Class-action lawsuit filed against B.C.'s foreign buyer property tax
Chinese student leads court action, demanding repayment of all money paid by foreign national home buyers
Jing Li, 29, moved to Canada from China to attend university. After graduating, she moved to Burnaby, B.C., and signed a contract to buy a townhouse in Langley, B.C. Because she is a foreign national, she had to pay an extra $83, 850 in tax. (Peter Scobie/ CBC)
It's taken just over six weeks, but B.C.'s controversial tax on foreign home buyers is now facing a major legal challenge.
A class-action lawsuit has been filed in B.C. Supreme Court on behalf of virtually all non-Canadians who have been forced to pay an extra 15 per cent under amendments to the Property Transfer tax act.
If the lawsuit is certified by the courts and succeeds, the province could be forced to repay hundreds of millions of dollars — much of the expected revenue now earmarked to pay for affordable housing for British Columbians.
The additional charge went into effect August 2, brought in by the B.C. government in an attempt to cool down Metro Vancouver's overheated real estate market.
Foreign investors, especially from mainland China, have been blamed by some for fuelling high home prices.
Lead plaintiff a university student
The lead plaintiff in the case is Jing Li, 29, a university student from the People's Republic of China, now living in Burnaby.
In August, Jing told CBC News she was caught in a financial crunch by the imposition of the additional tax.
In mid-July, she cobbled together a 10 per cent deposit on a $560,000 townhouse in Langley by borrowing from her parents and friends in China.
Twelve days later, the new levy was imposed.
The tax added $84,000 to the price of the property. If she backs out of the deal, she will lose her non-refundable deposit of $56,000.
"I can't go forward and also can't go back," she told the CBC at the time.
Now, in the notice of civil claim filed late Monday, Jing represents nearly all foreign buyers in the province who have been forced to pay the additional 15 per cent.
Up to 4,000 Metro Vancouver real estate deals were affected by the quick introduction of a 15% tax on real estate deals, and were not allowed to be 'grandfathered' to avoid the tax introduced before the deal formally closed. (Christer Waara/CBC)
Lawsuit alleges discrimination
The suit argues the provincial government has acted outside its jurisdiction, and that only the federal government has the exclusive power over "the conduct and regulation of foreign trade, aliens and the regulation of trade and commerce."
The lawsuit also claims the additional tax has the "sole effect of discriminating against [foreign buyers] because of their status as foreign nationals."
And that, her lawyer argues, violates more than two dozen international treaties that Canada has signed with nations ranging from Argentina and China, to Russia and the United States — the latter covered by NAFTA, the North American Free Trade Agreement.
Lawyer Luciana Brasil, representing Jing and most foreign home buyers in B.C., says the province "used the wrong tool for the job." (Colin Fode/ CBC)
"The problem here is that the province has intruded into an area of federal jurisdiction" says Luciana Brasil, a partner with Branch MacMaster Barristers and Solicitors, the law firm that has filed the class-action suit on behalf of Jing.
"Because the province chose to use nationality as the basis for the tax, they're intruding into an area of federal jurisdiction. ... They're violating over 30 international treaties that guarantee equal treatment to these citizens and residents of other countries."
'We say they used the wrong tool'
Brasil says there's no denying there's a real estate problem in Metro Vancouver — it's just that the province made a mistake when it imposed the additional 15 per cent tax on foreign buyers.
"The case is not really about whether there's a housing crisis or whether or not there is a vacancy issue ... what we take issue with here is the tool that the province chose to use," says Brasil.
"We say they used the wrong tool for the job. It's like trying to use a screwdriver to put a nail on the wall. It just doesn't work."
It's like trying to use a screwdriver to put a nail on the wall. It just doesn't work.- Lawyer Luciana Brasil, on the provincial government's foreign buyer tax
None of the allegations has been proven in court. The B.C. government has yet to file a response to the lawsuit.
In order to proceed, the claim will have to be certified as a class action by the B.C. Supreme Court, a process that could take months if not years.
In the meantime, it's expected the province will continue to collect the extra 15 per cent tax.
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