The Conservatives' misleading claims about a 'secret' Liberal housing tax

The claim: Justin Trudeau has a "secret plan to implement a tax on up to 50% of the profits on the sale of your home."

-- The Conservatives repeat a claim they have been making for weeks, via a new attack website, hiddenhometax.ca

The facts: In late August, Conservative leader Andrew Scheer sent party supporters a "Dear friend" missive on his official House of Commons letterhead, making the claim that the Liberals intend to introduce a capital gains tax on the sale of primary residences.

As it stands, Canada is one of a handful of Western nations, along with Denmark, France, Finland, the U.K. and Portugal, that exempts profits made on the sale of a principal residence from capital gains levies. In contrast, the United States partially taxes such gains, offering an exclusion of $250,000 for individuals and $500,000 for married couples who file a joint return, then taxing the remainder at a rate of 20 per cent.

Scheer's letter which is now being circulated at the riding level on Conservative Party letterhead as campaign literature warns of "an alarming proposal that has leaked from inside Justin Trudeau's government," saying that its source was Toronto MP Adam Vaughan, the Liberals' special adviser on housing and urban affairs. It details a "sliding scale" of capital gains tax on home sales 50 per cent after one year of ownership, 25 per cent after two years, 15 per cent after 3 years, 10 per cent after 4 years, and 5 per cent after five.

Internal document cited

To back up their claim, the Conservatives have been sharing an internal Liberal party policy proposal on housing, prepared in the fall of 2018. It does indeed mention the capital gains tax, saying it is an "idea that has emerged from housing town halls."

When the Tories launched their attack website on Wednesday, they initially posted an edited version of the document, which appeared to suggest that it was Vaughan's own proposal, rather than a submission from the entire Ontario caucus. After complaints from the Liberals, and enquiries from the media, the Conservatives replaced the altered image with a picture that shows the actual attribution.

Still, the attack site only shares the first page of the Liberal policy proposal, which was made as the party began the process of drafting its election platform. A copy obtained by CBC News'sKatie Simpson provides more context. It shows that the capital gains tax was being proposed as part of a broader suite of possible measures aimed at making housing more affordable, including tax-free down payment savings accounts, replacing national stress test and mortgage rules with regional ones, and no-interest loans for 'green' renovations. And that all of the ideas were positioned simply as "areas to explore," rather than written-in-stone recommendations.

Overall, the Ontario caucus rated housing affordability as its second-most important issue, behind only national pharmacare. A levy on sugar-sweetened beverages was ranked 18th, while a proposal to help create a network of environmentally sustainable trails through Toronto's ravines, came last at 19th.

So, what evidence is there of such a plan?

No evidence

In a word, none.

The proposal isn't part of the Liberal platform, although the party is promising additional steps to help with housing by enhancing the existing first time home-buyer incentiveand by levying a new, one per cent anti-speculation tax on real estate owned by non-resident foreigners.

Nor is there any mention of changes to capital gains in the Liberals' costing. Some Conservative partisans have suggested that the measure is buried in a line about "new tax expenditure and government spending review," which promises an additional $2 billion in revenue in fiscal year 2020-21, growing to $3 billion by 2023-24. But the platform details six changes under that heading, including an enhanced whistle-blower program, closing corporate tax loopholes, and a 10 per cent luxury tax on cars, boats and aircraft, again giving no hint of any planned changes to home sales.

Then there's the fact that the Liberals, from Trudeau on down, flatly deny that they have any intention of changing the tax rules on primary residences.

"To be perfectly clear. Again. It's not in our platform," Adam Vaughan posted this week on his website. "We've never considered it. It's not something the party has endorsed. It's not something the party will endorse. It won't happen after we're re-elected. Period."

Of course, it's possible that the Liberals really do have a "secret" agenda when it comes to capital gains. But if so, firmly and repeatedly denying it seems like a stupid-verging-on-suicidal political strategy. Not only would the measure be unpopular with a large segment of Canadian voters, many of whom are counting on the value of their home to finance their retirement. The bait-and-switch would certainly shred the party's credibility heading into the next election, and possibly beyond.

The verdict: False. The Conservatives are continuing to advance their capital gains claim without evidence and in the face of firm denials. And the policy proposal they are citing was clearly aimed at speculators who flip properties after owning them for less than five years.

Sources: Justin Trudeau's Secret Plan to Tax Your Home; Conservative Party of Canada;Sale of your principal residence, Government of Canada; Which Countries Have the Highest and Lowest Taxes on Residential Real Estate?, Mansion Global; Overall statutory tax rates on dividend income, Organization for Economic Co-operation and Development; Topic No. 701 Sale of Your Home, Internal Revenue Service; Conservative campaign pulls altered image of Liberals' policy paper, Toronto Star; Forward: A Real Plan for the MIddle Class, Liberal Party of Canada; Enhancing the First-Time Home Buyer Incentive, Parliamentary Budget Officer of Canada; Non-resident owned speculation and vacancy property tax, Parliamentary Budget Officer of Canada; A Responsible Fiscal Plan, Liberal Party of Canada; Response to Andrew Scheer's Misinformation Campaign, Adam Vaughan.