Vacant home tax? little effect…

Here’s a scoop: sometimes politicians do things just so they can say they did something. Whether what they do has much effect in the real world is an entirely secondary matter.

If Toronto does go ahead with a tax on vacant homes in an effort to slow the vertiginous rise in property prices, it will be an example of this unfortunate habit. It will allow the city and province to claim they are doing something, while almost certainly having next to no effect on the housing market.  

Mayor John Tory set off speculation by saying he is “open to exploring” whether a tax on vacant homes would be right for Toronto. He wants to discuss whether the city should follow the example of Vancouver, which is also grappling with sky-high property prices and has just imposed what it calls an “empty homes tax.”

At first glance, the idea has a lot of appeal. The idea that thousands of speculators are hoarding empty houses and condos while both property prices and rents shoot up is galling. If those empty dwellings became available, surely there would be more affordable places to live?

The trouble is that the closer you look at the idea, the less persuasive is the argument. There are a lot fewer truly “vacant” homes than it appears, and it’s likely even fewer would end up being captured by any realistic tax.