Perfect storm

Got one of these? Stay tuned.

HST rally1

I’m posting this both here and on my political blog. Obvious reasons.

For some time I’ve warned that a consequence of today’s political actions will be higher taxes. For 16 million Canadians, this starts in eight months.

Governments unable to contain their spending are about to lower a $6.9 billion annual tax boom on families. To do this when a million and a half people are out of work, in a recession, and just as mortgage rates start climbing, is a recipe for disaster.

Oh, not for business. And not for government. Both will clean up.

But for average Canadians the move to combine provincial sales taxes in Ontario and BC with the GST is an unbelievably ill-timed, cynical and mean-spirited move. Suddenly a slew of things that were not subject to tax, will be. The HST will be inflationary and punitive. It will also be inescapable. Unless you are a business operator, able to deduct it fully.

Over the weekend masses of people protested this federally-inspired tax grab in BC in 20 events. In Vancouver a thousand taxpayers gathered to tell the Gordon Campbell government to stuff its 12% levy – a far cry from Ontario where polls show most people have yet to clue in to the looming advent of a 13% sales tax to be imposed by the McGuinty administration.

The HST is a politician’s dream. Everything from grass seed to funerals, real estate commissions and clothing to legal and accounting fees will now be doubly taxed. The tax will be collected with every purchase, and added to general revenues. In exchange for agreeing to harmonize provincial levies with the GST, Ottawa is paying those two provinces extra billions. That Jim Flaherty guy sure knows how to spend your cash.

Hard hit will be real estate. Prices of new homes selling for more than $500,000 (basically every home in the Lower Mainland and most new digs in the GTA) will rise by about 6%. In Toronto, for example, this means to close on a $600,000 house a buyer will need $52,200 in cash just for taxes ($7,725 for Toronto land transfer tax, $8,475 for Ontario land tax and $36,000 for HST).

Sellers will pay HST on the entire commission. And the lawyer’s charge, the mover’s bill and the utility hook-ups. In fact the TD Bank estimates that although businesses can deduct the combo sales tax from their overhead, a big whack of tax will be passed on to consumers in the form of higher prices. So, figure on paying 1.5% more for everything.

Of course, coming out of a profitless recession, most businesses will be sorely tempted to top-up prices any way possible. What better chance than the wholesale addition of a 12% or 13% sales tax in these two key provinces?

So HST will add to the weekly cost of living, robbing families of cash flow, goosing the inflation rate while opening the door to inevitable price gouging. It is scheduled to take place (July 1) about exactly the time the Bank of Canada’s interest rate moratorium will end, bumping mortgage and loan costs. And most economists also believe energy costs will be on the rise throughout most of 2010 as global demand for oil starts to augment with a robust recovery in places like China – where annual car sales have just increased by 90%.

The perfect storm?

HST protest 1

Hope not, but the potential’s clearly there for cascading events to knock Canadians back into a recessionary funk, with falling disposable incomes, downward pressure on home values and lots more KD on the menu.

But don’t blame Gordon Campbell or Dalton McGuinty. They’re merely the guys who got mugged. Both premiers are facing out-of-control deficits, thanks to national finances which have fallen off a cliff. As the Harper government jacked up its spending over the last three years, destroyed the pool of private savings in income trusts, foolishly chopped the GST instead of income taxes, increased the size and cost of government, failed to care about failing factories and talked up the dollar, we became sitting ducks for recession.

Sure, governments need cash. They’re plunging us into debt by the hour. Sure, businesses crave tax relief. The HST will give it.

But this is not the moment.

The country still belongs to the taxpayers and the voters. Not the taxing elites. Or does it?


#1 Dave on 09.20.09 at 10:29 pm

i’m starting to see more listings in the Toronto area. The past few months it was signs that read “sold” rather than “for sale”.

Maybe things are turning over once again…

#2 The Great Gazoo on 09.20.09 at 10:30 pm

I know, to eradicate elitist spending i think I’ll vote for this guy (a blue blood himself):

Canada opposition leader Michael Ignatieff said the country may need a second round of stimulus measures to emerge from its slump and threatened to topple the government if it rejects proposals to help the economy.

On second thought…

Here’s the complete context, form the same article: “Ignatieff said changes in the global economy, including a “reordering” of global production, mean additional stimulus should aim to boost Canada’s productivity, while maintaining fiscal discipline.” Sadly that ‘fiscal discipline’ exercised by Jim Flaherty has resulted in a $56 billion deficit – beyond anything even the NDP imagined. Maybe it’s time we had some better conservatives running the place. — Garth

#3 nonplused on 09.20.09 at 10:33 pm

A 12% HST on absolutely everything only results in an effective tax increas of 6% on income for high earners. (High earners are already at a 50% marginal rate on income, so they only have half thier income left to pay 12% on, so they pat 56% of total income in taxes.

The poor, on the otherhand, pay no taxes so a 12% HST is 12% to them.

And it’s 12% of disposable income for everybody.

Bloody hell. Where are we supposed to get the money to pay all this?

Oh and don’t forget property taxes and all the various fees.

Didn’t they raise taxes in the great depression, killing economic activity?

#4 Too Old Bob$ on 09.20.09 at 10:36 pm

Well you know the old saying ” you get what you vote for”. Actually I don’t think this applies anymore. I mean does it really matter who gets in power, they will all do the same. Every Goverment takes the same economics course, which is nothing.

Yep! another tax grab, but wait till the other ones kick in. You know, CPP, EI, Health, whatever. As said before, someone has to pay for this. Lets open the underground economy a bit more, like back in the GST days. Eventually we will get over it and life goes on.

