Generation Squeeze argues that the surtax could raise between $4.54 billion and $5.83 billion to go toward other housing projects
A think-tank funded in part by the Canada Mortgage Housing Corporation (CMHC) and National Housing Strategy is proposing that homes valued at more than $1 million be subjected to an annual deferrable surtax as part of a plan to tackle housing inequality.
In a report released on Wednesday, the research organization Generation Squeeze argues that such a surtax would hit nine per cent of homes across the country and could raise between $4.54 billion and $5.83 billion to go toward other housing projects.
The proposed surtax rates would range from 0.2 per cent on homes valued between $1 million to $1.5 million and up to one per cent tax on homes valued at over $2 million. The tax would only apply to the value in excess of the $1 million threshold.
Most Canadians, according to the report, would not have to pay anything.
“The tax will apply only to the nine per cent of households living in the most valuable principal residences in the country — including 13 per cent of Ontario households, and 21 per cent of B.C. households,” it reads.
Deferrable in this case would mean that the tax would not need to be paid until the home is sold or inherited. The report added that this design detail would be flexible to avoid imposing risks on those with limited incomes or wealth beyond their homes.
The proposal, which was part of a package of measures including increasing affordable purpose-built supply and policies to keep rental units affordable, comes as low interest rates and a boom in demand for single-family housing in the suburbs helped push the average home price in Canada to an all-time high of $720,850 in November .
It’s a pretty obvious fix
Thomas Davidoff
Thomas Davidoff, an associate professor at the University of British Columbia who researches housing and real estate, told the Financial Post that setting the politics of it aside, a surtax would ultimately soften inequality between homeowners and renters.
“It’s a pretty obvious fix: if you think there’s housing inequality, taking money from homeowners and big money voters and giving it to renters is a pretty straightforward way to address that.”
Davidoff added that it would take a combination of solutions to address high house prices in the country, but tax policy is step one.
Mortgage expert Rob McLister, however, told the Financial Post that he believes wealth redistribution is not the way to create lasting prosperity.
“The absolute last thing overtaxed Canadians need is another tax,” McLister wrote in an email. “If the goal is to make home ownership more accessible, the solution is the same as it always was: incentivize more home building within a reasonable commute from where people want to live. That takes mass housing coordination by all three levels of government and investment in ultra-high-speed transit.”
In a statement to the Financial Post, The Canadian Taxpayers Federation also criticized the report, arguing that higher taxes could have the opposite effect in addressing home prices.
“They’ve got it backwards. Higher taxes won’t make homes less expensive, higher taxes make everything more expensive,” the group said in the statement. “If there’s a housing problem then we need to build more homes, so governments should be reducing taxes and red tape on homes and the material that is needed to build more homes. We are not going to tax our way to more homes. You build more homes with hammers, not tax hikes.”
Former CMHC chief executive Evan Siddall addressed housing wealth inequality in a 2018 speech when he was leading the organization, noting that the continued escalation of house prices in Canada will create “an even greater gap between the rich and the poor in this country.”
More recently, Siddall called a capital gains tax on homes a “step too far” for politicians during a December interview on CTV’s Question Period.
“There are lots of options. But politicians just aren’t allowed to have this conversation because the opposition — and it’s any colour — will skewer them for it. And so, we don’t have the debate that we need to have,” he said.
The concept has been long considered a political third rail. During last year’s federal election, both the Liberals and Conservatives were quick to shoot down the possibility of introducing measures to impose capital gains taxes on homeowners.
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TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
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The Canadian Press. All rights reserved.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
Companies in this story: (TSX:SHOP)
The Canadian Press. All rights reserved.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
Companies in this story: (TSX:REI.UN)
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