Mike Smyth: Liberal flip-flop on foreign homebuyers tax costs honest owners — and taxpayers — dear

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There are millions of people around the world who can only dream about starting a new life in a prosperous country like Canada, where hard work and talent are welcomed and rewarded.

Nivesh Sharma, 30, was living that dream when he arrived from India in November 2015 with a work permit and visa and found a job as a shipping-logistics expert with a company in Richmond.

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His wife, Neha, also had a work permit and found a job as a bookkeeper with a kitchen-supply company in Surrey.

With their application for permanent-resident status awaiting approval in Ottawa, the Sharmas began planning to raise a family. Last April, they put down a $20,000 deposit on a new townhouse under construction in Surrey.

With the townhouse scheduled for occupancy in November, the Sharmas could not have been happier.

“We were renting a basement apartment and enjoying our first summer together in Canada,” Nivesh Sharma told me.

“We had settled in our new country, we both had jobs, friends and a new house to look forward to. It was a joyful time.”

But things took an unexpected turn last July 25 when Premier Christy Clark announced a 15-per-cent foreign homebuyers tax, vowing to “put British Columbians first” in Metro Vancouver’s overheated housing market.

Because the Sharmas had agreed to buy the townhouse for $361,000, it meant the government was now demanding an additional $54,000 from them.

They did not have the money and the bank would not loan the additional cash. Heartbroken, Sharma tried to get out of his purchase contract, but the townhouse developer would not refund his $20,000 deposit.

“We had two options: Lose $20,000 and our new townhouse or try to come up with the $54,000,” he said. “We had many sleepless nights over it.”

He eventually scraped up the money by securing six separate personal loans. He borrowed money from his father and his father-in-law (both back in India), two friends and from his boss and his wife’s boss.

Now he is working long overtime hours to pay off the unexpected debts.

“We somehow managed it, though it’s been extremely difficult and stressful,” he said.

But then came another twist. On Jan. 29, Clark suddenly announced the government would eliminate the tax on foreign homebuyers living, working and paying taxes in B.C.

“We believe that people, the best and the brightest, should be able to come to British Columbia,” Clark said.

Nivesh Sharma is now wondering if the government will pay him back his $54,000.

“I’m just asking for what’s fair,” he said. “If I bought the same townhouse today, I wouldn’t have to pay the tax.

“We’re not some big investors looking to make a large profit by flipping properties. We’re just normal working people trying to start our lives in Canada.”

The government says it is “considering” issuing refunds to some foreign homebuyers who paid the tax. I suspect the Sharmas will get their money back. If Christy Clark has any remorse at all for this screw-up, the government should pay them back with interest.

Other people, though, may not be so fortunate.

Nic Benner is an American citizen who works as a business analyst in Burnaby. In May 2016, he paid a deposit on a townhouse under construction in Langley.

Benner was forced to back out of the deal when the government imposed an $80,000 foreign-buyers’ tax on the purchase and he lost his $25,000 deposit.

Will the government compensate him for his loss now that they lifted the tax on foreign residents working in B.C.? There’s no clear answer.

Benner said the B.C. government showed no sympathy for his situation when he discussed his case a while ago with Housing Minister Rich Coleman.

“He said to me right away, ‘Look, I am not going to beat around the bush. We are not going to make any changes,’” Benner told me.

“He made it very clear that the government had considered all their options when they imposed the tax, including giving an exemption to people here on work permits, but they decided against it.”

If Benner and others like him end up receiving compensation — and he certainly makes a logical and compelling case — it means B.C. taxpayers could be on the hook for the government’s flip-flopping tax botch-up.

Once thing the Christy Clark government can’t do here is plead ignorance. They can’t say the tax had unexpected consequences.

Many critics pointed out last summer that the tax would unfairly punish people living and working here legally. NDP housing critic David Eby even introduced an amendment to exempt people on work permits. The government voted it down.

“The purpose of the tax should have been to target and discourage absentee speculators using our housing market like a stock exchange to trade properties for financial gain,” Eby said.

“The government knew they were going to hurt working people who had been encouraged to come here. It’s not like they didn’t know what they were doing. They did it anyway.”

When Clark announced the surprise tax exemption, she said it was in response to U.S. President Donald Trump’s travel ban on people from seven Muslim-majority countries.

But I suspect there are many other reasons the government backed down, including anger from real-estate companies that donate to her Liberal party and anger from immigrant communities representing many votes in the looming B.C. election.

The government was also getting push-back from the high-tech industry and other sectors that rely on skilled foreign workers, as well as potential lawsuits under NAFTA and other trade deals.

Now the government must correct its errors. Watch for the refunds to flow — though I suspect not all the people unfairly targeted by the tax will be compensated.

msmyth@postmedia.com

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