BURNABY (NEWS 1130) – The province’s 15 per cent tax on foreign home buyers is now facing its first legal challenge.
A student from Burnaby is the lead plaintiff in what could become a class-action lawsuit that claims the new rules go beyond provincial jurisdiction.
Jing Li scraped together enough for a down payment on a $500,000 home in Langley, but once the new tax kicked in last month, it retroactively added more that $80,000 to her purchase price.
Jing can’t afford the new fees, and because pulling out of the deal would cost her the down payment, this puts her in a no-win situation.
“We still think there is a problem when the province chooses nationality as the basis for the payment of the tax because of the intrusion on the federal powers,” says Jing’s lawyer Luciana Brasil.
Canada has deals with other nations which give equal rights under the law to their citizens when they’re doing business here. Brasil intends to argue that the foreign buyers tax violates those agreements.
“Put the foot on the other shoe and I think a lot of [buyers] got the short end of the stick,” says Vancouver realtor Steve Saretsky. “Obviously these deals were agreed to and then without notice or without any time to get deals changed, a lot of them ended up forfeiting their deposits which some of them had built up their life savings for.”
Saretsky adds he’s not surprised by the lawsuit, just over six weeks after the tax came into effect.
He does favour a tax, but says the provincial government went about it all wrong.
“I’m not surprised. I think that the implementation of the tax was not done correctly,” says Saretsky. “Ultimately the 15 per cent tax is a good thing, but I think the BC government didn’t really think it through entirely in terms of implementation. I think the deal should have been grandfathered, and so, I’m not really surprised that they’re filing a lawsuit.”
The suit is not certified as class-action yet, but the legal action could eventually involve everyone who has had to pay the tax so far.
In a statement to NEWS 1130, the BC Ministry of Finance says “all legislation goes through constitutional and legislative analysis” and that “the Constitution allows Provinces to impose taxes within the province to raise revenue for provincial purposes.”