Posted originally on Jul 11, 2024 By Martin Armstrong
Inefficient politicians consistently cite additional taxation as the solution to their nation’s economic troubles. The housing crisis in Canada is has spread to every province. Instead of addressing availability, the disproportionate demand brought on by multiplying the nation with migrants, or any of the countless fiscal policies that have contributed to inflation, the Canadian government believes it is the duty of citizens to subsidize their wealth as a temporary solution.
The Trudeau Administration has been trying to paint the housing crisis as a conflict between the social-economic classes. All those greedy citizens who saved for homes are preventing new homeowners from entering the market. Trudeau basically said this when appearing on the podcast Generation Squeeze, an organization that is pushing to add an annual surtax on homes over C$1 million. They believe houses between C$1 million to C$1.5 million, even if a primary residence, should face a 0.2% surtax that would eventually rise to 0.5%. Homes over C$2 million would face a 1% surtax.
What about older Canadians who have been residing in their family homes for decades? They may not necessarily be rich but they purchased when the landscape was different. Trudeau said those who “scrimped and saved” simply fail to understand that the younger generation can no longer do the same due to the economic environment he helped to create.
“GOVERNMENT BUREAUCRATS DON’T BUILD HOMES!” – Conservative Leader Pierre Poilievre
I mentioned in a separate post that 13.5% of young Canadians under 24 cannot find entry-level work. Unemployment is on the rise and young people cannot afford to save what little they have. All Canadians are feeling the constraints of inflation, with household debt rising to over 100% of GDP and the debt service ratio surpassing 15.22%. People are paying for the luxury of even having debt.
This thoughtless plan does not count for the fact that home prices are continuing to rise. C$1 million may sound high, but the average home in British Columbia is around C$965,447, with those in Ontario facing an average price of C$853,915. The average home cost around C$657,145 across all provinces in 2023, but that average was only C$391,820 just 10 years ago. The Canada Mortgage and Housing Corporation (CMHC) believes the average home will reach C$$746,410 by next year.
This is not a tax on the wealthy, though that would not be a solution, rather, this is a tax on hardworking Canadians who are struggling to maintain what they have left. This tax is in addition to the countless other grabs that the government is expecting from homeowners. There are federal initiatives that currently spend billions on new construction, such as the Canada Housing Infrastructure Fund, which spent C$6 billion toward new construction. What’s the point of increasing the supply when you’re increasing the overall population more rapidly? Trudeau did not offer ANY other solution during his interview because he had none to offer.
Centinel2012 