Corporate Tax Breaks, Housing Heartbreaks with Silas Xuereb

10/07/24 • 17 min

Perspectives: A Canadian Journal of Political Economy and Social Democracy

Corporate tax breaks and loopholes in Canada have contributed heavily to the affordability crisis argues Silas Xuereb, researcher at Canadian for Tax Fairness, PhD candidate at University of Massachusetts, Amherst, and author of a new report entitled, How tax breaks are worsening Canada's housing affordability crisis. Outside of calls to build housing supply, Xuereb draws attention to a lesser discussed issue within the broader debates in Canadian housing: financialization. Without tackling financialization, housing may very well remain unaffordable despite changing supply and/or demand.

Financialization refers to the process by which a commodity, like housing, becomes a financial tool for investment rather than remaining as social or human good. Xuereb points to Real Estate Investment Trusts (REITs) as the main driver of this transformative shift in the real estate market. What makes REITs so popular and effective is the tax system in Canada, which gives real estate investors tax breaks on housing investments as an apparent incentive to increase supply. However, despite a 700 percent increase in real corporate capital gains since 2002, these entities have pocketed most of the profits while prices go up and supply remains insufficient.

Closing the tax loophole is an important step in fighting rising costs, as a part of a comprehensive policy set that includes investment in non-market housing and caps on single-entity ownership of multiple dwellings.

Listen to our interview with Silas Xuereb on how the current Canadian tax system favours corporate landlords and what we need to do to fix financialization driving the housing crisis.
Notes:

REPORT - How tax breaks are worsening Canada’s housing affordability crisis, by Silas Xuereb, Canadians for Tax Fairness, September 2024.
REPORT - The Financialization of Housing in Canada, by Martine Auguste, Canadian Human Rights Commission, June 2022.
"Addressing the Rise of Investor Ownership of Housing, Part 1: Assessing the Scale and Impacts across Canada" by Jeremy Withers, Perspectives Journal no. 1, April 2024.
REPORT - Dreams and Realities on the Home Front: Canadians’ Call for Government Action on Housing Affordability, Broadbent Institute & Friedrich-Ebert-Stiftung, March 2024.
Alternative Federal Budget 2025, Canadian Centre for Policy Alternatives, September 17, 2024.

Listen to our interview with Silas Xuereb on how the current Canadian tax system favours corporate landlords and what we need to do to fix financialization driving the housing crisis.
Notes:

REPORT - How tax breaks are worsening Canada’s housing affordability crisis, by Silas Xuereb, Canadians for Tax Fairness, September 2024.
REPORT - The Financialization of Housing in Canada, by Martine Auguste, Canadian Human Rights Commission, June 2022.
"Addressing the Rise of Investor Ownership of Housing, Part 1: Assessing the Scale and Impacts across Canada" by Jeremy Withers, Perspectives Journal no. 1, April 2024.
REPORT - Dreams and Realities on the Home Front: Canadians’ Call for Government Action on Housing Affordability, Broadbent Institute & Friedrich-Ebert-Stiftung, March 2024.
Alternative Federal Budget 2025, Canadian Centre for Policy Alternatives, September 17, 2024.

Previous Episode

Escaping the Consulting Trap with Chris Hurl and Leah Werner

When public services malfunction, such as the Phoenix Pay scandal or the failure of the pandemic travel ArriveCan app occur, it is easy to point the finger at the government and the political party in power. As Chris Hurl and Leah Werner describe in our latest Perspectives Journal podcast episode, there is some truth to this, but The Consulting Trap: How Professional Service Firms Hook Governments and Undermine Democracy, Hurl and Werner’s latest book, makes the case that the issue is much deeper than governmental failure and is also the result of a deepening intertwining of consulting firms within Canada’s government.

Werner and Hurl offer a detailed account of how many Western governments, including Canada, became so reliant on consulting firms. The rise of neoliberalism and the influence of “Transnational Professional Service Firms,” not only led to further privatization of public services, but also led to small government mandates that worsened services and deskilled the public sector.

In the end, this systemic issue has come at a cost for ordinary Canadians. Hurl and Werner break down some of the major issues facing countries trapped in what they call “the consulting trap,” including the huge and disproportionate costs to taxpayers. Despite the bleak landscape of TPSFs embedded administrations across Canada's democratic institutions, the authors also highlight forms of resistance that have spawned in response to the rise of TPSFs and clear areas for reform.

Listen Chris Hurl and Leah Werner’s interview to learn more about the origins, the problems, and the solutions to “the consulting trap” at the highest level of democratic governments on the Perspectives Journal Podcast.
Notes:

The Consulting Trap: How Professional Service Firms Hook Governments and Undermine Democracy, by Chris Hurl and Leah B. Werner, Fernwood Publishing, May 2024.
REVIEW - "Escaping the Consulting Trap," by Jack McClelland, Perspectives Journal, 20 September 2024.
The Big Con, by Mariana Mazzucato and Rosie Collington, Penguin Press, March 2023.
“Shadow Government: The Consulting Firms Telling Ottawa What to Do,” by Justin Link, The Walrus, 31 July 2024.
“McKinsey Charged in South African Corruption Case,” by Michael Forsythe and Walt Bogdanich, The New York Times, 30 September 2022.
Open Canada Government Procurement Database - search federal government contracts over $10,000.

Next Episode

Opening the Black Box: Nursing Agencies in Canada with Joan Almost

Private nursing agencies are have grown in number and use amid the crises facing the healthcare sector by filling the gaps in chronic understaffing. The Canadian Federation of Nurses Unions’ new report Opening the black box: Unpacking the use of nursing agencies in Canada reveals just how much this reliance on nursing agencies has cost. Dr. Joan Almost, Professor of Nursing at Queen’s University and author of the CFNU report spoke with the Perspectives Journal Podcast about how, in the end, private nursing agencies were at most a band-aid solution to a systemic issue.

The CFNU report offers clear recommendations to help mitigate this growing cost, and encroaching privatization, in the healthcare sector. For instance, to help address staffing irregularities, especially in rural and remote communities, provincial governments could create public nursing agencies that help to fill in these faps, instead of relying on private nursing agencies. Professor Almost points to Manitoba and British Columbia, where provincial governments have created similar agencies to ease off their reliance on private nursing agencies. These private agencies have also lacked transparency, leading to Professor Almost’s challenges in compiling the data for this report. Ensuring immediate oversight and regulation of these agencies will be critical to prevent them from ballooning costs on our public health care systems.

Professor Almost offers a guide to fixing the nursing problem on this episode of the Perspectives Journal Podcast.

Notes: