Nova Scotia Prime Minister Tim Houston in March 2022. The prime minister said the now-repealed tax increase was an attempt to slow real estate speculation. Andrew Vaughn / The Canadian Press
Nova Scotia’s Prime Minister Tim Houston has reversed a plan to increase taxes on non-resident property, saying he is concerned about the damage it will do to the province’s reputation as a place to visit, live and invest.
The provincial government said Thursday it would not proceed with a property tax that would triple the tax on property owned by people who do not live in Nova Scotia all year round. The proposed increase, introduced in the spring budget, has drawn fierce criticism from villa owners outside the countryside, including a group claiming the new tax would violate the Canadian Charter of Rights and Freedoms.
The prime minister said the now-canceled tax increase was an attempt to slow real estate speculation. The government says the hot housing market in Nova Scotia has become inaccessible to many buyers for the first time in the province.
“My intention all along was to improve the accessibility of the home, not to run counter to our core value of being a friendly province,” Mr Houston said.
“So today I will put aside my personal pride. This policy was an effort to find a solution. It has always been designed to be a tool for maintaining housing. But when you realize that the tool you have in your hand may not work, look for another tool. I am committed to finding a tool to make home affordability, especially for first-time buyers, a reality in this province.
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While several provinces have introduced taxes on foreign buyers in recent years, most do not have special property taxes that affect other Canadians.
Nova Scotia’s proposed $ 2 tax on $ 100 of appraised property on non-resident property has gone further than any other province, including British Columbia, which has a 0.5% tax on speculation and vacant land on property owners. outside the province. About half of Nova Scotia’s 27,000 non-resident properties belong to people who reside in Ontario most of the year.
Some owners of villas outside the countryside say the prospect of tripling their property taxes has forced them to consider selling their properties. They attribute the letter-writing campaign to early legal efforts and the support of Nova Scotia’s business for helping to influence the prime minister.
“It’s a huge financial relief. We’ve been seriously considering whether we can manage the cost of this villa, “said James Mackintosh of Toronto, whose family has owned a maritime property in the Chester Basin for more than 60 years.
“We were hurt by this and we thought it was unfair. So it took the courage of Prime Minister Houston to listen and back away. We feel that democracy is working. “
The province will still continue with a 5 percent tax on the transfer of documents on housing purchased by non-residents, which was also introduced in the spring budget. Earlier this week, the province announced a reduced version of the property tax, with exemptions for military members, before abolishing it altogether.
Mr Houston said the policy adjustment was an attempt to make it fairer, but his government eventually acknowledged the wider risk to the province.
“I believe that the risk of damaging Nova Scotia’s reputation is becoming more real, and that is something I am reluctant to accept. So we will find another way to solve the housing issue, “he said.
“Sometimes it’s hard to predict where something might go in the public mind. But we did not foresee that this would change the view of Nova Scotia in the eyes of the people.
The real estate market in Nova Scotia is burning previous sales records, with homes in the Halifax area typically exceeding $ 200,000 above asking price. The average price of homes sold in January 2022 was a record $ 392,828, an increase of 23.2% from January 2021, according to the Nova Scotia Real Estate Association.
The prime minister is under strong pressure to tackle housing problems as the province’s population has grown by more than a million. The percentage of vacant living space in Halifax is only 1 percent, among the lowest in Canada. The city center is the fastest growing city center in the country, its population grew by more than 26 percent from 2016 to 2021, according to Statistics Canada.
Non-residents own about 4% of all properties in Nova Scotia, according to StatsCan. This is higher than Ontario (2.2%) and British Columbia (3.2%), which introduced taxes for foreign buyers in 2016 and 2018.
The Provincial Real Estate Association celebrated the abolition of the real estate tax, saying the increased taxes would not free up “meaningful housing” or have a significant impact on affordability.
“However, we believe that these taxes would have unintended and negative effects on our economy,” said Tanya White, a spokeswoman for the association.
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