In the wake of Vancouver Mayor Gregor Robertson’s letter to Premier Christy Clark last week suggesting the provincial government should tax real estate flippers and owners of luxury homes, and the province’s reply to Robertson that perhaps the mayor should (and I paraphrase) suck eggs, we here at The Sun wondered how the provincial government can:

(a) Dismiss Robertson’s suggestions out of hand if there was a lack of data;

(b) Admit there was a lack of data but then quote a study by the B.C. Real Estate Association suggesting offshore investors had a negligible effect on the housing market (because, you know, the real estate industry is completely unbiased on this issue), and;

(c) Sleep at night.

Since demands have grown louder that our government provide some sort of verifiable data, we put questions to the premier’s office, the Ministry of Housing and the Ministry of Finance. (We asked the same set of questions of the Canada Mortgage and Housing Corporation. More on that in a future column.) A spokesman for Housing Minister Rich Coleman replied the minister was unavailable for comment. The premier’s office replied, after four days, that it was deferring to the Ministry of Finance. Our questions (in bold) to the finance ministry and its answers follow:

1. Other jurisdictions around the world track offshore investment in real estate to a very precise degree. Why has the B.C. government refused to do the same and why does it feel these investments do not need to be tracked and compiled?

“The Province recognizes that home ownership affordability can be challenging in B.C., particularly in Vancouver. The Ministry of Finance is studying this issue and considering measures that could alleviate some of the challenges British Columbians face. Government would need to proceed very carefully before considering measures that would force down the value of people’s assets and prevent sellers from obtaining a fair market price. Government continues to study the factors that contribute to relatively higher real estate prices in Vancouver. Part of this research includes assessing whether any additional data should be collected. The Lower Mainland has historically been an expensive market, primarily driven by economic activity, rising population due to in-migration, and a constrained geography.”

2. Does the ministry have any records that might give an idea of offshore real estate investment?

“Statistics Canada collects limited data related to foreign investment in Canada’s real estate sector. These data are not broken down by province. Industry experts consulted by the Ministry of Finance state non-residents likely make up less than 5% of home sales in Greater Vancouver, and this fraction is not believed to be sufficient to drive prices in a market as broad-based and diverse as Greater Vancouver’s. In terms of speculation, domestic investors are estimated to be 3 to 4 times more active in the region’s housing market than foreign investors, adding much needed rental accommodation supply.”

3. At one time, the province required a Statement of Citizenship from the new owner of every transaction in B.C., which included a declaration of the citizenship of the buyers and/or directors involved. These records were allowed to lapse and have since been destroyed. Has the government considered doing something like that again, and if not, why not?

“This requirement first appeared as part of the new Land Title Act (as section 148) that was enacted in 1978 (in place of the former Land Registry Act). It was repealed in 1998 as part of a streamlining initiative that was announced in the 1998 budget. This initiative was designed to reduce red tape and cut the cost of doing business in British Columbia. The Property Law Act has for many years included a provision which stipulates that a person who is not a Canadian citizen has the same capacity to acquire and dispose of land in B.C. as if he or she were a Canadian citizen. Further, it is important to note that there are no active B.C. laws or statutes that prohibit people of foreign origin from owning land.”

4. The ministry makes several assertions about the state of overseas investment and the housing market in its report, but it acknowledges that the data on the phenomenon is inexact. How can the ministry come to its conclusions in its report when the data on the phenomenon is, at best, informal and dependent on the real estate industry, which clearly profits from an overheated market?

“Government has not reached final conclusions about the impact of foreign investment in B.C.’s real estate sector. This is an area we continue to study, including assessing what the effect of any tax measures related to foreign investment in real estate could have on the broader economy. The Ministry’s analysis includes data and reports from BCREA, Central 1 Credit Union, the 2011 Census, CMHC, Urban Futures, and Landcor.”

5. Does the ministry make the distinction between offshore buyers and offshore money? That is, many residents living here have sources of income overseas and do not report those incomes. Yet they are allowed to bring those monies into Canada. Has the ministry tried to estimate how much offshore money is coming into B.C., or what the effects of that offshore money might be?

“Questions regarding the obligation to report foreign sources of income are best directed to Canada Revenue Agency, under whose authority that obligation falls ... It would be up to the federal government and the CRA to pursue property speculators to the fullest extent possible, to ensure they are paying their fair share of income tax and are not incorrectly reporting a capital gain or claiming the primary residence capital gains exemption. Broadly speaking, foreign investment and immigration play an integral role in BC’s ongoing prosperity.”

Broadly speaking, I’d say that those waiting for the provincial government to supply them with precise data on foreign investment on real estate have just got their answer, such as it is.

pmcmartin@vancouversun.com