In response to the government of Canada’s decision to impose an annual 1% tax on the value of vacant and underused properties that are not owned by Canadians, Congressman Brian Higgins wrote a letter requesting a meeting with Canadian Finance Minister and Deputy Prime Minister Chrystia Freeland.
In a letter to Freeland, whose agency is handling implementation of the tax, including exemptions, Higgins wrote, in part,” The Western New York and Southern Ontario regions share a special and historic binational cottage culture. As such, many of my constituents own modest vacation properties in beachfront communities in Southern Ontario. Since March 21, 2020, the border between the United States and Canada has been closed or restricted in various capacities, leaving American property owners unable to access their cottages in the same manner they have been accustomed to for decades. To enact a tax on cottage owners is counter to our nations’ shared mission of restoring cross-border traffic to pre-pandemic levels.
“While the current law includes some exemptions to the Underused Housing Tax, it lacks guarantees that would exclude all American cottage owners from this tax. For example, cottage ownership structures are diverse, and often shared between families. Current exemptions do not take these shared responsibilities into account.”
Higgins’ team said, “The Underused Housing Tax will impose a 1% tax on the value of residential real estate defined as vacant or underused owned by non-resident non-Canadians. Properties that qualify for exemptions from the tax include those that are not winterized, in census conglomerates of fewer than 30,000 residents, and are occupied for more than four weeks per year.
“Many modest properties owned by Americans, particularly Western New Yorkers with seasonal cottages, would likely not qualify for these exemptions. In Fort Erie, an estimated 15% of properties are owned by Americans, and the population is 30,710, which is above the identified population threshold for exemptions.”
Higgins has previously addressed the Underused Housing Tax in a letter written to U.S. Trade Ambassador Katherine Tai, who met with Canadian Trade Minister Mary Ng in May. He raised the same concerns about the impact the tax could have on both the U.S. and Canadian economies, and explained “the burden it will place on Western New Yorkers” to Tai during a Ways and Means hearing in April.
Higgins’ Western New York district encompasses the cities of Buffalo and Niagara Falls, and borders Southern Ontario. He serves on the House of Representatives Ways and Means Committee, which oversees U.S. tax policy, and is a member of the Subcommittee on Trade. Higgins also serves as co-chair of the Northern Border Caucus.
His team said, “He has been an active voice advocating to end ongoing restrictions at the northern border, which have greatly impacted the ability of our cross-border economies to return to pre-pandemic activity.”