The Ontario government is hiking its tax on foreign homebuyers ahead of a provincial election campaign where affordability is expected to be a key issue.
In a news release issued on Tuesday afternoon, the province confirmed that it would increase its non-resident speculation tax from 15 to 20 per cent as of tomorrow.
It said that it would also now apply the tax provincewide. Previously it only applied to properties purchased in the Greater Golden Horseshoe Region.
The changes come three months after BNN Bloomberg reported that the province was prepared to hike the tax if the federal government didn’t follow through on a campaign promise to crack down on foreign buying activity.
“Young families, seniors and workers are desperate for housing that meets their needs. But a lack of supply and rising costs have put the dream of home ownership out of reach for too many families in the province,” Minister of Finance Peter Bethlenfalvy said in the release. “That is why our government is adopting the most comprehensive non-resident speculation tax in the country. Our government is working to increase supply and help keep costs low for Ontario families and homebuyers, not foreign speculators looking to turn a quick profit.”
Ontario’s tax on non-resident home buyers was first put into effect back in 2017 under the leadership of former premier Kathleen Wynne.
It did appear to initially slow the pace of growth in home prices but in recent years home values in the GTA have marched much higher amid what industry observers have described as a supply crunch.
In February the average price of a home in Greater Toronto Area surpassed $1.3 million, up 28 per cent from the previous year.
In its release, the Ontario government said that in addition to hiking the tax it is also eliminating rebates that were previously made available to international students and foreign nationals working in Ontario.
It says that it will continue to allow foreign nationals studying and working in Ontario to receive a rebate, should they become permanent residents of Canada.
The Ontario government has not released statistics on the number of people and corporations paying the non-resident speculation tax since 2020.
In a message posted to Twitter on Tuesday, NDP Leader Andrea Horwath welcomed news that the tax was being increased while taking credit for the move.
“I'm happy to see Mr. Ford take a page from my Housing Plan I released in August 2021! Doug, if you need some other good ideas, check out the sections on real rent controls, ending homelessness and ramping up supply of homes folks can afford,” she said.
