A British Columbia Supreme Court judge has dismissed a lawsuit claiming the province’s foreign-buyers tax is unconstitutional and discriminates against people from Asia.
A previous B.C. Liberal government introduced a 15-per-cent tax in an effort to quell Metro Vancouver’s overheated real estate market in 2016, and the NDP raised it to 20 per cent in 2018 after coming into power.
In a ruling posted online on Friday, Justice Gregory Bowden says the main purpose of the tax is to increase housing affordability in Metro Vancouver and generate provincial revenue, which he says falls within provincial jurisdiction.
Justice Bowden says the view that foreign buyers were contributing to the high cost of housing is not prejudiced in respect to any particular group and appears to be accepted by expert economists.
He says the tax will actually give a benefit to visible minorities, who make up 49 per cent of Metro Vancouver’s population, because the province will apply the tax revenues towards affordable housing and shelter programs.
The ruling says that although the majority of foreign property owners were from Asia, especially China, that doesn’t mean the tax adversely affected Asians “in particular.”
“There is no burden imposed on buyers from Asian countries that is not imposed on buyers from other countries. Further, buyers from Asian countries have the same opportunity to seek permanent residency status or a provincial nomination so as to be exempt from the tax,” the ruling says.
The representative plaintiff in the case was Jing Li, a Chinese national who learned she would have to pay an additional $83,850 on a $587,895 home in Langley that she agreed to purchase days before the government announced the new tax.
She sought to certify the case as a class action.
Ms. Li moved to Canada in 2013 to complete a master’s degree in public administration at the University of Saskatchewan. She later moved to Burnaby before putting an offer on the Langley home.
Eight days before the law was announced, Ms. Li paid a non-refundable deposit of $55,990, which she would have had to forfeit had she been unable to come up with the extra money for the tax.
Her lawyers argued the tax placed an arbitrary disadvantage on non-Canadian and non-permanent residents because it assumes foreign nationals are richer and better able to outbid domestic homebuyers.
In his ruling, Justice Bowden says Ms. Li had a duty to show the tax itself perpetuated or made racial stereotypes and prejudices worse.
“It is not enough that the stereotypes and prejudices existed or were mentioned in public discourse around the time that the amendments were enacted,” the ruling says.
He also references reports and testimony by economics professor Andy Yan in the ruling, indicating “overwhelming support” for the tax among Asians living in Metro Vancouver.
Eighty-nine per cent of Asian residents in Metro Vancouver who were surveyed indicated support for the tax.
“Professor Yan states that Canadian citizens or permanent residents of Vancouver of Chinese descent are equally impacted by housing unaffordability and equally will benefit from any measures that improve affordability,” the ruling says.
“In this context, it cannot be said that the tax perpetuates an Asian disadvantage.”
During the federal election campaign, Prime Minister Justin Trudeau pledged that a re-elected Liberal government would impose a national 1-per-cent tax on properties owned by non-Canadians and non-residents in an effort to curb foreign speculation in real estate. The tax would help deter foreigners who wish to speculate in the housing market, which has been a key contributor to a surge in home prices in some markets in recent years, Mr. Trudeau said in September.
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