At this point it depends which theory you subscribe to ... (1) The housing market is in a bubble or (2) Vancouver and Toronto are becoming cosmopolitan cities joining the ranks of London, New York, Toyko, Paris, etc... I personally subscribe to theory #2. Vancouver and Toronto are attracting foreign capital as they are constantly garnering international attention as being the best places on the planet to live. It's not a bad thing. Now Vancouver has basically told the world that they're not ready to be in the major leagues and prefers to stay in the minors. "Thanks but we don't want your money". Cutting the influx of foreign capital could have consequences on the entire Canadian housing landscape if other major cities (ie. Toronto) start to follow suit. It's no secret that the housing industry is playing a major role in keeping the Canadian economy afloat by creating thousands of jobs in construction. With depressed oil prices and the Alberta wildfires already hurting the economy, why risk introducing another catalyst that could further hurt an already fragile economy. Now my slant on the government. If the B.C. government is serious about making housing more affordable they should earmark any taxes collected from the new foreign ownership tax and use it to offset the property tax / land transfer tax paid by locals when purchasing property. You kill two birds with one stone. Scare off foreign capital and stimulate local ownership. But we all know that is just a pipe dream. Government will extract tax from anyone and everyone under the guise of "utilitarianism". So my take .... BAD IDEA.
New taxes are usually a bad idea in my books. I understand the motivations for wanting to impose a new tax. The residents and the media keep pushing the narrative that the Vancouver (and Toronto) housing market(s) are out of control and unaffordable because foreign money (evil) keeps coming in and pushing up real estate prices.