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Foreign buyers tax violates NAFTA: lawyer

Last Updated Jul 29, 2016 at 5:00 pm PDT

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Summary

A local lawyer says the levy will violate NAFTA, leaving BC and Canada open to trade disruptions

The 15 per cent tax is being implemented on August 2nd

VANCOUVER (NEWS 1130) – An international trade and investment lawyer says BC’s new foreign buyers tax will violate NAFTA and open the province and the country up to lawsuits and trade disruptions.

Barry Appleton of Appleton & Associates says the 15 per cent tax, set to take effect August 2nd, favours local investors and is, therefore, a violation of our trade agreement with the United States and Mexico.

“You can’t treat foreign investors from that country less favourably than we treat our local citizens,” he says. “What it looks like is the government simply picked something that might have been politically very desirable to announce, but was clearly and every way on its face, a violation of our trade agreements.”

Foreign investors could, either individually or collectively, bring claims against the federal government to be reimbursed for the tax, while foreign governments could institute their own trade restrictions in retaliation, Appleton says.

Appleton is also concerned the tax violates the 2014 Canada-China Foreign Investment Promotion and Protection Agreement (FIPA) along with 18 other treaties with various countries. “It doesn’t sound very pretty to me.”

Although NAFTA does allow Canada to place restrictions on residency requirements for ownership of oceanfront land, Appleton says a tax is not a residency restriction and it would only apply to land right on the edge of the water.

When asked in the past if they concerned about law suits, Premier Christy Clark says she believes her government is on strong legal ground.

A statement from the Ministry of Finance says the constitution allows provinces to impose taxes to raise revenue for provincial purposes,┬áthat all legislation goes through constitutional and legislative analysis, and “the changes presented in this bill build upon tax policy that has been in place for almost 30 years.”