I say with time, the reaction will be mute and most will just pass it on to the new home, vehicle, mutual funds owners etc. and just consider it another tax that they will shrug off.
Yes it will be an inflation increase, but we won’t tell anyone.
We have short term, long memories. :(

#5 Eduardo on 09.20.09 at 10:44 pm

Garth, perhaps you could clarify two things for me:
1. Harper govt “talked up the dollar” whereas the other day you said Flaherty has done “everything possible” to talk down the dollar.
2. You continually chastise the government for decreasing the GST and now that they are adding a sales tax back in you are chastising that too. Can you clarify why the decrease in GST is bad and the increase in sales tax is also bad. I do understand that you want an increase in income tax instead.

Then my editorial: Failing factories are the fault of the factories for lack of foresight and innovation. It’s not the job of government to babysit industry. Nobody made GM, Chrysler, and Ford produce gas guzzlers at a ridiculous cost of union labour, etc, etc.

Pay attention. It was the BoC I wrote about regarding efforts to dampen the dollar, not Flaherty. The GST cut was a stupid move, condemned by virtually all economists since it did little to help families while gutting fed revenues at the wrong time. I argued strongly that income taxes should have been reduced instead, and still do. The only politician to raise income taxes in the last generation was Stephen Harper. — Garth

#6 WillsDad on 09.20.09 at 10:44 pm

Glad I’m in Korea. In January I’ll be paying $170,000 cash for a good sized apartment in the best part of my city. Close walking distance to outstanding parks, shopping, good and cheap restaurants, affordable hospitalS, subway line. I also get almost 6 months paid vacation, and I don’t have a masters degree (teaching degree, same as toilet paper back in Canada). My tax rate is 4%.

#7 Shawn Allen on 09.20.09 at 10:45 pm

It would have been more fair to introduce the HST on a revenue-netral basis. Change the tax but try to target the same revenue collection.

As long as consumption is to be taxed I tend to agree it should be broad based and the tax should apply to everything. But there should be no attempt increase the tax collected at the tiome of harmonization. Any increase should wait not be done by stealth at the time of harmonization.

So will house prices rise or will the the tax simply come out of the sellers hide? time will tell.

Already houses are priced at the limit of affordability. That might suggest the extra tax will come out of the hides of the sellers. That’s my bet. If you have a house to sell in the back half of 2010, consider selling now.

#8 Eduardo on 09.20.09 at 10:47 pm

“Sadly that ‘fiscal discipline’ exercised by Jim Flaherty has resulted in a $56 billion deficit – beyond anything even the NDP imagined. Maybe it’s time we had some better conservatives running the place.”

So why didn’t the Liberals, NDP and Bloc use their power in the minority government to vote down the spending? Don’t even try to suggest the Liberals or NDP would have spent less.

How could anyone have spent more? — Garth

#9 Eduardo on 09.20.09 at 10:54 pm

dd – re the other post… you told me to compare apples to apples and then compared Alberta income to Calgary house prices. Calgary house prices and income are both higher than the Alberta average.

#10 Eduardo on 09.20.09 at 11:01 pm

dd- Here you go:

Average Alberta house price < 350,000

Alberta average income 98,000 based on that federal document I linked the other day.

LESS than 3.5 x income.

#11 Lance on 09.20.09 at 11:15 pm

As a business owner (and no, we’re not lowering prices), I am loving the new HST… but still entirely agree that it is a massive tax-grab that will hit the middle class the hardest. The lower class will get most of it back in the form of rebates, the upper class can evade a good chunk of it through business purchases… and so the middle class, once again, takes it right on the chin.

#12 Real Estate Deal or No Deal on 09.20.09 at 11:16 pm

Sounds like the Grits should be stumping the “change” song book … it worked for Obama.

#13 HST quest re: resales on 09.20.09 at 11:29 pm

Will the HST on homes apply to resales, or only new homes? Thanks.

#14 Basil Fawlty on 09.20.09 at 11:35 pm

Here in BC, Gordon Campbell is to blame. He is shifting taxes from corporations to consumers in the amount of nearly $2B per year. None of the added consumption tax is going to healthcare or government services. Campbell could have left the existing tax structure with no difference in provincial revenues, other then the federal payoff for signing on. Plus he lied through his teeth to the hospitality industry and everyone else in BC, when he said they had no intenion of instituting the HST.

#15 Alberta Renter on 09.21.09 at 12:01 am

Sounds like my grandiose plans to move back to British Columbia (after the Olympics) are on hold. Seems like the best place to be is to stay put in the oily province paying exuberant rental prices.

Harper and his conservative henchmen are playing an awful game of Russian Roulette. I count at least three bullets, HST, higher interest rates, and a debt never before seen in this country by this time next year.

There is no way to avoid this train wreck and it’s getting uglier all the time. I hate to say this, but my only salvation is eventually higher oil prices to stimulate the economy of Alberta. Not terribly kind to the rest of Canada though.

On another note, I came up empty when searching Canadian Mortgage Delinquency data . Does any reader here have an idea where I could find this data?

#16 Steve on 09.21.09 at 12:17 am


In BC, the government is claiming that the HST will be “revenue neutral” to them (it will cost as much to administrate as it generates in additional tax revenue). Also, they are claiming new HST tax breaks based on income or, in the case of real estate, purchase price.

What do you make of that?

