Montreal’s hot housing market remains sustainable without slapping a surtax on foreign buyers like Ontario and British Columbia have done, insisted Quebec Finance Minister Carlos Leitão.
“We’re not in the same situation as Toronto or Vancouver,” he declared during a media briefing following remarks to the West Island Chamber of Commerce, May 24.
Canada Mortgage and Housing Corporation studies, he added, “demonstrate that in the Montreal area, foreign buyers are not yet of the same magnitude as we have seen in Toronto and Vancouver. That is very reassuring.”
Who’s buying what?
Leitão acknowledged that Quebec still needs to keep a close eye on real estate markets, in case there’s a sudden influx in foreign capital that could inflate local prices excessively. New legislation which has just passed the committee stage—Bill 150—will give provincial officials the power to pull property purchase data “like place of residence” directly from the Quebec land registry, he declared, “to know who is buying what.”
“We need to be able to monitor the market on an ongoing basis,” Leitão said. “So far, we have no intention of applying any sort of tax. But since we will have that information in real time, if we feel the need to do something, then we can respond fairly rapidly.”
Tax relief for towns
The Liberal government also intends to hand more money to the province’s municipalities, which get most of their revenue from regressive property taxes that often doesn’t reflect what many homeowners—particularly the elderly—are able to pay.
“That will be an important theme in the [upcoming] negotiations of a new [tax agreement] with Quebec’s cities, in 2019,” he hinted, but “I can’t go any farther than that. There will be some negotiating.”
Quebec Premier Philippe Couillard has already proposed turning over to cities and towns one percentage point of Quebec’s goods and services levy. Taxing sales is considered a sounder approach, since it targets spending—which tracks disposable income much more closely than inflation-prone property values which can push up property taxes and push out seniors from the homes where they’ve lived their lives.
Income tax cut?
Though Leitão wouldn’t commit to reducing income taxes in the interview, he didn’t rule it out either. “They’re not out of the question but neither are they automatic. If, in the future, we generate a surplus, about half will go toward reducing the tax burden,” he replied, “Revenue flows from economic activity. Not increasing income and other taxes will mean more people will work and earn a better salary which will help to fill our coffers.
Leitão acknowledged that “Quebec remains the highest-taxed jurisdiction in Canada” and said that he wants to redress that situation. However sidestepped Montreal’s recent tax grab from its demerged municipalities. “Those are municipal taxes,” he retorted. “That’s a different ball game.”
No relief from fuel surtax
He also reiterated his support for the 3¢ per litre gasoline surtax that Montrealers must pay.“It goes to fund public transit, so I think that’s a reasonable tax,” Leitão said.
He voiced confidence in Quebec’s economic prospects, now that the province is back in the black.“What we see on the horizon for 2018-2019 is for economic activity to remain quite strong,” Leitão enthused, despite the prospect of interest rate hikes on the horizon which would boost the amount that Quebec will have to pay to service the debt that it has accumulated under previous administrations.
“Our financial plan is based on a realistic assumption of intrest rate increases,” he concluded. “We are now in a cycle of moderate interest rate increases which we have provided for. If they prove higher than what we have assumed, we have [also] made a provision of about $250 million on the interest rate side.”