Winter is Coming.
Here on the West Coast of Canada, winter is officially here, and along with it comes the fruition of our labours from populist sentiment. Many B.C. homeowners in the past week have awoken to the receipt of their new speculation tax forms, a part of the new initiative fostered by the NDP government in response to popular demand for affordable housing and attempting to stop the speculation from investors, both foreign and local. This is only the beginning of tax winter, as further legislation at home here in B.C. and across Canada, in response to more transparency and affordability, begin to erode certain privileges that we as citizens have taken for granted.
It’s funny, but not funny, how we always end up shooting ourselves in the foot. I remember when in 2002 in response to greater transparency and disclosure due to the implosions of accounting scandals with Enron and WorldCom, the Sarbanes-Oxley Act was enacted. In this case, greater accountability and regulation was needed, however the heavy-handed approach took a toll on small companies through additional costs and regulations. This forced some to delist but also resulted in added costs to the very investors who were clamouring for even more stringent regulatory legislation. It is interesting how history often repeats itself in different forms.
I firmly believe the demand for greater transparency here in Canada will also come back to haunt us at certain levels. While, there are certainly merits to greater accountability and increased regulation, there is also one large glaring problem that we all are conveniently overlooking. The 1%. I know many individuals complain about the rich and the corporate big-wigs, but at the same time, if you take away certain tax incentives for these entities and individuals they will take their business and capital elsewhere. Often, this results in decreased investment, decline in new job creation, and a sputtering economy, which in turn drives the very people who are grumbling into potentially losing jobs, taking pay-cuts or facing economic hardship. Am I advocating that we become lax in our regulation or turn a blind eye? Certainly not, as there is always a swinging pendulum from one extreme to another. However, I do believe there is middle ground where we can find a place to co-exist.
Over the next few weeks, we’ll be looking at some of the legislation and new policies that have come in to place and are slated to be enacted in the near future. We’ll look at the new Provincial taxes in B.C. affecting the holding of real estate, additional disclosures, CRA’s new aggressive stance, and legislation changes at both the Provincial and Federal levels along with recent measures of relief from the 2018 Fall Economic Budget. In eating my own words, backed by popular demand, this week we shall feature a blog post on the new Provincial speculation tax and what this means for B.C. residents.
As this is an election year, it will be interesting to see the incentives the Liberal Federal Party shall throw out to appease voters and which tax policies are left off the table but may come back to haunt us in 2020 with a new Budget. As always, I urge constituents to seek reliable knowledge and look at the bigger picture to make their informed decisions, as while attractive and trendy, the populist vote often overlooks the forest and gets caught up in the trees, not showing the cliff a few kilometers ahead.