#17 ruraldude on 09.21.09 at 12:28 am

People wanted stimulus, the opposition wanted stimulus. Harper was against massive stimulus, but here we are. The bills are coming due and the gov needs cash,the parties over. Tax the rich,tax the poor, tax the middle class, tax the healthy, tax the sick, tax the dead. Tax the taxes. And Iggy wants more stimulus, while chastising the Harper gov for running up a huge debt. When are these bozos going to realize there’s no free lunch. We can only produce our way to prosperity,we can’t spend our children’s future and expect this country to prosper.

I don’t hear any calls from the Libs for more stimulus at this time. Link? — Garth

#18 s33knges8 on 09.21.09 at 1:07 am

Is natural gas going to save BC’s a$$ again? Gordo is no doubt salivating! Put up the interest rates.

#19 Marc on 09.21.09 at 1:11 am

In B.C. is the first 400K not exempt from HST? So the 500K new home would have 12K added to the price because only the 100K over the exemption is taxed, or is it if I was to buy a 500K home, because it is above the exemption limit, I pay 60K HST. You don’t mention the 400K exemption for some reason?

#20 Chaostrology on 09.21.09 at 2:13 am

OMG I am so sick of politicians saying that they didn’t see it coming, and by “it” I mean the crash of credit markets and the resulting global upheaval.

In Vancouver on the “Bill Good ” radio show, retired B.C. Finance Minister Carole Taylor has stated that her govt. economists had told her that the future was not looking so rosy. Carole Taylor retired before TSHTF, to preserve her reputation and very possibly not to have lie to British Columbians as directed by her boss.

No, no, it will not do. Provincial leaders do not get to hide behide the threadbare cloak of deniability any longer.

The chickens have come home to roost and they have been on a diet of genetically modified derivitives, credit default steroids and ecstasy laced loans. These are big chickens that anyone with a pair of eyes and a set of ears can see and hear.

When me and my lunchbucket coffee buddies are sitting around wondering how people with service jobs can afford to buy big houses and drive new cars, take vacations and buy new furniture all at the same time, ( it first of all makes us feel really old to be complaining about the state of affairs) we can only conclude that the majority of these people aren’t using real money, they must be financing everything!(it ain’t rocket science)

The BEST PLACE ON EARTH, is about to become a living heart attack for Premier Gordon Campbell and the B.C. Liberal Party. They are already ensnared in a trap of their own making by lying to British Columbians about the timeline of their decision to implement the dreaded HST.

Honestly, there is only one recourse. The consumer will have to buy, buy, buy and buy some more to pull our collective asses out of the fire.

Our biggest problems as I see it are,
– The HST will retard the consumer economy if not cripple it.
– The consumer has already been operating at over 100% income spent for many years already.
– Domestic manufacturing is already taking a huge hit from foreign manufacturers.
– The undergound economy is very likely to receive a massive boost as consumers will try to evade the tax.

Big business loves this tax as it will lower their cost dramatically, and of course they say all the right things like,
– it will make us more competitive globally.(sure thing)
– we will be able to hire more people to work at high paid jobs(yep, that’s what they say)
– and the best one of all is that they will lower their prices to the consumer.(Do they really think that we are that stupid)

The businesses that this tax hurts are the one’s that cannot receive an input tax credit. aka: The consumer Economy.

The party is over and now the piper must be paid.

BTW, Carole Taylor is on record as being against the HST and reportly turned this tax down many times.

Makes you wonder why she didn’t seek re-election.

#21 Mike (Authentic) on 09.21.09 at 2:35 am

I’m in favor of higher taxes and interest rates, User fees and program cuts. As long as it’s done in a logical, thoughtful and purposeful manner.

We need to aggressively attack Canada’s debt, lets reduce it to $0 as fast as possible. Let’s end Canada’s debt burden on every man, woman and child, not only in this generation but in generations to come. The financial medicine may taste bitter now, but you’ll feel a heck of a lot better in the end.

After we reduce the debt to $0, we can use the savings we paid in interest on our debt to improve everyone’s life and living standards. We could even be looking at cutting income tax almost completely. Or having no HST, GST or PST, or increasing the CPP or improved heath care, you name it, the future would be ours.

Bring on the HST and increased income tax, I’ll do my share for all Canadians.


#22 rory on 09.21.09 at 2:43 am

Hey GT …Iggy said…
“I have a feeling that we’re going to need to do more. We’re going to need to do more as the jobless numbers begin to drive this.”

A ‘feeling’ is good – NOT ….So the extra stimulus will produce good long lasting jobs that will produce income to pay back this extra stimulus in increased revenue … so like as in what kind of jobs and where …I call BS.

Everyone is banging the C’s for $56B deficit but all 3 opposition parties are saying more stimulus …WTF?

#23 G. on 09.21.09 at 4:37 am

This is great news.
Deflationary effect on house prices due to harmonization.
Inflation increases because of harmonization.
Interest rates rise to contain inflation.
Further positive feedback on housing deflation.
The beautiful cascade is about to begin.

House prices in my neighbourhood rose 150% in the four years before I moved here.
They are now falling slightly.
Soon they will fall more and faster.
Just what I have been waiting for.

The irrational exuberance that priced me out of the market is about to price me back in.
It may sound heartless, but my cautionary tales to those who bought houses in this market were met with silence or denial. They still are.

Roughly, $300k mortgage at 3% is $750 interest monthly. Without taxes or principal tacked on.
Same at 4% is $1000. At 5%, $1250. And 6%, $1500.
Who can weather a 3% rise in interest on a variable rate or $750 a month for even six months?
Especially those who bought as much house as they could with no room in their budget for more?

I just have to keep my powder dry for two more years.

#24 Frugalistas on 09.21.09 at 5:41 am

I’m glad that you are putting your prediction down with at timeline. I called the financial crisis as well, but I wasn’t gutsy enough to pull out early enough, and I didn’t time it correctly.

