The B.C. government has made its first major move in the battle for housing affordability in Metro Vancouver and beyond by promising to raise the foreign-buyers tax to 20 per cent and institute a range of taxes to quell property speculation.

Now it looks as if the B.C. NDP is preparing to take on a more thorny challenge to confront the housing crisis. It’s a tax-related problem that Liberal MLA Mike DeJong promised to address three years ago when he was finance minister, but never did. The repercussions could be significant for increasing housing affordability.

The challenge is the so-called “bare-trust loophole,” which wealthy individuals, both offshore and domestic, have long used to disguise their identities when buying and selling residential property in B.C. That way, they could avoid paying hundreds of millions of dollars in taxes. The loophole remains open in B.C. despite the province of Ontario largely closing it in the late 1980s.

B.C. Attorney General David Eby and anti-money-laundering expert Peter German were in Ottawa this week telling a parliamentary committee about how the transnational rich are pumping billions of dollars into B.C. real estate by using bare trust loopholes and other techniques that make it possible for them to avoid paying B.C.’s property transfer taxes, the foreign-buyers tax and federal capital gains taxes.

Arguing that the federal government’s anti-corruption measures have been a “colossal failure,” Eby confirmed his government is preparing to create a “beneficial ownership database” that would require public disclosure of the actual owners behind thousands of trusts and numbered companies. “The bottom line for British Columbians is they want to know who owns the property and they want to know where the money’s come from.”

The fact that massive volumes of foreign capital have long been fuelling the housing markets of Metro Vancouver, Toronto and elsewhere is no longer in serious dispute in Canada. Polling shows the public is intensely concerned. And even mortgage-lending banks are admitting to the crisis.

This month David McKay, head of the Royal Bank of Canada, said foreign wealth is “distorting” the country’s over-heated housing markets by adding “gasoline” to it. “We do not need foreign capital using Canadian real estate as a piggy bank.”

McKay’s warning comes on the heels of a 2017 report by one of Metro Vancouver’s top housing analysts, Richard Wozny (who died in January), that shows how a “large, mysterious, untaxed pool of international capital” is being converted into speculative investment in residential real estate. Much of that investment, Wozny discovered, is being subsidized by tax avoidance and evasion, which hurts the tax-paying middle class.