Submission to the Ontario Standing Committee on Finance and Economic Affairs
The Federation of Urban Neighbourhoods (Ontario) Inc. (FUN) provides a provincial voice for residents’ associations in Ontario’s urban areas. Residents’ associations are engaged with their municipal governments in land use planning and development, transportation, and advocacy regarding policy and priority setting for services provision, and revenues. FUN believes that sustainable urban regions are characterized by environmental balance, fiscal viability, infrastructure investment, and social renewal.
FUN recognizes the significant fiscal challenges facing the Government of Ontario, especially in light of the continuing Pandemic. We also believe that investing in and maintaining physical and social and health infrastructure, all the while addressing the Climate Emergency are critical to the future wellbeing of all Ontario residents. However, we are choosing to focus at this time on the growing Housing Market and Housing Affordability issue and offer a recommendation for inclusion in the Spring 2022 Ontario Budget.
We are all aware that Housing is becoming increasingly unaffordable in all urban areas of Ontario, especially Toronto. We are concerned however that the Government of Ontario is not effectively addressing the issue. The core issue is the rampant speculation in the housing market.
While many Canadians are desperately searching for a home they can afford to buy and live in, others see housing as an investment only. In the first half of 2021, 25 per cent of homes sold in Ontario were bought by investors who didn’t need a place to live. In theory, building more new houses should cool down house prices, but in practice, that won’t happen when an investor can own 10 of them. If we want to curb inflation in the housing market, ending unproductive speculation — it can be done through the tax system. And this is something we could do very quickly.
According to research by the Canada Mortgage and Housing Corporation (CMHC), home prices in Canada have risen 30 percent since the start of the COVID-19 pandemic and land speculation is partially to blame. CMHC Chief Economist, Brad Dugan says that’s “something that worries [him] because that adds extra froth to the market, pushes home prices higher and can create a harder landing if and when the market turns and prices correct.” When Ontario was facing a similar problem in the early 1970s, Premier Bill Davis implemented a 50 percent Land Speculation Tax on people buying and selling homes that were not their principal residence. This tax is credited with slowing the extreme increase in property values in Toronto in the 1970s.
Urgent action is needed to help stop the extreme increase in home prices in Ontario, driven by home flippers and land speculators who treat housing like a Bitcoin-type commodity.
We note that the City of Toronto is currently considering a motion by Councillor and former MPP Mike Colle to:
- “request the Government of Ontario to introduce a Home Speculation and Home Flipping Tax to help stop the extreme increases in home prices driven by land speculators and home flippers in the City of Toronto”.
Dr. Brian Doucet, Canada Research Chair, University of Waterloo provided a statement in support of this request.
It’s time for the Ontario Government to stop out-of-control housing prices by re-imposing a Land Speculation Tax to stop home speculators from unfairly driving up the cost of housing in Ontario to unprecedented levels.
We request that the Standing Committee on Finance and Economic Affairs recommend:
- That the Government of Ontario introduce a Home Speculation Tax to help stop the extreme increases in home prices driven by land speculators and home flippers in Ontario.
c.c. Premier and Ontario Party Leaders