1% per year really means well over 50% over your lifetime of home ownership.
The remarks below are my thoughts regarding the article by Amy Smart in the January 7, 2021 Vancouver Sun quoting Paul Kershaw and his report on “housing affordability” proposing an Inequality Tax.
Our current federal government creates housing inflation by its very own policies and then shifts the blame of house price increases on others to rationalize confiscating even more money from ordinary Canadians.
- The bond-buying program which reduced interest rates makes it easier for buyers to pay more for the same home while keeping the same monthly payment. This policy created huge price increases for homes.
- While I strongly support reasonable and sustainable levels of immigration, the government policy of high immigration levels creates a huge excess demand for housing.
- An “inequality tax” on your homes will incentify homeowners not to sell, thus reducing supply further, creating even higher home prices. There would be even less of your equity left over if you need to move, making you poorer. The same thing happens with capital gains tax. It incentivises owners not to sell due to the tax burden, creating less supply and thus higher prices.
All this is inflationary where a dollar buys much less today than it did years ago. In other words, our currency is devalued. The government devalues the currency, so we must pay more for the same goods, then calls it “unfair” and wants to tax us even more. The government calls these taxes “creating equity”! If the market value of a house rises due to inflationary pressures, you cannot sell it and go buy another similar house in a similar area and pocket any “profit”. You must pay just as much again, if not more to buy a similar home so you are no better off! The home is still the same home. You just need more of the devalued currency to buy the same home. It is misleading and a deception to call this tax proposal “Fairness in Real Estate”, “inequality” or “a benefit at the expense of others”. Inflation or currency devaluation is never a “benefit”. More taxes will not solve these problems. It just transfers your equity to the government. The government’s “concern about housing affordability” is misplaced. It wants more for itself, not you.
With inflation (devaluation of our currency), it won’t be long before all homes in the Lower Mainland will be well over $2,000,000, not just “the top 9% of the most expensive homes”! Homes have doubled in value (currency devalued) every 10 years or so for the last 60+ years in Greater Vancouver. Most homeowners own a home for over 50 years, so 1% per year times 50 years is 50% or half of your lifetime equity – most Canadian’s retirement fund. Add to this 50%, the 1-5% Property Transfer Tax every time you move plus the 5% GST and 7% PST for newly constructed homes, the government would be confiscating roughly 70% of the equity of ordinary Canadians over their lifetime of home ownership. This is much more than reducing housing inequality! More and more taxes rarely result in anything positive for ordinary Canadians. This is evil. It is big government robbing the people and smacks of the communism that my parents risked their lives to flee.
Ben Gauer, January 7, 2022. Surrey