Court rules against claim that B.C.'s foreign buyers tax is discriminatory
Credit to Author: Joanne Lee-Young| Date: Fri, 25 Oct 2019 23:29:25 +0000
The B.C. Supreme Court has ruled against a claim that the provincial government’s 20-per-cent property transfer tax for foreign buyers is discriminatory, unconstitutional and in violation of trade agreements.
Jing Li, a Burnaby resident who moved to Canada from China in 2013 as a student, was the sole plaintiff in the case against the province.
Li entered a contract to buy a $559,000 residential property in Langley on July 13, 2016. When she closed the deal in November, the foreign buyers tax had come into effect on Aug. 2, and she had to pay an additional $83,850 as she was neither a permanent resident of Canada nor a Canadian citizen, according to the ruling.
Li said in the claim that she “felt that the tax unfairly labelled me and many others like me as being the cause of housing unaffordability” and that it “further reinforced” anger toward buyers from China due to unfair biases and stereotypes.
Li’s lawyer, Luciana Brasil, has previously cited support from other foreign buyers and the possibility for the claim to widen into a class-action with potentially significant costs for the province if it were to lose.
Li’s lawyers presented testimony from economist Tom Davidoff, associate professor of sociology Nathanael Lauster and history professor Henry Yu, all with the University of B.C., as well as data analyst and consultant Jens von Bergmann.
The province submitted testimony from UBC economist Tsur Somerville and SFU finance professor Andrey Pavlov. It later added reports and affidavits from UBC professor emeritus David Ley, SFU adjunct professor Andy Yan, and housing activist Justin Fung.
Andy Yan in downtown Vancouver.
In the ruling posted late Thursday, B.C. Supreme Court Justice Gregory Bowden looked at the context leading up to the tax’s enactment, whether the province had the constitutional right to implement it, and whether it violated international treaties such as NAFTA.
“In relation to the plaintiff’s argument that the tax perpetuates prejudice, stereotyping, or disadvantages of Chinese people in B.C., it is not enough that the stereotypes and prejudices existed or were mentioned in public discourse around the time that (the tax was) enacted. The plaintiff must also show that the tax itself perpetuated or exacerbated racial stereotypes and prejudices,” wrote Bowden. “All of the expert economists appear to accept that foreign buyers contributed to housing unaffordability.”
Bowden cited Yan’s report and wrote that the region “was experiencing hyper-commodification of real estate where housing becomes a financial instrument disconnected from its function as housing. (Yan) suggests that the inflow of foreign capital into the market introduced new demand pressures in a number of jurisdictions that resulted in a de-coupling of prices from local incomes.”
“For me, (the ruling) really recognizes that our real estate market is consumed globally and that our government, like other states around the world, can regulate it for the global economy,” said Yan in reaction to the ruling. He was one of the first to draw attention to large amounts of capital from China flowing into the local real estate market via the private banking networks of Canadian institutions.
Yu, who specializes in the history of Chinese migration to North America, found “the tax implicitly targets Chinese foreign buyers,” according to the ruling.
Bowden wrote that he excluded Yu’s report, describing it as being “more like a position paper in the form of an argument rather than an expert report.”
In reaction to the ruling, Yu said: “What worries me is that the category of foreign buyer grew out of anti-Chinese sentiment and this has cemented the easy conflation of ‘foreign’ and ‘Chinese,’ which is only now going to get easier to use rhetorically and allow dog whistling to become even more normal.”