The phantom tax

Here we go again.

Knowing they were about to get the brown end of the electoral stick, previous Con leaders Andrew Scheer and Erin O’Toole tried to scare people by saying Libs had plans to tax home equity.

They lost. No tax happened. None had been proposed.

But that’s not stopped the river of dread from flowing again. Days ago, speaking to a roomful of Toronto wrinklies, leader Pierre Poilievre pulled it out once more. The Carney guys, he said, will have no option but to start Hoovering houses. “It will be crippling.”

“What happens when the finance officials tap them on the shoulder and says, ‘You’re out of money, you need to go find more?’ Well, they’re going to go out and they’re going to tax your home equity. They’re going to go after your house. Bottom line is, Liberals will tax your home equity if you give them the chance in this election. We will never let that happen. Your home belongs to you, and when you sell, you should keep every single penny for yourself and your kids.”

In no political party platform is a home equity tax suggested, hinted or proposed. But that doesn’t seem to matter. Last week the Winnipeg Free Press gave over space so Liberal supporter and former mayoralty candidate Kevin Klein could tell folks, flat-out, that it’s coming – if the red devils retain the levers of power.

“With Carney at the helm or not, they will need cash fast. Their only option is to start treating Canadian homeowners not as citizens, but as balance sheet solutions,” he writes.

“This is not about fearmongering. It’s about pattern recognition. This government has spent beyond its means, taxed beyond reason, and blamed others for the consequences. They are not about to change course. They are about to double down.

“When they do, it won’t be Ottawa’s elite who take the hit. It’ll be the homeowner in Winnipeg who finally paid off their mortgage. It’ll be the senior who planned to pass down a family home. It’ll be the small business owner who poured equity into their shop instead of renting.”

And that swamp we call the Internet is home to all kinds of wackos, quislings, grifters and liars who understand there are zero consequences – and perhaps money to be made – by scaring the poop out of people.

Oh, wait. Here comes some now…

As reported here previously, there are existing proposals to seriously increase personal levels of tax in Canada, including residential real estate. In this campaign the NDP has proposed a wealth tax it claims will raise more than $94 billion. It would click in at net worth of $10 million (including property, pensions, investments), collecting 1% of that per year – or a minimum of $100,000, atop income tax (which is at a 54% rate over $220,000 annually). Today the Green Party is slated to unveil its own wealth tax, also including houses.

And Generation Squeeze, which has worked with CMHC on policy concepts, has been lobbying for a pure real estate equity tax for several years. “We’re proposing a modest annual surtax on homes valued more than $1 million… to tackle the housing crisis,” it says. “The surtax could generate $5 billion per year to fund affordable non-profit housing. It would also disrupt a cultural problem that fuels the crisis: many everyday Canadians have benefitted from skyrocketing home values, creating wealth windfalls that are largely sheltered from taxation. Meanwhile those same rising values erode housing affordability for younger generations, whose earnings from work are fully taxed.”

That levy would be calculated annually and paid when the house is sold or changes ownership –  effectively a giant, new land transfer tax.

So far, GenSqueeze has no takers. Nor will Jagmeet or the Greens ever form government in Canada. And both the Libs and Cons understand a retroactive tax on home equity would be both politically toxic and destructive, leading to a crashed housing market plus a big jump in debt as wise people drain their equity.

Of course, we all know the current system sucks. And, yes, the tax-happy kiddos have a point that the principal resident cap gains exemption encourages speculation, higher property values and the financialization of real estate. It’s an anachronism which has locked millions out of ownership while showering long-time owners with unearned wealth.

But, it is what it is. And nobody has the stones to change it. A better option, as proposed here, is a lifetime capital gains tax break for all Canadians, to a certain level (say, $250,000) to be used as they want – sheltering gains from a house, a retirement portfolio or your 1979 Wayne Gretzky hockey card.

Poilievre knows better than to scare old people into voting for him. But he does anyway. When hope and reason fail, use fear.

About the picture: “Hi Garth, I thought i would send you this picture of my dog and my son’s bearded dragon,” writes Jane. “They’re both looking out the window hoping the rain will stop.”

To be in touch or send a picture of your beast, email to ‘[email protected]’.

Source: https://www.greaterfool.ca/2025/04/23/the-phantom-tax/