Eight months sounds right :)

#25 somecatchphrase on 09.21.09 at 6:27 am

Welcome to the new feudalism.

From the top down:

Top 30% (the payees, aristocrats)

1. The independently wealthy.

2. Highly skilled government workers.

3. Low skill government workers.

Bottom 70% (the payors, serfs)

4. Highly skilled private workers.

5. Low skill private workers.

6. Illegal immigrants.

The parasites versus the productive.

The productive pay their tythes (taxes) to the parasites under the threat of force.

The parasites supported by a growing police state with ever more efficient tactics and technology.

Rather than encourage a young person to go into government, I would encourage that young person to learn Mandarin or Spanish. This will make it a whole lot easier to flee the country. This is better disaster insurance than gold bullion.

“None are more hopelessly enslaved than those who falsely believe they are free. “
Johann Wolfgang von Goethe

#26 DG on 09.21.09 at 6:33 am

Doesn’t harmonization just give government an entirely new arsenal of crumbs to brush off the table, down to the masses? For example, they can introduce HST exemptions when they feel things are getting a little too close for comfort, and thus be the champions of children, homebuyers, working families, whichever group they feel will play best on the evening news.

#27 Al on 09.21.09 at 7:12 am

“But don’t blame Gordon Campbell or Dalton McGuinty.”

I won’t speak to Gordon Campbell, but I most certainly will blame Dalton McGuinty. After promising no new taxes and then introducing the health ‘premium’ to Ontario, I’m not willing to give Dalton McGuinty a pass on this one either. He showed his stripes early.

#28 pbrasseur on 09.21.09 at 7:38 am

In Quebec we already have the HST, income tax is among the highest in North-America, but government’s finances are in a disastrous state anyways and that’s just before one of the worse aging scenario in the industrialized world kicks in. So now they are about to increase fees on just about everything except a few “sacred cows” such as subsidized child care, from public transport to electricity bills. (They’re also about to cover the province with photo radars… of course it’s only for our security…).

Welcome to big brother welfare state trying to maintain its utopia alive…

The problem is that to pay for all these taxes some wealth has to be created somewhere, for a while propping up real estate might seem to do it but lets face it: that’s not real productivity and indebtment has limits. Meanwhile redirecting (stealing!) money from the private economy to state affairs can only hurt productivity and growth.

Now that’s the real problem: Economic growth is the ONLY way out, but politicians (including Garth’s federal Liberals) have other ideas.

#29 Ottawa_Tradesguy on 09.21.09 at 7:53 am


So we are saying a $500,000 house will cost approximately 60% more? I’m not entirely sure that this is true. As a contractor in Ottawa I buy and sell materials on a regular basis and they constitute roughly 50% of my business including mark-up. The other 50% is labour, overhead, profit, etc. Currently labour makes up less than 50% of the cost of a job for me and I do not believe that this will change.

What seems to be apparent here (and that no one has commented on yet) is that the PST is already built into the price — I simply take the PST add it to my raw materials cost, add whatever mark-up is fair and sell the materials to the customer. The addition of the PST on all purchases will hit customers hard, there is no question about this. However, I believe that economists are correct in stating the average consumer will only pay about 1.5% more on their purchases, not a full 8% more.

In the construction of a new home builders have already taken into account the fact that they are paying 8% on all materials and include this in the purchase price of a new home. In theory (granted theory is usually flawed) the overall before tax ‘price’ of a new home should decrease while the total price (including tax) should increase moderately.

It is incorrect to assume that you are not already paying PST on things that you purchase for your home (though in some cases you are not).

Just a point of clarification.

#30 miketheengineer on 09.21.09 at 8:32 am

Garth et al:

You have just given us the date for the start of great downward spiral. Everyone has been asking, when, when, when…..

There you have, July 1, 2010. It starts, full force in Canada.

People will realize, that at the end of the month, they will not be able to pay their bills, and mortgages, especially if the home is stressed with the current debt load. So, we shall see a ramp up in home defaults, bankrupcies, etc, and plain, more hardship, for the struggling people out there.

Yet the government has failed to lay off not one person in the government, at any level, provincial, municipal, or federal. And they continue to spend like there is no end to the money. If that were a private industry, they would have made cuts to employee’s already, and attempted to “balance” the books.

July 1st the SHTF…..or the start of major ramifications of the recession / depression take hold. Hang on, cause it is going to get very bumpy after July 1st.

#31 jess on 09.21.09 at 8:45 am


In 2008 some 15,000 registered lobbyists spent more than $3.25 billion

Banks Across Borders

“Bank of America, Banamex, Citigroup, HSBC, BBVA, ING and Santander teamed up late last year to engineer a $2.38 billion buy-out of the U.S. operations of Canada-based George Weston Limited by Bimbo, the giant bread, snacks and other foods company founded by conservative Mexican businessman Lorenzo Servitije. The purchase greatly helped Bimbo consolidate its position as one of the leading baking and food companies in the world.

Recipients of U.S. government bailout money, Citigroup and Bank of America, greased the wheels of the deal after they announced lay-offs of tens of thousands of workers in the United States.

In Mexico, foreign bank bailouts have had their own repercussions. Under Mexican law, foreign governments are not permitted to own banking assets in Mexico. When the U.S. government acquired a 36 percent ownership stake in Citigroup, Banamex’s parent company, Mexican opposition politicians said Banamex was now operating in defiance of the law.

