The Nobel Prize-winning economist who previously called Canada’s housing inequality “very disturbing” says the country needs to hike taxes on higher-priced real estate to avoid a housing bust.
U.S. economist Joseph Stiglitz told BNN in an interview that capital gains taxes on higher-priced real estate, as well as policies or taxes targeting uninhabited homes, will help ease inequality and boost the economy.
“It is not good to have the centre of cities empty, and forcing ordinary citizens to move way out into the suburbs,” Stiglitz said. “It’s bad for the environment – it increases transportation costs and pollution. It’s bad for the way cities work. We should encourage more integrated, economically-integrated cities.”
In an interview with The Tyee last year, Stiglitz called the housing inequality emerging in Vancouver “very disturbing” and compared it to New York’s “unaffordable” real estate market.
British Columbia in July cleared the way for Vancouver to impose a vacancy tax on empty homes in a bid to address soaring rents and growing concerns about foreign speculation.
Stiglitz added that real estate taxation can help dampen housing bubbles and prevent broader economic damage.
“If we look around the world, historically bubbles are a very common feature of real estate markets. When they break they have macroeconomic consequences with disastrous effects,” he said.
“That’s why I think that taxes that help dampen those bubbles are actually a good thing.”