Canada’ subsidizing foreign millionires
A home in Vancouver's west end that had been listed for more than $9 million. (Sotheby’s International Realty Canada)
Anyone who has spent time in Vancouver recently knows there is one topic everyone talks about: real estate.
The frenzied housing market, where tear-down homes sell for millions of dollars, is showing no sign of slowing down. In fact, 2016 is already breaking records for sales.
According to the Economist, Vancouver is the most expensive city in North America and the second-least affordable housing market in the world, after Hong Kong.
The average detached home now sells for over $2.2 million.
While wealthy foreign investors swoop in to buy homes that often sit empty, the city has become unaffordable for everyday people.
What’s going on in Vancouver, and will the phenomenon spread to other cities in Canada?
The problem, in part, can be blamed on Canada’s immigration rules — particularly the Immigration Investor Program.
Under the so-called investor program, wealthy immigrants could hand over $800,000 to the federal government in exchange for permanent residency.
Five years later, the government would return the money with no strings attached.
That’s it. If you had $800,000, or could access it through loans and mortgages, you could get a Canadian passport.
This program was a disaster.
A 2014 government report showed that after 10 years in Canada, the average immigrant who came through this investor program had a taxable salary of only $15,800.
One in three immigrant investors did not file a tax return — claiming zero income in Canada.
After a decade, these millionaire investors paid on average only $1,400 in annual taxes.
By contrast, the average immigrant who came through the skilled worker program earned $46,800 annually and paid $10,900 in income taxes.
Far from being a boon to our economy and creating jobs, these so-called investors are actually a drain on our social system.
A study by the University of British Columbia points out the high level of welfare dependency among those living in Vancouver’s wealthiest neighbourhoods.
Upwards of 30% of adults in these upscale communities report poverty-level incomes.
Neighbourhoods where homes typically sell in the $2 million to $6 million range also have the city’s highest welfare levels.
Under the immigrant investor program, a typical scenario might see a foreign businessman buying a house, then sending his wife and children to live in Canada while he remains overseas.
No one is earning income in Canada, so this family qualifies for welfare.
Our taxes are buying their champagne and caviar.
And don’t forget they use Canada’s free health care and education systems, without paying taxes.
The Harper government shut down this investor scam in 2012, but the impact is still being felt.
Immigration Minister John McCallum recently suggested the investor program may be coming back.
He told reporters the government is weighing its options and considering next steps.
Reopening this program would be a colossal mistake.
Instead, the government should look to Australia which, dealing with a similar housing problem, implemented a rule that restricted foreign ownership to new construction.
Canadian citizenship should not be for sale.
If Canada wants to attract wealthy investors, we should require them to invest here, not just snap up Canadian homes, collect welfare, and drive up real estate prices for the rest of us.
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