Calderon administration officials issued contradictory responses, first insisting that international free trade agreements signed by Mexico rendered the ownership law obsolete. Treasury Secretary Agustin Carstens later said Banamex had three years to shed itself of foreign government involvement.

“Can you all explain to me?” wrote a reader of the daily La Jornada website. “In what law or part of the Constitution can you violate a law for three days, three months or three years, without punishment?”

Besides Banamex, several other banks in Mexico are in the same legal quandary, including the Dutch ING bank and the Royal Bank of Scotland, both of which have been propped up by their respective governments.

The foreign government ownership controversy could wind up in Mexico’s Supreme Court. By virtue of its new ownership interest in Citigroup, the Obama administration has, for all intents and purposes, put its stamp of approval on the corporation’s Mexican business practices, including the extremely high interest rates charged to credit card holders. Calls to the U.S. Treasury Department for comment were not returned.

Based in the northern industrial city of Monterrey, Banorte is the sole remaining big Mexican-owned bank. Its principal stockholder is Roberto “Tortilla King” Gonzalez Barrera, who also leads Grupo Maseca, the giant corn flour milling and tortilla-making business that dominates the market in North America, Central America, and beyond. Maseca’s rival in the staple tortilla market is none other than Bimbo.

In the past, Gonzalez has been associated with the family of ex-president Carlos Salinas de Gortari. Nowadays, Gonzalez and Banorte have their sights set on U.S. expansion. The Mexican bank recently completed a take-over of the Texas-based Inter National Bank, a lending institution that offers mortgages to U.S. and Canadian citizens for vacation properties in Mexico.

While most Mexicans have scrambled to get by in recent years, the banks have enjoyed a golden era. In good years annual profits hover around 12 to 14 percent, according to the ABM’s own numbers. Even in gloomy 2008, Mexico’s banks raked in about $5 billion in earnings, according to the National Banking and Securities Commission (CNBV). Sometimes called “the crown jewel” of Citigroup, Banamex alone earned nearly $1 billion in profits, a figure down $500 million from the previous year.

Exporting Profits

To call banks in Mexico “Mexican” is almost a misnomer. Analysts estimate foreign capital controlled 80 to 90 percent of the assets of the 43 banks registered by the CNBV at the end of 2008. The largest banks are the U.S.-owned Banamex, the Canadian-run Scotia Bank, the United Kingdom’s HSBC, and Spanish-owned Bancomer (BBVA) and Santander. Bank of America, Prudential, Wal-Mart and J.P. Morgan, among others, have also entered the Mexican financial services market.

The profits from Mexico’s credit card bubble have been flowing north to U.S. financial giants and across the Atlantic to Europe’s money centers.

#32 Gord In Vancouver on 09.21.09 at 8:48 am

#19 Chaostrology

When me and my lunchbucket coffee buddies are sitting around wondering how people with service jobs can afford to buy big houses and drive new cars, take vacations and buy new furniture all at the same time, ( it first of all makes us feel really old to be complaining about the state of affairs) we can only conclude that the majority of these people aren’t using real money, they must be financing everything!(it ain’t rocket science)

Around Vancouver, many people are still able to own or take all of what you mentioned. I agree – when these people make an average of $45,000/year, you know that a large chunk of their financing is based on cheap money.

#33 JeffinPickering on 09.21.09 at 8:49 am

I don’t see what all the doom and gloom is about the HST. Learn to control your consumption. Yes, at one level/to one extent or another, everyone will pay more for some things, but we’ve been getting off for some time now thanks to bonehead GST cuts.

This should put a hard knock into speculative real estate, and get this – people might actually start treating their house like a home again rather than solely as a store of wealth or an investment to be traded in every five years.
You know, a home; a shelter for you and your family, a place where you make memories, etc. Crazy idea, huh!

And as for the hard knock against expensive properties – excellent! WTF does anyone need a house over $500K for? And most of them aren’t worth it to begin with! This should take care of the prices too. Double whammy!

The ‘masses’ have proven clearly that they can’t control themselves, so now it’s up to a harsh tax to do it for them.

#34 613 Happy where I am on 09.21.09 at 9:02 am

If this “Perfect Storm” (in the middle of a deep recession, to boot) doesn’t slow down and/or reverse the current trend in real estate prices in Canada, nothing will…. I think the vast majority of young people will be priced out of the housing market. I never really understood the “dream” of home ownership, hormonal or otherwise … it is a damn expensive thing to do with a rotten “return” on the investment.

There is nothing, I repeat, nothing wrong with renting and you often get a more central pad with great stores and restaurants you can walk to, rather than a plot of land stuck in the burbs where you are totally dependent on a car.

Hope we all have our seat belts on because we are going to have one helluva ride!!!!!

#35 dd on 09.21.09 at 9:08 am

#9 Eduardo

Avg Calgary Wage in 2006 $=90K
Avg increase 5% a year, therefore 2008 $100k

Avg house price in Calgary =$434K

Price to avg =$4.3x

Even if avg wage is off a bit the unemployment effect will drop avg wage in 2009. I still contend that Calgary house prices are more that 3.5x avg wage. Still overpriced … out of the money.

#36 David Bakody on 09.21.09 at 9:18 am

#3 nonplused on 09.20.09 at 10:33 pm

A point very well taken Sir/Madame …. when the government gives it takes it’s share off the top and when they take they do so having already taken their share …. hmmm no that’s the true meaning of double dipping! Well do Sir/Madame …. do rest of you get it?

#37 Bill-Muskoka (NAM) on 09.21.09 at 9:22 am

Garth and fellow bloggers,

There is ONE REAL REASON this is being promoted…PROTECTION MONEY to fund Harper’s illicit, and irresponsible spending.

