Please Advise! Why Tax Foreign Homebuyers Before the Study’s Done?

[Editor’s note: Steve Burgess is an accredited spin doctor with a PhD in Centrifugal Rhetoric from the University of SASE, situated on the lovely campus of PO Box 7650, Cayman Islands. In this space he dispenses PR advice to politicians, the rich and famous, the troubled and well-heeled, the wealthy and gullible.]

Dear Dr. Steve,

I am confused. Didn’t the B.C. government launch a review of the provincial housing market earlier this year? Weren’t they supposed to await the results before taking any drastic action?

Signed,

Homie

Dear Homes,

Recall the trial in Alice in Wonderland:

“No, no,” said the Queen. “Sentence first — verdict afterward.”

And so it came to be. Here in B.C., the housing study goes on but the sentence — a 15 per cent tax on foreign homebuyers — has already been passed.

To review: The provincial government commissioned a BC Housing research project to “build an economic model of the B.C. housing market.” A key goal of the study is finding out the effect of foreign buyers on the local market — are they only influencing the high end or the entire ball of pie? The study was launched in February and is now scheduled to be revealed at the end of the year.

Boring! Who can wait that long? Especially when your hair is on fire, and Vancouver’s collective ‘do has been a five-alarm blaze for months. The uproar over Vancouver house prices was beginning to threaten the Victoria housing market — specifically, the provincial legislature. If drastic action was not taken, Vancouver Liberal MLAs could’ve found themselves homeless after next election.

You’ve got to admit, Homie, that Queen — Premier — Clark’s decision to implement a tax has a certain boldness to it — so much so that it could boldly lead the government into even more trials. The fact that the BC Liberal government failed to include a grandfather clause exempting pre-existing contracts shocked some local sellers with deals already in the works. It wasn’t exactly “Off with their heads,” but it was at the very least a brutal bit of kneecapping. Real estate lawyer Richard Bell told CBC News he expects suits.

But in the meantime we are now ringside at a fascinating experiment — arguably a rash and ill-considered one but all the more fascinating for that. For the past year we have been observing two types of real estate speculation — speculators buying property, and pundits speculating on what it all means. The argument that foreign money was playing havoc with local values was obviously far more than an outburst of xenophobia. But how much of an effect was it having? And would a tax on foreign buyers really work (putting aside for now the question of whether it is fair to people who simply want to move here and play their part in building our community)?

Dr. Steve has been somewhat surprised by the many commentators who seem very certain of just what is going on in our overheated market and just what to do about it. It is his professional belief that sometimes a person must make like Socrates and confess that the wisest people are those who admit they don’t know jack shit.

Why wait for data? Experiment!

Not knowing jack shit never stopped a politician from leaping into action though. All the premier really needs to know is in the papers and the comment sections. Action is what’s important. Or possibly unimportant. As Lewis Carroll described it: “‘Unimportant, of course, I meant,’ the King hastily said, and went on to himself in an undertone, ‘important — unimportant — unimportant — important’ as if he were trying which word sounded best. Some of the jury wrote it down ‘important,’ and some ‘unimportant.’”

The BC Housing study would have made for useful reading. Now it will probably make useful kindling in the cold, rainy December to come. Instead, we get to sit back and watch Christy’s Experiment. One way or another the next year in the B.C. real estate market will likely be analyzed and studied in economics classes for years to come. It can be a dubious honour, as President Hoover could tell you. Early returns suggest sales have plummeted but prices have not. Some say the effect will be negligible, while Toronto honchos fear the effect will be to add Vancouver’s lunacy to theirs. But we have a ways to go.

By the way, Dr. Steve rents. And is preparing for upcoming developments by microwaving a very big bowl of popcorn.