Canada's Trudeau promises to tax foreign speculation in housing market if reelected

FILE PHOTO: Canada's Prime Minister Justin Trudeau speaks during a news conference at Rideau Hall after asking Governor General Julie Payette to dissolve Parliament, and mark the start of a federal election campaign in Canada, in Ottawa, Ontario, Canada, September 11, 2019. REUTERS/Patrick Doyle/File Photo

OTTAWA (Reuters) - Canada’s ruling Liberals will introduce a 1% tax on non-resident non-Canadians to help prevent foreign speculation from driving up housing prices, Prime Minister Justin Trudeau said on Thursday on the second day of an election campaign.

Speaking at an announcement in Victoria, British Columbia, Trudeau said the national speculation and vacancy tax would apply nationwide and would not affect Canadians living abroad.

Politicians are crisscrossing the country after Trudeau formally kicked off a campaign on Wednesday, and a major issue is expected to be the mounting cost of living. Canadians head to the polls on Oct. 21.

The proposed new measure would model a 2% speculation tax that British Columbia imposes on the assessed home value for foreign owners to curb the rising price of housing.

“We have seen from British Columbia’s example that even a modest tax can have a significant impact on foreign speculation in housing markets,” Trudeau said. He acknowledged that the tax had pushed investment capital to other parts of the country.

“That is why we feel it is important to create a national measure right across the country based on British Columbia’s success with it, to ensure foreign speculation doesn’t make housing less affordable for Canadians,” he said.

In 2017, the Ontario government imposed a 15% non-resident speculation tax on residential property located in and around Toronto - Canada’s largest city - in an effort to cool off the city’s red-hot housing market.

Reporting by Kelsey Johnson; Editing by Chris Reese and David Gregorio