Despite the Canadian Press reading more like opinion pieces than objective news nowadays, these two articles are objective enough, and when taken at face value, paint a picture of the government supposedly doing their job.
Annual inflation rate 1.5 per cent in October, in line with expectations: http://www.thecanadianpress.com/english/online/OnlineFullStory.aspx?filename=DOR-MNN-CP.d6fa08c6972f4982a6d273c258d0dcfd.CPKEY2008111303&newsitemid=39501401&languageid=1
City of Vancouver approves empty homes tax: http://www.cbc.ca/news/canada/british-columbia/city-of-vancouver-approves-empty-homes-tax-1.3853542
1.5% inflation already sounds like B.S. to most Canadians. The government alongside the Bank of Canada does its best accounting to manipulate the numbers so that it gives the impression they know what they’re doing with regards to interest rates. Reality paints an obviously different picture. The cost of housing and rent, excluding some parts of hard hit Alberta, have skyrocketed throughout most of Canada, with double-digit percentage increases being posted in the Toronto and Vancouver areas. The rising cost of groceries ($8 cauliflower?), have been popular water cooler talk, particularly at times when the Canadian dollar hit new lows against the U.S. dollar. Oil, despite trading in the 40 USD range, pegs the cost of gas nowhere near where it should be during similar times in the 1990’s when oil reached a similar level.
This is thanks to even more government intervention in the form of taxes and regulation in the past two decades. Its interference with the free market has lined the pockets of bureaucrats with taxpayers’ money. Trusting the government with its inflation reports is like trusting a mischievous student that wrote his own report card. There’s more intervention in the works that will continue the current trend of bad economic policy: carbon taxes and this new “empty homes tax”.
Rather than addressing the root cause of skyrocketing house prices, that is low interest rates backed by taxpayers’ money through the CMHC which allow banks to lend recklessly, Vancouver has decided to add a new tax. Despite the mayor saying the tax is not a cash grab, like any drug an addict gets his hands on, the government will not be able to let go of the tax so easily, even after a correction in housing prices. It figures any new “sin tax” becomes permanent once their budget revolves around the added income collected from the new tax. Get rid of artificially low interest rates, get government out of the way of the free market, and have prices correct to where they belong. At the moment the only winners to come out of this bubble are the banks and the government. Taxpayers will be left holding the bag.
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