NDP housing taxes hammer retirement income
In 2018, B.C.’s NDP government, along with the other provinces and the federal government, signed on to the notion that Canadians weren’t saving enough for retirement and agreed to push ahead with an increase in Canada Pension Plan contributions, also known as “payroll taxes.” They felt so strongly about this that they went ahead even though numerous studies questioned its need and showed that thousands of jobs could be lost as employers struggled to make up their new increased portions.
The B.C. NDP then set its sights on bringing down the price of homes in B.C. by imposing numerous new property taxes, including a speculation tax, a significant increase to the existing school tax (even though there is no commitment to use these revenues on schooling) and increases to the property transfer tax for both foreign and local buyers. These taxes are in addition to the vacancy tax already imposed by the City of Vancouver.
As a result, it’s reported that house prices in the Lower Mainland have already dropped by 10-20 per cent, on average, and in some areas even more, effectively wiping out billions of dollars in homeowners’ equity. NDP Finance Minister Carole James even boasted that this was “proof” that their measures were working.
Here is the folly of the NDP’s ways. For the vast majority of homeowners the equity in their homes will make up the most significant portion of their retirement savings — far greater than their CPP investments.
So, here you have a government that says, on the one hand, that it’s concerned that British Columbians aren’t saving enough for retirement while on the other hand implements measures that destroy billions of dollars of potential retirement savings.
Furthermore, the NDP’s rationale for their new taxes was to make housing more affordable. My experience has been that one of the best ways to make housing more affordable is to increase supply. However, developers are actually now scaling back on projects and, in some cases, even putting them on hold because of the market correction. As a result, supply will stop increasing and thousands of people working in the building trades may stand to lose their jobs.
The irony is that the NDP claims to be the champion of the working class. But the correction in the housing market and the new payroll taxes will undoubtedly lead to thousands of layoffs in “working-class” jobs and maybe even worse, lead to a recession.
It’s been said that the best social program is a strong economy. So, why is it that the so-called champion of social programs keeps getting it so wrong?
For starters, NDP members have never seen a tax they didn’t like, nor a tax they didn’t want to hike. They believe the only way to increase government revenues is to increase taxes. However, when I served as parliamentary secretary to the late federal finance minister Jim Flaherty we were able to reduce taxes to their lowest levels in more than 50 years while, at the same time, government revenues and transfers to the provinces went up. Presumably, because people and businesses were reinvesting those savings in job-creating and prosperity building investments, which, in turn, led to a higher tax base.
This isn’t rocket science, it’s common sense!
If the NDP truly cared about British Columbians’ retirement savings, working-class jobs and a greater supply of housing, its leaders would admit their mistake and reverse the measures that most negatively impact B.C. taxpayers and the economy — namely, the speculation tax and the new school tax.
The government has given no sign they intend to do this so this will likely go down as yet another failed, government-engineered economic experiment. Unfortunately, hard-working British Columbians are yet again being used as guinea pigs, with devastating results.