VANCOUVER, B.C. (CN) — With housing prices in Vancouver, British Columbia, rising into the stratosphere, the provincial government this summer imposed a 15 percent tax on property transfers involving foreign nationals. Now a Chinese homebuyer claims in a class action that the tax is unconstitutional and violates international treaties, including NAFTA.
Lead plaintiff Jing Li claims the provincial tax is ultra vires, and cites NAFTA and 29 investment protection agreements the federal government made with other countries, including her homeland, China.
The British Columbia Legislature approved the property transfer tax on July 28, to take effect on Aug. 2, in response to growing public outrage over housing affordability in Vancouver and its suburbs.
Public debate about the city's overheated real estate market has zeroed in on foreign investment, with opposing political factions trading barbs over just how big a role foreign money plays in inflating land values in a city where single-family homes routinely fetch more than $1 million, even for dilapidated so-called tear-downs.
Before drafting the tax, the governing B.C. Liberals had faced mounting criticism for their years of inaction on the issue, accused of kowtowing to the real estate industry and developers who fill the party's coffers with donations.
British Columbia does not prohibit or cap donations from unions or corporations, even entities from outside the province.
Li, who moved to B.C. after completing a master's degree in another Canadian province, inked a deal for a property in Langley, about an hour out of Vancouver, on July 13. Including taxes, the price was listed as $587,895, and on July 20 she paid a nonrefundable deposit of $55,990, with the balance due "by the completion date, which is November 14, 2016," according to the Sept. 19 complaint in B.C. Supreme Court.
Due to the new tax, Li is on the hook for $83,850 more, though she signed the contract before the tax took effect.
She complains that foreign people and entities are "treated less favourably than Canadian citizens or permanent residents when purchasing residential properties." She says that buyers who signed deals before the tax was announced, with closing dates after its implementation, are left with the dilemma of paying the extra 15 percent or backing out of deals and forfeiting deposits.
She seeks certification of a class of people and entities from dozens of countries, named in the complaint, plus restitution, and declaratory judgment that the tax is unconstitutional, beyond the authority of the B.C. government, that it discriminates against foreign nationals and violates international treaties, including the North American Free Trade Agreement.
She also claims the province unjustly enriched itself through expropriation.
She is represented by Luciana Brasil, with Branch MacMaster in Vancouver.
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