Finance Minister Chrystia Freeland has announced that the Canadian federal government is exploring the implementation of a 3% annual tax on vacant lots, drawing inspiration from Ireland’s Residential Zoned Land Tax. The proposed measure, outlined in Freeland’s April budget, aims to discourage speculative landholding and promote residential development.
“We believe good land should not go unused,” Freeland stated, referencing Ireland’s upcoming tax set to take effect in February. The Irish model will impose a 3% levy on vacant serviced lots based on their market value.
The Department of Finance suggests that such a tax could deter property owners from holding undeveloped land in anticipation of rising values. The initiative is intended to incentivize development and generate revenue for housing projects.
While no official revenue projections or estimates of potential new homes have been provided, the government’s April budget document, “Fairness For Every Generation,” expressed concerns about landowners hoarding developable land instead of utilizing it for immediate residential purposes.
This proposal follows the 2022 Underused Housing Tax Act, which imposed a 1% annual tax on vacant or underused residential properties owned by non-resident foreigners. However, that tax has underperformed, collecting only $49 million since 2022 against a forecast of $175 million annually, while incurring $59 million in collection costs.
Freeland’s office has initiated consultations with provinces, territories, and municipalities to gauge interest in implementing vacant land taxes at the local level. The proposal also builds on experiences from Canadian cities like Vancouver, Toronto, and Ottawa, which have introduced similar taxes on vacant properties.
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2 Responses
Taxe, taxe, taxe et taxe comme si les taxes rĂ©solvaient tous les problèmes de la sociĂ©tĂ©. Le seul vĂ©ritable pouvoir de nos gouvernements est de nous taxer. c’est tout ce qu’ils sont capables de faire et peu importe le parti au pouvoir. Et ne me dites surtout pas que le gouvernement, c’est nous. Ça se rĂ©sume plutĂ´t “C’est NOUS qui PAYONS” that’s it!
This news initially got me excited about the prospect of a land tax, but my enthusiasm waned when I saw it only applies to vacant land. A more effective solution would be a comprehensive Land Value Tax (LVT). A full LVT captures the unearned value of land that society as a whole creates—through infrastructure, public services, and economic growth—rather than allowing it to be exploited by speculators profiting from rising land values. Properly implemented, an LVT would not only discourage speculation but also redistribute wealth, making housing more accessible and equitable for everyone.