The BC government faces a class-action lawsuit over its handling of the 15 percent property tax imposed on foreign home-buyers which came into effect August 2.
If the suit is successful, the province could be forced to pay back millions of dollars.
Jing Li, a 29-year old university student from China, is leading the suit.
After moving to Sasketchewan in 2013 from China to complete a Master's degree, she relocated to Burnaby.
According to court documents, on July 13, Li signed a contract to buy a property in Langley for $587,895 and was required to pay a non-refundable deposit of $55,990 on July 20. However, due to the implementation of the new property tax, must now fork up an additional $83,850 as she is not a permanent resident or Canadian citizen.
The suit claims that other foreign buyers were involved in transactions that did not close until after Aug 2, and had entered into contracts to purchase homes before the tax was announced or came into force.
Luciana Brasil, Li's lawyer, argues that the tax is discriminatory against foreign-nationals, and that there are likely many other foreign buyers that are also affected, but have yet to come forward as they figure out how to handle their predicament.
According to Brasil, implementation of the tax on foreigners violates more than 30 international treaties by which Canada is committed to treating foreign-nationals as favourably as Canadian citizens.
Besides China, other countries listed in the lawsuit include Hong Kong, the Philippines, United States, Mexico, Poland and Russia.
Brasil said the lawsuit aims to overturn the legislation and demands repayment of any tax added to the purchase of a home because of the buyers nationality.
The suit also claims that only the federal government has exclusive power over the conduct and regulation of foreign trade, and that the provincial government had overstepped its bounds as the tax was enacted without proper constitutional authority.
When the Ministry of Finance was asked to comment on the issue, an email statement said that "as [the claim] is currently before the court", it could not speak directly to the notice of the claim, and would "file a response in due course".
The statement did however, briefly address the claims that the B.C. government did not have the power to enact such a tax.
“Generally, however, all legislation goes through constitutional and legislative analysis, and our view is the changes build on tax policy that has been in place for almost 30 years,” the statement reads. “The Constitution allows provinces to impose taxes within the province to raise revenue for provincial purposes.
“British Columbia acted to protect the residential real estate market from distortions.”
A judge must now decide if the class action application can proceed and Brasil says it could take six months to a year to set a hearing date for the lawsuit.
Do you think that the provincial government could have handled the enactment of the property tax differently? We'd love to hear your opinion.