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Noah Zivitz

Managing Editor, BNN Bloomberg

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Former Canada Mortgage and Housing Corporations Chief Executive Officer Evan Siddall sees a laundry list of reasons for sky-high home prices in Canada -- from the dearth of supply, to low rates, to economic fundamentals, to the safety net of mortgage insurance. 

He also points the finger at the lack of a capital gains tax on the sale of principal residences. But he is quick to admit that's a no-go for elected officials. 

"It's political suicide," Siddall told CTV's Question Period Host Evan Solomon in an interview that aired Sunday.

"You could be allowed to make a certain amount of money tax-free and tax above that," he said about ways that a tax could be implemented in a non-retroactive fashion. 

"There are lots of options. But politicians just aren’t allowed to have this conversation because the opposition -- and it’s any colour -- will skewer them for it. And so we don’t have the debate that we need to have.”

Canadians have recently faced an onslaught of reminders that housing affordability is being pushed further out of reach. 

On Friday, the Toronto Regional Real Estate Board said the average home price in Canada's largest housing market climbed almost 22 per cent year-over-year to a new record of $1,163,323 last month. One day earlier, the Real Estate Board of Greater Vancouver reported November home sales that were 33.6 per cent higher than the 10-year average for the month. And the most recent Teranet-National Bank composite home price index showed a 15.8 per cent year-over-year increase in October, putting it less than one point below the all-time high set in September.  

Nonetheless, Siddall said he doesn’t think there’s a housing bubble, and pointed to “real underlying factors” – including immigration and shifts in buyer preferences because of COVID-19 – that are driving demand.

While RBC Senior Economist Robert Hogue urged the federal government in March to "put everything on the table, including sacred cows like the principal residence exemption from capital gains tax", that notion rarely moves beyond the fringes in political circles. And, indeed, shortly after Hogue made that statement, he acknowledged in a subsequent publication from RBC Economics that eliminating the exemption “may prove more of a theoretical exercise than a politically viable one.”

When asked during this year's election campaign if the Liberals would introduce such a tax, Party Leader Justin Trudeau quickly shot down the idea. 

"We will not do that. That is something that we're not interested in doing," he told reporters on Sept. 7.

Siddall, who was at the helm of CMHC from late 2013 until April of this year before he was appointed chief executive of Alberta Investment Management Corp., warned in the interview with CTV's Question Period that the free pass from taxation is creating a nation of haves and have-nots. 

"One of the things that’s really driving people apart in terms of inequality in our country is the amount of money people are making off houses who own them versus the amount of money people aren’t making on their homes that rent them. It's a real problem. And why don’t we tax gains on houses but we do tax gains on other investments? It’s a serious non-progressive situation in our tax code," said Siddall. 

He said one of the reasons politicians refuse to touch the issue is because it opens the door to what he described as a “silly debate about, ‘You’re not going to take my money from me.’” 

In the absence of taxing the capital gains from selling a principal residence -- which he acknowledged would be "a step too far" for Deputy Prime Minister and Finance Minister Chrystia Freeland -- Siddall did offer another piece of advice when asked what he would tell her as she prepares to deliver a fiscal and economic update on Dec. 14. 

"What I would do, is I would look at the construct of mortgage insurance. 

"I would increase the minimum down payment from five to 10 per cent for sure. I might even bracket it. It’s currently 5 to 20 per cent down payment. Go from 10 to 25 – cover more of the waterfront, require more equity. I actually think that would be a smart move."