The big lie

Yesterday the feds said their budget is generationally fair.

And, yup, it is. Fair to the wrinklies. After all, we old farts get enhanced OAS, more free drugs and the benefit of oodles of government spending we’ll never have to pay for. Once again – and more than ever – the Libs have kicked the can down the road. Spending surges. The debt swells historically. Interest charges jump to record levels. Deficits become structural. And nowhere in sight is the day when revenues match expenditures. No balanced budget. Taxes can only increase. The Boomers win again. Do their kids even know what’s coming for them (and their kids)?

What a political, cynical, manipulative, opportunistic thing the PM and his finance minister unleashed. After almost a decade in office, and after having already doubled the country’s debt, they’re buying voters with billions in new spending that will cost hundreds of billions to finance.

The budget is inflationary, adding a ton of fiscal stimulus that might cancel out yesterday’s rosy inflation number. It ensures the tax load will increase more. And if sunny economic projections aren’t met, Canada could have a debt-deficit crisis on its hands when federal borrowing goes nuts, bond yields pop and you will pine for the good old days when houses only cost $1.5 million.

Yikes. Look at what Chrystia Freeland says we’ll be paying to service the existing steamy pile of debt. About $65 billion a year within sixty months. That will be the biggest single taxpayer expense – more than we dump into health care. And this is the best-case scenario.

Our economist pal Derek Hold has this right: “Trudeau and Freeland are ripping off Canada’s youth who will be the ones left to face the bills for many years to come. It’s an insult to portray such a Budget as being in the best interests of Canada’s youth who have fled from the Liberals in droves.”

To deceive the kids, the Libs are telling them to look away from the economy and instead to focus on real estate. Thiry-year mortgages, enhanced RRSP downpayment loans, billions for construction, mortgage and renter’s charters, the first-home tax shelter and no tax on property profits. However, as we all know, it ain’t working. House prices have not dropped appreciably. Mortgage rates are a struggle. The pace of construction has faltered. So building three million new homes in the coming years is fiction.

Meanwhile the coalition government is doing what leftists love. Portraying society as a class struggle between Us and Them, then punishing the most successful and productive among us.

So Ottawa plans on Hoovering about $20 billion a year in seriously higher capital gains taxes, levied on individuals plus all businesses and trusts. This will affect only the wealthy, they say. But also caught in the web will be those selling investment or secondary properties, long-held cottages or cabins, facing real estate inheritances, dumping rental condos because of onerous regs or families now facing taxable trusts.

Besides, didn’t the Bank of Canada say the other day Canada has a productivity emergency? Our economy has been too obsessed with residential real estate and not feeding economic growth, tech development and entrepreneurs with investment capital. It’s a dangerous thing. We’re falling behind, blinded by selling houses to each other.

And what does the government do?

It raises taxes on investment capital and keeps real estate gains tax-free. Duh. Investors funding corporations, start-ups, businesses that make stuff, invent things, compete and employ workers will think twice about having two-thirds of their profits taxed at a 54% marginal rate – when they can buy an opulent, lavish principal residence and pay nothing on gains when they sell.

Lost on the Libs is the fact that ‘wealthy’ investors hand over half their incomes in taxes, then use the savings that remain to fund companies that pay taxes, and will now be taxed far more heavily on gains when they sell. In other words, why would you do it? Why not buy residential real estate? Or move your capital? Or just leave?

We’re increasing taxes and jeopardizing the country so the government can increase spending for political advantage while pushing the greatest burden upon future taxpayers. Then lying about it.

Oh, and here’s one more thing to fret about.

Some years ago when the Liberals began collecting data on residential real estate transactions, saying it was to spank foreign buyers, this blog warned of a darker reality. Now Derek Holt, chief economist of one of our major banks, in light of Ottawa’s fiscal folly, is voicing it.

“I still worry about how the Trudeau Government began collecting data on home sales with your tax filings starting years ago. They are establishing the infrastructure to maximize future policy flexibility toward the tax treatment of home equity. Would this government, for instance, tax home equity gains on primary residences held by relatively wealth folks? I wouldn’t trust them.”

So, it’s a new day in our nation. We whack the productive. We punish success. We borrow from the future. We promise the impossible. We feed the house lust. We ignore the threat. We pander for political gain.

This may not end well.

About the picture: “Regular photo contributor and avid reader of your educational and entertaining blog,” writes Robin, on Vancouver Island. “Never miss a daily dose, even during my recent travels to the jungles of Borneo, where I took this pic of this orangutan.  Feel free to use the ape photo,  if you want to change it up a bit from canines and felines.  Thanks for all your free advice and wit.”

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