From the Fraser Institute

By Jake Fuss and Austin Thompson

Taxing part-time residency is no substitute for genuine housing reform, and may in fact deter investment in new housing.

A recent court decision has cleared the way for Canmore next year to impose a new “Livability Tax”—a 0.4 per cent property tax surcharge for homes left unoccupied for more than half the year. Mayor Sean Krausert called the ruling a “big win for Canmore.” But without addressing the root cause of Canmore’s housing shortage—too few new homes being built—this new tax is simply a costly distraction.

Canmore is not alone in taxing housing that is supposedly underused. Vancouver, Toronto, Ottawa and the federal government have imposed similar taxes. According to proponents, these taxes encourage part-time residents to sell or rent their properties to full-time residents. However, the evidence for this is underwhelming.

A study of Vancouver’s Empty Homes Tax found that it shifted 5,355 homes from part- to full-time residency between 2016 and 2021. While that may seem like progress, during the same five-year period construction started on more than 240,000 new homes. And despite the tax, home prices and rents continued to rise significantly. Again, because new housing construction has not kept pace with population growth, partly due to policies that discourage homebuilding such as high municipal fees, long permit approval wait times, and restrictive rules on what can be built and where—challenges that are familiar to Canmore’s homebuilders. Taxing part-time residency is no substitute for genuine housing reform, and may in fact deter investment in new housing.

Vacant home taxes are also costly for governments to administer. According to Canmore’s latest budget, it will cost $920,000 in the first year and $820,000 in the second year just to administer the Livability Tax. That amounts to between eight and nine per cent of the projected $10.3 million in annual revenue generated by the tax. By contrast, the administrative cost of ordinary property tax administration in Canada is typically about two per cent of revenue. The Livability Tax will apply to Canmore residents that occupy their housing unit for less than 183 days a year.

Crucially, the stakes of vacant home taxation are unusually high for Canmore. A study commissioned by the municipality estimates that one in four homes are likely not occupied full-time . That may increase the tax’s reach, but also its potential harm.

Why? Because deterring part-time residents is a risky proposition. The underlying assumption of the Livability Tax is that full-time residents are more valuable to the community than part-time residents. But the town council’s arbitrary 183-day threshold does not account for a resident’s contribution to Canmore’s economy or civic life. In many communities in North America, particularly in areas with wide ranges in seasonal temperatures and weather, part-time residents may help comprise the lifeblood of the community. Canmore may not realize the full cost of deterring part-time residents until they are gone.

And the Livability Tax comes on top of a recent hike in property tax rates for so-called “tourist homes,” which now pay roughly triple the standard rate. While these measures may appeal to some permanent residents, they risk deterring homebuilding and undermining Canmore’s appeal as a tourist destination.

Meanwhile, the town’s actual housing supply remains stagnant. Only 321 new homes were started in 2024. Some constraints on housing development are unavoidable given that Canmore is hemmed in by mountains and protected land. But other impediments to new housing—rooted in policy and political will—are not.

Rather than targeting part-time residents, Canmore should remove policy barriers that restrict new housing development. The recently approved Gateway and Palliser Lane projects show that relaxing municipal rules—on building heights, setbacks and parking requirements—can unlock more housing development. Building that kind of flexibility into policy and applying it more widely could go a long way toward easing the housing crunch.

If Canmore wants to improve housing affordability, it needs to build—not tax—its way there.

Jake Fuss

Director, Fiscal Studies, Fraser Institute

Austin Thompson

Senior Policy Analyst, Fraser Institute

From the Fraser Institute

By Tegan Hill

Following last month’s Liberal election victory, and after a decade of damaging federal policies by the Trudeau government, some Albertans are calling for a referendum on separation. While Premier Danielle Smith said she does not support separation she “will honour” the referendum process. And according to a recent poll, more than one-third of Albertans are open to leaving Canada. But whether or not the referendum actually happens, one thing is clear—Albertans have reason to be frustrated with confederation.

In our current system, Ottawa collects taxes from people and businesses across the country then transfers that money to Canadians for federal and national programs including the Canada Pension Plan (CPP) and employment insurance. Albertans contribute disproportionately to this system thanks to the province’s relatively high rates of employment, higher average incomes and younger population.

For example, from 1981 to 2022 (the latest year of available data), Albertans’ net contribution to the CPP—meaning the amount Albertans paid into the program over and above what retirees in Alberta received in CPP benefit payments—was $53.6 billion. British Columbia was the only other province where workers paid more into the CPP than retirees received in benefits—and Alberta’s contribution was six times greater than B.C.’s contribution.

On equalization—Canada’s transfer program aimed at ensuring each province can provide comparable levels of public services—Alberta has not received payments since 1964/65. In 2022 (the latest year of available data), the federal government spent $21.9 billion on equalization while 13.5 per cent of total federal revenue came from Alberta, which means Alberta taxpayers contributed an estimated $3.0 billion to the equalization program that year—while receiving no payments.

More broadly, Alberta’s total net contribution to federal finances and national programs (that is, total federal taxes and payments paid by Albertans minus federal money spent or transferred to Albertans) was $244.6 billion from 2007 to 2022—more than five times more than the net contribution from British Columbians or Ontarians (the only other two net contributors) despite Alberta’s smaller population.

So that’s the reality—Alberta massively overcontributes to federal and national programs. But that’s not necessarily a problem, in and of itself. The problem is that despite Alberta’s outsized importance within Canada, Albertans have faced a barrage of federal policies that disproportionately and negatively impact the province including Bill C-69 (which imposes complex, uncertain and onerous review requirements on major energy projects), Bill C-48 (which bans large oil tankers off B.C.’s northern coast and limits access to Asian markets), an arbitrary cap on oil and gas emissions, numerous “net-zero” targets, and so on.

On the campaign trail, Prime Minister Mark Carney promised to keep the emissions cap and Bill C-69 (which opponents call the “no more pipelines act”). Yet in a recent interview with CTV, Carney said he will “change things at the federal level that need to be changed in order for projects to move forward” adding that he may eventually remove both the emissions cap and Bill C-69.

That would be welcomed news in Alberta, which continues to punch above its economic weight despite federal policies that prevent the province from reaching its full economic potential. And any policies that restrict Alberta ultimately limit prosperity in Canada.

Albertans may soon face a referendum on separation. The rest of Canada should understand why so many Albertans are frustrated with the status quo. Federal policies specifically target their province’s energy industry despite their disproportionate contribution to the federation. It’s time to undo these federal policies, for the benefit of all Canadians.

Tegan Hill

Director, Alberta Policy, Fraser Institute