A prominent expert on constitutional and tax law is planning to challenge B.C.’s new tax on foreign homebuyers. “There’s a huge problem with this legislation,” Toronto lawyer Rocco Galati said Thursday. “It’s clearly offensive on its face.”
Galati, a former tax specialist in the federal Department of Justice, has developed a public profile on cases such as the successful challenge of the former Conservative government’s appointment of Marc Nadon to the Supreme Court of Canada.
Galati expects to be supplied clients for a test case by Vancouver immigration lawyer Larry Wong, who on Thursday said B.C.’s 15-per-cent foreign buyers’ tax comes from the same mindset that has fuelled Donald Trump’s drive for the presidency.
“The new normal is the Donald Trump new normal of taking action according to one’s feelings — ‘Oh, these foreigners, their money is not clean,’ based on their feeling that, ‘How could one make so much money or pay for such overvalued real estate?’” Wong said.
“I think the tax shows disrespect. Foreign buyers who buy Vancouver properties are not criminals.”
Galati said the law is a violation of section 15 of the Charter of Rights and Freedoms, which prohibits discrimination on the basis of, among other things, national origin.
In most instances, Canadian jurisprudence supports the requirement that foreign nationals be treated the same as Canadian citizens and permanent residents when they are in Canada, he said.
The B.C. government would have to justify the new law under section one of the charter, which says equality rights can only be subjected to “reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society,” according to the Toronto lawyer.
Galati questioned whether the B.C. government could do this, arguing that he’s never seen clear evidence proving that foreign sales are the reason for Metro Vancouver’s housing affordability crisis.
A second and more substantive concern is that the surtax, by being directed at a group of people rather than at property, is by definition, an “indirect” tax.
He said the Constitution Act of 1867 limits provinces only to direct taxation such as income taxes imposed universally.
“A province can impose a tax on beer, but it can’t say, ‘If you’re Chinese it’s 10 per cent, but if you’re white it’s zero,’” he said.
Galati also believes the bill could be challenged under the North American Free Trade Agreement, which requires signatories to treat U.S. and American investors from those countries the same way as Canadian investors.
And if the Trans-Pacific Partnership agreement is ratified, investors from signatory countries, like Australia and Japan, would also have the right to challenge the law and seek compensation.
The B.C. finance ministry, asked Thursday whether the government obtained legal assurance that the law wasn’t vulnerable to a legal challenge, did not immediately respond.
Galati has earned a reputation for being a tenacious adversary when a government does something he thinks is objectionable on legal grounds.
His challenge of Stephen Harper’s appointment of Nadon to Canada’s highest court was based on the argument that Nadon, named to fill one of the three spots reserved for Quebecers, did not qualify under the Supreme Court Act because he was a Federal Court of Appeal judge.
The Conservative government referred the case directly to the Supreme Court of Canada, which ruled in 2014 that Nadon didn’t qualify because he wasn’t a current member of a Quebec superior court or was acting as a lawyer with current standing as a member of the Quebec bar. Legal scholars described the decision as a “stunning” setback for the Harper government.
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