(Adds detail from Morneau's response, Sousa's letter, context)
By Andrea Hopkins
OTTAWA, March 21 Canadian Finance Minister Bill
Morneau is committed to working with provinces to tackle housing
affordability, a spokeswoman for Morneau said on Tuesday in
response to a request from Ontario that Ottawa do more to clamp
down on speculation in Canada's hot housing market.
Listing the measures already announced to cool the market,
spokeswoman Annie Donolo said in an email the government
believes all Canadians deserve access to housing that they can
afford, but did not mention new measures Ottawa might be
In a letter to Morneau, Ontario Finance Minister Charles
Sousa urged the federal government to consider options to
improve housing affordability beyond the measures Morneau
announced last year. The letter, provided by Sousa's office, was
dated March 17.
Sousa, whose Ontario Liberals have largely worked in harmony
with Morneau's federal Liberals, told Morneau there are "a
number of policy levers" available to Ottawa.
"In particular, speculation in the housing market could be
addressed by changes to the capital gains treatment of sales of
residential housing," Sousa wrote.
"For example, increasing the capital gains inclusion rate of
50 percent on the sale of residential housing that does not
qualify for the principal residence exemption could reduce the
incentive for people to make speculative purchases."
Observers have speculated that Ontario might introduce a
foreign buyers tax to dampen investment by overseas buyers, as
British Columbia did in August 2016 for the Vancouver market,
which has since cooled.
Toronto, Canada's largest city, has continued to boil, with
frequent bidding wars driving up prices, and economists have
begun to describe the market as a bubble.
In her emailed response, Morneau's spokeswoman said the
government has studied the housing market since increasing down
payment requirements in December 2015.
"Our government is bringing consistency to mortgage rules by
standardizing stress tests for both low and high ratio
mortgages. Additionally, we’re improving tax fairness by
ensuring that the principal residence exemption is available
only in appropriate cases," she said.
Canada's finance department launched risk-sharing
consultations in October to force banks and mortgage insurers to
take on more responsibility for the loans they dole out.
Morneau, who is set to announce his second budget on
Wednesday, is expected to announce new rules on risk-sharing in
the coming weeks.
(Reporting by Andrea Hopkins; Editing by Meredith Mazzilli)