Connect the dots. Harper tells McGuilty that unless they allow Oddawahaha to collect the HST, there will be no equalization payments Ontario now desperately needs. It is simple Blackmail!

The key words are CASH FLOW! The Harper goobernment KNOWS it has sadly blown any resemblance to a conservative fiscal managment under the guidance of both Harper and Dim Jim Flaherty.

Let us NOT FORGET that it was Flaherty who ran Ontario into the hole with a $5.6 BILLION DEFICIT! (Amazing how similar ‘deficit’ and ‘deficate’ are, eh?). Now with his hands on the Federal coffers Dim Jim has mulitplied that mistake by 1000%.

This NOT a Conservative government it is a bunch of ideological neanderthals out of touch with reality destroying Canada. Hate the Liberals if you must, but for God’s sake do not allow these imbeciles to destroy what we have all worked so hard and long for…social stability and Hope.

I think it is time to give the NDP the reigns and show both the two major parties the penalty box. Neither has OUR interests at heart any more. Harper and Ignatieff both lust after power. They even send pre-packaged Body Bags as an omen of what is to come. Harper has spent more promoting Harper than he has preparing for the H1N1 epidemic. Those are OUR taxpayer dollars he is SPENDING! Let’s get on line, on the phone, and emails and tell them who the Boss is. It is US!

Happy Fall Equinox to all. And to Garth! BRAVO! You know Iggy is not going to be pleased to read what you have to say just like Harper could not stand your honesty. at least there is one well known politician who has the spine to speak up and Stand Up for Canada and more importantly Canadians.

#38 J Walker on 09.21.09 at 9:30 am

@24 Somecatchphrase wrote:
“Rather than encourage a young person to go into government, I would encourage that young person to learn Mandarin or Spanish. This will make it a whole lot easier to flee the country. This is better disaster insurance than gold bullion.”

The Americans have already factored this in and instituted a tax “cut” for military families that also institutes a tax for all American ex pats working outside of the country. Seems even if you leave they will tax you. If renounce your citizenship you will be charged the equivalent of a death tax (50% of your worth) and not be allowed back in the country for any reason. The last part has not been challenged yet, but it is on the books.

8 USC 1182(a)(10)(E)
(E) Former citizens who renounced citizenship to avoid taxation
Any alien who is a former citizen of the United States who officially renounces United States citizenship and who is determined by the Attorney General to have renounced United States citizenship for the purpose of avoiding taxation by the United States is inadmissible.

So if you are American the US government has the right to tax you anywhere on earth, if you resist, then your never coming back.

Soon we’ll all have a bar code and a GPS chip just like a big screen TV @ WalMart.

So don’t be thinking your going to leave the country and the debt behind. Not going to happen.

#39 Calgary_rip_off on 09.21.09 at 9:32 am

Garth its hilarious that some of your readers are trying to justify Calgary houses worth. They are still double what they are worth. Anyone considering buying should be intelligent and wait. You still get more house renting than buying.

What exactly is the incentive to pay $350K for a house worth $150K? So many idiots in Calgary.

#40 WillsDad on 09.21.09 at 9:39 am


A house just sold for $11 mill in Calgary. Some CEOs are taking home tens of millions of dollars in pay. You are talking average prices, but median price is the only number that is relavent.

#41 OttawaMike on 09.21.09 at 9:44 am

Some valid arguments were made here on the size and cost of the various levels of govt. Unfortunately these statements paint every type and level of government employee with the same brush.

Currently in the municipal sector where I am employed, my employer is looking at across the board wage hikes for skilled trades. Why? National recruitment drives have been unable to attract qualified or in some cases any applicants. The National Research Council(a federal dept.)is up against the same challenges. So if things are really that good here, why can these employers not attract any talent?

With engineering positions, you will find the pay is considerably less than the private sector even after taking the benefits and pension into account. In fact we routinely lose our top talent to consultants after the tax payer has essentially trained/cultivated these employees.

Our summer university students earn 12$/hr., a rate unchanged in 18 years.

I believe where the real disparity lies is in the unskilled labour and clerical staff. Within the past 20 years their pay has gotten out of line with the private sector but then all people should be entitled to a living wage, whatever that is.

#42 Jason on 09.21.09 at 9:52 am

Bring on the HST and higher CPP, EI, etc.
Then…. bring on the REVOLUTION!

I’m sorry Garth, but Liberal, Conservative, they’re all the same at this point. I voted for Gordon in our recent Provincial election ONLY because I felt him to be the lesser of evils. I don’t feel one bit responsible for the HST decision, since I at least voted. Can’t say the same for the other half of BC residents.

#43 vicguy on 09.21.09 at 10:07 am

A local article last week suggested that Mutual Funds will be HST taxable. That industry would certainly be killed or maimed — you’re bloody lucky to make 7% on many mutual funds these days, so presuming they appreciate, it would take a year just to pay the taxes and fees on them.

#19, re Carole Taylor – she is an extremely intelligent woman. I think you’re correct when you suggest she bailed when she saw these times ‘acomin’, and didn’t want any part of the Campbell team’s pending lies.

Mr. Campbell, a person completely without morals, has about reached his maximum shelf life. He would not resign after spending a night in a Hawaiian jail for drunk driving — any of his cabinet ministers would have been forced to resign, had they committed this atrocity.

And he expects people to believe he awoke one morning, a week or two after the last election, when suddenly this wonderful new idea for an HST popped into his head. People will finally remember this one at the next election. He’s smart enough that he’ll believe the polls and resign beforehand.

