Good long read by Todd on some of the major policy and operational failures that have contributed to housing prices in Vancouver:
The main dereliction of duty by Immigration Canada has been its refusal, until it was too late, to properly assess the Business Immigrant Program (BIP).
Started in the mid-1980s, the BIP has arguably been the most crucial factor driving up Metro housing prices. UBC geographer David Ley estimates it has brought more than 400,000 well-off immigrants to Metro.
The first problem with the BIP, say Ley and others, is that it had extremely low standards.
It began by requiring an immigrant entrepreneur to invest only $150,000 in a business and hire one Canadian. The U.S., at the same time, was demanding business immigrants invest at least four times more money and hire at least 10 Americans.
One of the few high-level government officials to sound a warning about BIP applicants, whose first choice is to pour money into “safe” real estate, was David Mulroney, Canada’s former ambassador to China.
Asia-Pacific-trade boosters like Yuen Pau Woo, recently named a senator, have long said Canada should do everything it can to attract rich immigrants, calling them “the best and brightest.”
But Mulroney counters that liberally handing out passports “devalues the importance of Canadian citizenship.” And Justin Fung, with HALT (Housing Action for Local Taxpayers), concurs: “We’re practically giving away passports for free, and little benefit.”
In the meantime, Immigration Canada officials have not properly monitored the BIP. Their lax approach went on for decades as wealthy trans-nationals avoided being tested for compliance with even the BIP’s low standards.
A forensic auditor for the World Bank ended up called Canada’s BIP “a massive sham.”
The Conservatives finally killed it in 2014, which Fung called “years too late.”
Fung also worries a form of the BIP lives on in Quebec’s stand-alone immigrant-investor plan, which each year brings thousands more moneyed arrivals to Vancouver.
In addition, the federal Liberals are considering reviving a pilot program similar to the BIP.
Canada Revenue Agency
It gets worse.
While Canadian passports were being sold at bargain-basement prices, the Canada Revenue Agency has been ignoring another red flag — that many BIP newcomers and other owners of Metro mansions have been reporting strangely low incomes.
Even though the tax department had been warned, the politicians responsible did not want to face the reality that thousands of BIP investors and others were hiding most of their assets, which should have been taxed.
Officials have not wanted to admit to the widespread phenomenon of “astronaut” fathers who leave wives and student children in expensive homes in Metro to return to their homelands to do business — without declaring their offshore assets to Canadian tax officials.
An early attempt to bring in a national law requiring residents of Canada to disclose their foreign assets was opposed and not only by centre-right politicians, says Ley. B.C.’s centre-left NDP government of the 1990s also expressed concern such a law would be “culturally insensitive” and decrease B.C.’s attractiveness as a place for migrants to invest.
And even when a national foreign-assets disclosure tax law was finally brought into effect, it has often gone unenforced.
In the midst of Vancouver’s escalating housing crisis, in 2014, former Conservative prime minister Stephen Harper chopped 262 experienced tax auditors.
One of the first people to publicly expose ongoing tax avoidance by the trans-national elite was former Richmond Mayor Greg Halsey-Brandt.
In 2015 Halsey-Brandt directed Postmedia to data showing residents of one of Richmond’s most expensive neighbourhoods, where most of the population is foreign-born, were reporting poverty-level incomes — and thus putting themselves in position to pay virtually no taxes.
Another revelation came in the fall of 2015 when statistician Jens von Bergmann and UBC geographer Dan Hiebert independently unveiled census statistics showing high portions of mansion owners in ritzy Vancouver neighbourhoods were declaring almost no income.
The figures from von Bergmann and Hiebert showed several neighbourhoods, in which houses were selling in the $5-million to $7-million range, that were generally populated by immigrants, particularly ethnic Chinese.
In 2016, South China Morning Post journalist Ian Young broke open the tax department’s failures. The Hong-Kong-based newspaper revealed Canada Revenue Agency officials had been aware for decades of such tax-avoidance schemes.
CRA officials had admitted, in internal documents, they were not willing to devote auditors to catching these “highly sophisticated” tax-avoiding schemes by Metro Vancouver mansion owners and others.
‘They were scared,” the source said, “of being labelled racist.’”
In addition, a common real-estate scam has gone largely undetected as a direct result of the failure of Canada’s tax and immigration departments to share their information.
Because of the absence of cooperation, many Metro house owners have been avoiding paying capital gains taxes. They have been falsely claiming they are residents of Canada for tax and immigration purposes when they are actually mostly living outside the country and not disclosing their foreign income.
Unfortunately, it turns out that Canada’s immigration and tax departments have not been the only ones turning a blind eye to such unfairness and cheating in Vancouver’s exploding housing market.
Important study by Statistics Canada and John Berry from the General Social Survey confirming high levels of belonging to Canada:
Multicultural Meanderings 