Impact of new taxes for seasonal N.S. residents won't be known for 2 years, says minister

It will be about two years before the Nova Scotia government learns whether proposed taxes aimed at seasonal residents have freed up housing stock for taxpayers who live in the province full time.

Nova Scotia's finance minister, Allan MacMaster, said the impact of the new deed transfer and property taxes will become more clear once information is collected for a database the government intends to build.

"We'll know for sure at that time how many non-residents have actually decided to either move here or if they've decided they're no longer going to ... keep their property here," MacMaster said Tuesday.

"We'll know if a Nova Scotian benefited from a purchase of a property and were able to access a property."

The proposed measures will see a tax of five per cent and property tax of $2 per $100 of assessment for people who own property in Nova Scotia but are not full-time residents. 

Non-residents speak out

Seasonal residents appearing virtually before the legislature's law amendments committee have called the taxes unfair, punitive and discriminatory. 

Multiple people have said the government's argument that the taxes are aimed at cooling a hot housing market doesn't hold water because their properties are not winterized.

MacMaster is not swayed by that view.

"A cottage can be winterized for a lot less than building a new home," he told reporters following a second day of overwhelmingly unfavourable testimony before the committee.

What's happening in Nova Scotia is along the same lines as measures already in place in New Brunswick and P.E.I., said the minister. Ontario also recently increased its deed transfer tax for out-of-province residents to 20 per cent, although non-residents in that case are considered people who are not permanent residents or citizens of Canada.

Along with property owners, opposition members have characterized the new measures as a tax grab that targets people who cannot vote. Liberal Leader Iain Rankin said his caucus opposes the new taxes.

"They're looking at trying to get revenue from people that spend a lot of money that support local economies, especially in rural areas," he told reporters.

Tories vote down dedicated housing fund

During Tuesday's committee meeting — which at times included MLAs talking over each other and shouting — the NDP put forward an amendment that would have seen the approximately $80 million that will be generated by the new taxes earmarked for affordable housing efforts.

Tory MLAs used their majority on the committee to defeat the amendment.

NDP Leader Gary Burrill said the least the government could do is create a fund to prove it's serious about addressing the affordable housing crisis.

"What we need is for the government to become involved in a major way — in an equity way — in public housing, co-op housing [and] non-market housing," he said.

But MacMaster said most taxes collected by the government go into general revenue and he sees no reason why this should be any different. He said the government has shown a willingness to act on the housing file, and a dedicated fund for the taxes "would be too prescriptive."

Various justifications for new taxes

Premier Tim Houston said the government would evaluate the taxes as they're implemented. He noted the measures were part of his party's election campaign platform.

While MacMaster originally billed the new taxes as a way to address the hot housing market, Houston has also said the government needs money to offset a new tax break for people younger than 30 working in the trades. On Tuesday, he also referred more generally to the province's finances and election commitments, which include fixing health care.

"We have a $500-million deficit, so of course we're going to look for ways to make sure that we can execute on our commitments," he said.

One area the premier does not want to tap for additional revenue — for now — is Nova Scotians who own multiple properties to operate as short-term rentals. The former government created regulations that would have allowed them to be taxed at a rate other than residential, but it was not brought into force.

Houston was asked Tuesday why the government has not set its sights on those properties.

"Those folks file their taxes here in Nova Scotia and contribute to our economy year-round, which is, I think, a significant point here," he said.

The government does have a bill before the House that would require anyone with a short-term rental, even if it is a room in their home, to register it with the province. That database is intended to help municipalities with future land-use planning.