At that time, I expect that Ms. Taylor will throw her hat in the ring, and very likely win the party leadership. I think I’d vote for her…

The mutual funds industry claims that $500 million a year will be drained from investors because of HST in Ontario and BC. — Garth

#44 Q on 09.21.09 at 10:12 am

Canadians = push overs.

#45 T.O. Bubble Boy on 09.21.09 at 10:19 am

Who knew? Nova Scotia has the most common sense in Canada:

If the NDP promised to freeze all government-paid salaries — including unions — for 2 years, I might even consider voting for them.

Someone needs to tell the Finance Minister that collecting 5% more on certain items with the HST doesn’t mean anything if you are not tightening the budget somewhere else! Shouldn’t basic math skills be a requirement for that job?

#46 Gregor Samsa on 09.21.09 at 10:34 am

#24 somecatchphrase – I love your class hierarchy of Canada and I totally agree with it. I believe that this country does belong to the taxing elites and the public sector employees who feed off of those taxes. This recession was the tipping point: the private sector was decimated, while the public sector grew. What is going to return that balance? Government grows easy, but making it shrink is like trying to kill cockroaches.

The current path to prosperity in Canada is to work for the government. For me, just landing a basic job would result in: a pay raise, a substantial increase in benefits, a substantial increase in time off, access to a pension, and a substantial DECREASE in how hard I have to work. Excuse me, but back to I go! Applying for government jobs = the new lottery.

#47 Vicguy on 09.21.09 at 10:45 am

I buy as much of my everyday ‘stuff’ as possible online, to avoid the BC PST. It’s even possible to get a fair bit of mechandise from the US without paying pst/gst/duties. The HST is going to greatly escalate this practice. It will be interesting to see if/how the province goes after this lost revenue…

#48 somecatchphrase on 09.21.09 at 10:55 am

# 37 J Walker

My understanding is that Canadian law is a bit more complex than US law with regard to the tax status of expats.

Americans expats are taxed on citizenship, while Canadians are taxed based on residency status. There seems to be a complex set of rules governing residency status.

My thinking is that maybe it’s time to get moving on the idea of emigration, before the law changes here in Canada.

For younger Canadians, born on the wrong end of the baby boom, the future looks pretty bleak. If you’re fortunate enough to be employed, the government will bleed you dry, while you’re paying through the nose for a place to live.

For those interested in real estate, do a Google and see what $300,000 will buy you in South America.

If anyone has any good links or book recommendations dealing with the question of living and working abroad, please post.

#49 Jmack on 09.21.09 at 11:05 am

People should start asking themselves what a living wage really is where they live. In BC, this number is probably alot higher than what a large percentage of people even bring home today. $500,000 tear downs and $1.13 a litre gas plus the lowest minimum wage in the country…not too many working people in BC make a wage capable of carrying their own place and raising a family. Somethings gotta give.

#50 Vancouver_bear on 09.21.09 at 11:15 am

Canadian office vacancy rate climbs in Q3-report

* Q3 office vacancy rate rises to 9.4 pct from 6.3 pct
* Rates jump in Vancouver, Calgary and Toronto

Recession is over….ya ……right….

#51 PeckedToDeathByDucks on 09.21.09 at 11:35 am

Edge of Doom (U.S. working title for Dr. Strangelove)

If you have a few moments, take some quiet time out for yourselves and study the Debt Clock. Focus on the second by second increases.

It’s quite relaxing and calming as you finally realize that all the daily machinations, the G20’s, the Obamadrama, the Harper World Stage dancing, and the Commons puppet show doesn’t really matter. This sucker is going down, at exponential increasing pace. American politicians have realized this and, like Slim Pickens in Dr. Strangelove, are straddling the debt bomb on its ride to oblivion. They pile debt upon debt.

Our younger generation has learned long ago to stop worrying and now love the debt. Yeeeeeeehaw!

#52 Roial1 on 09.21.09 at 11:44 am

Cutting back on government employees is a great idea————– BUT!
it hits on the “rock”, of layoff rules.
Newest hires first laid off.
So, what happens?
Most of the actual “working” gov. emps. get the shaft and the useless middle and upper staff go on as before, and service declines sharply, due to “short staff”.

Garth, If you get elected can you try to find a solution to this dilemma?
It would mean fighting the Gov. employees union, but it must be done to get us started on ANY recovery.

P.S. I know that not all gov. employees are “feather nesters”, but they do exist in larger numbers than we as a country can afford.

I was a member of the NDP till I found out that they are a government employee union mouth piece and nothing more. (Here in BC)

Now I am (because of you) a LIBERAL and proud of it.

#53 MC on 09.21.09 at 11:56 am

I have been reading and following Garth’s articals/opinions many times and I do value it high.
We have paid off house and 50% cash for a cottage, which I thought would be good idea to buy this fall, because of cost of new homes increasing (HST, development charges etc.) and inflation. We do have still about 15 years before retirement but are very risk adverse and do not what to invest in stock, so not sure what to do with cash. Would buying in Eastern Europe or Spain be safer at this point in time?
Thanks in advance. Marta

#54 Joe Realtor on 09.21.09 at 12:23 pm

Garth, I do indeed have one of those lovely letters from TDCanaduhtrust.

Staying tuned. (As if the letter itself didn’t do that)

#55 Kelly McMae on 09.21.09 at 12:37 pm

#39 WillsDad on 09.21.09 at 9:39 am

A house just sold for $11 mill in Calgary. Some CEOs are taking home tens of millions of dollars in pay. You are talking average prices, but median price is the only number that is relavent.


