government's non-resident speculation tax, introduced in 2017 at a rate of 15%, later raised to 25%, and applied province-wide. The city staff estimate that the new tax could generate between $14 million to $15 million in revenue in 2025, but this projection is contingent on the federal government lifting the two-year ban on most foreign buyers. The tax would apply to up to six "family residences" but excludes multi-residential apartment buildings, agricultural, commercial, and industrial land. Exemptions are also provided for individuals nominated under Ontario's immigrant nominee program, as well as protected persons and foreign buyers jointly purchasing with a Canadian citizen, permanent resident, nominee, or protected person.

Critics argue that the tax may have a limited impact as it targets a small percentage of sales involving foreign buyers, estimated at 2-3% in Ontario. Some experts suggest that the focus should be on addressing housing supply and the actions of domestic investors and speculators, who play a more significant role in the market. Council members, including Coun. Brad Bradford, question the effectiveness of the tax in addressing the housing crisis and highlight the importance of other measures such as a vacant home tax. The full council is set to consider the speculation tax at its next meeting, scheduled for February 6 to 8, with potential implementation on January 1, 2025, following the expiration of the temporary foreign buyer ban.

Read the full article on: CBC