Local MP Blake Richards says Canadians will be hit hard if the federal government establishes a home equity tax.

Richards is reacting to a media report that a $250,000 study is being undertaken by the Canadian Mortgage and Home Corporation (CMHC) that will, in part, examine whether a capital gain tax should be applied to the sale of principal residences.

CMHC claims the propose of the study have been misinterpreted, but it has risen a red flag for many, including the Conservative party.

Richard says for many Canadians that equity is a key to their financial well-being, especially for when it comes time to retire.

"We should be encouraging people to better their financial futures, not discouraging them. Creating a tax like this would be like getting rid of RSPs or tax-free savings accounts that encourage people to save."

"It will mess with a lot of people's retirements, and their savings plans. Frankly, it just isn't right."

Richards says instead of creating new taxes, the government needs to get its spending under control.

The Conservatives say they now have proof of something they've long suspected.

"Two or three years ago, we first caught wind of some rumours that the Liberals may be looking at doing a tax on home equity. I brought it up in the House of Commons in question period and we brought it up during the last election."

CMHC has taken to Twitter to deny it is conducting research on a home equity tax. It says the 18-month study focuses on housing, wealth and inequity to help improve housing affordability for Canadians.

The research is being conducted by the University of British Columbia’s School of Population.

Richard says those residents who want to voice their opinion on the issue can visit his website to answer a survey. The information will be used as ammunition by the Conservatives to step up their opposition to the proposal.

To participate go here.