Monday, January 9, 2017

Chinese-language media up in arms over B.C. foreign buyer tax



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Chinese-language media up in arms over B.C. foreign buyer tax


Vancouver’s surprising new property-purchase tax for foreigners has generated a storm of coverage in Chinese-language media both in Vancouver and in China itself, with articles warning of dramatic new costs, analyzing the political motives of the B.C. Liberal Party and predicting a host of negative outcomes.
“The new tax is nothing but the ruling party of British Columbia soliciting votes for the election held next spring. It won’t cool down the enthusiasm of foreign buyers,” Ou Lyu wrote in the Global Times, a Beijing newspaper affiliated with the Communist Party-owned People’s Daily,
Premier Christy Clark announced on Monday that buyers of Metro Vancouver real estate who are foreign nationals or foreign-controlled corporations would have to pay an additional 15 per cent property transfer tax beginning on Aug. 2.
Hexun.com, a comprehensive financial website in China, warned that the new tax policy would dramatically increase the cost of buying.
The site summarized the four reasons that Chinese buyers are keen to purchase properties overseas: their children’s education, the desire to immigrate, the mania for owning houses and speculation. “Few will now buy for speculation purposes because the cost will increase by 15 per cent,” the site’s writer maintained. “However, for people who buy properties for the purpose of immigration, the new tax will be nothing to them. Because they are all billionaires.”
XinKauiBao, a newspaper based in Guangzhou, also warned about the impact, comparing it to similar taxes in Australia and Hong Kong.
On the other hand, China News Service, also owned by the government, was skeptical about whether the tax would slow down offshore buying in Vancouver. “It is premature to speculate on the outcome of this change in policy,” according to writer Changan Xu.
But it was journalists and commentators in Vancouver who were the toughest on the new tax and who gave it the most coverage.
In the Sing Tao Daily, one article warned that foreign buyers would be able to hide their identities by asking local residents to buy properties on their behalf.
Another article criticized the tax, which was much higher than anyone expected. “Increasing the tax to cool down the real estate market has limited effects,” it said. “It won’t achieve its goal of reducing housing prices dramatically.”
The Ming Pao Daily News echoed some of that and went further.
It ran one story about a Chinese buyer looking for contracts being abandoned by offshore buyers because of the new policy. Another story talked about the likelihood that buyers will shift their attention to Toronto, Vancouver Island or Vancouver houses priced under $2-million.
“The new policy will have a strong impact on houses over $4-million, which are always favoured by offshore buyers,” said Yongci Lyu, a realtor in Vancouver.
There was also coverage on WeChat, the Chinese version of Facebook, on which many of Vancouver’s almost 200,000 mainland Chinese residents communicate.
The WeChat articles outlined solutions for avoiding the tax. Though it comes into effect on Aug. 2, the long weekend makes July 29 the actual deadline for foreign buyers to avoid paying the extra 15 per cent. “Finish the transactions before July 29th, no matter how high the attorney’s fees will be,” the story advised.
And, like the other two newspapers, one WeChat article predicted disaster for the local real estate industry.
There was relatively little attention paid to the new policy in Hong Kong, which saw a tide of residents immigrate to Vancouver in the 1990s but has drawn many of them back.
The South China Morning Post’s Vancouver columnist Ian Young outlined the new policy, but reminded readers that it would not apply to millionaire immigrants from mainland China, some of whom are still trickling into Canada through the Quebec immigrant-investor program.