Q – Canadians = Pushovers > edit North Americans

#56 My_view on 09.21.09 at 12:37 pm

#13 HST will only apply to NEW builds not resales.

#57 My_view on 09.21.09 at 12:39 pm


Whats the big deal with the Green Bank Letter? That bank was the last one to increase the line of credit rates.

#58 doubtingThomas on 09.21.09 at 12:40 pm

Fair enough, separating economics from politics would take an alchemist. Just one question from someone who stopped voting after contributing to the election of Brian Mulroney and all that followed. Does anyone out there actually believes that any of the opposition parties, had they been in control of the government, would have made more prudent financial decisions during this financial crisis? If memory serves Stephen Harper was severely pressured by the opposition to spend more and – to his eternal shame – caved. This is why he is still governing. Garth, if or when you run, I hope you win. You seem a decent sort of fellow that deserves the golden parachute more than most of the individuals I see lining up for it. But to expect either the Liberals or the NDP to be more fiscally prudent that the current minority government… Hell, one may just as well pack the suitcases and wait for the rapture.

#59 Mike B formerly just Mike on 09.21.09 at 12:53 pm

I am encouraged when I see Canadians protesting… too many times I see us being just sheep and taking it up the a>> … I think we are ushering in a new era of ever higher prices and ever higher taxes just because we are afraid of what will happen if the Financial Institutions are left to go under from their ill management of their business. Our generation and the next two will take the lions share of the hit from these higher prices and taxes…It may be generations until we see more reasonable pricing for anything… OR NEVER..

#60 Bill on 09.21.09 at 1:04 pm

There is too much negativity on this site. Just relax. Everything will be fine.

#61 Rugger on 09.21.09 at 1:16 pm

You know, Ontario voters astound me. Dalton McNuggests outright lies to them over and over again. Taxing them to death in the process. And yet, they still vote him in multiple times. I don’t get it? Show some testicles people!!! If someone crosses you like he has multiple times, why vote him back in? That is showing the Fiberals that they could do whatever they want to us, but we’ll vote them back in cause Ontario is as close to a socialist state that it can get in a democracy. It is truly sickening.

#62 mike from oakville on 09.21.09 at 1:19 pm

Garth – i thought you had more scruples than this. All smart economists agree that an HST is better for the economy than our current system. Shame on you for making political hay with this. For someone professing to be one of the few progressive conservatives left, this is disappointing. You’re putting politics first, people second. You’re engaging in the same partisan politics that harper and his boys do. Just admit that the HST is the right thing to do, despite the unfortunate timing (just like the GST was), and lets move on.

I’m disappointed in you Garth.

Then you lack an understanding that those in public life are in place to serve the public, not ideology. This is absolutely the wring time to be broadening and increasing the sales tax base, just as it was wrong for Harper to cut a progressive consumption tax instead of a regressive income tax. This economy will hurt everyone if it turns south again, and hiking the sales tax burden on half the national population at a time when interest rates are set to rise, further eroding disposable income, is plain dumb. I’m disappointed with you. — Garth

#63 X on 09.21.09 at 1:37 pm

#42 the mutual fund industry deserves less business b/c of the MER’s that they charge here in Canada.

There are lots of funds with minimal MERs. — Garth

#64 dd on 09.21.09 at 1:58 pm

#10 Eduardo on 09.20.09 at 11:01 pm dd- Here you go:

…Average Alberta house price < 350,000…

Sure avg Alberta house prices are $350K. Doesn't give you much information when you are looking at the major cities. I bet you could do that to BC house prices and you would get the same, however, try buying a house in Vancouver or Victoria with $350K

#65 Jason on 09.21.09 at 2:00 pm

If you believe this article, then corporations definitely don’t need this money. I’m pretty young, but from what I’ve seen thus far M&A don’t create jobs, they eliminate them!

#66 Gary on 09.21.09 at 2:08 pm

#15 Alberta Renter on 09.21.09 at 12:01 am

Someone posted a direct PDF link to the CBA mortgage delinquency data, which was very helpful.

However, here is the statistics page for the CBA website. You’ll find the mortgage delinquency stats here as they become released.

It’s interesting to note that mortage delinquency for Ontario last peaked in February of ’92 at %0.70. (the last recession)

If you check out historic housing price data (Toronto corresponding to Ontario), this peak was near the bottom of the trough.

If you look at this PDF and scroll down to Ontario, you will see that unaffordability peaked at ’90-’91. This was the beginning of the descent to the trough.

Based on some of this data I can make some general conclusions:
We’re at the lowest point of unaffordability since 20 years ago; AND the mortgage delinquency rate is still considerably low but rising (%0.42 June ’09 compared to Feb ’92 %0.70 peak). It’s a safe assumption that with still rising unemployment that in August 2009, mortgage delinquencies are approximately %0.45. House prices will not drop considerably yet(within the next 6 months), this is quite obvious with the lower interest rates being the main factor in the decreasing unaffordability.

With the evidence of unaffordability on a steep slope starting July 10’th 2010 from the “perfect storm” we can probably see house prices dropping like a rock 1 year from that date (at the most). Then based on the delinquency curve I think we can start to see the bottom of the trough 1 year from that point.

How long will the price curve drag along the bottom? I believe that this is mostly dependent on the direction of unaffordability and supply vs. demand. These two factors are dependent on government/banking policies and selling sentiments.

But with amortizations already at an all time high and rates on their way up, boomers cashing out(this begin to accelerate when house prices initially drop right after after July 10, 2010; seniors will panic as their nest eggs evaporates), energy rates rising and unemployment looking to stay high longer. We probably won’t see a housing recovery for a long long time. I suspect it will take much longer than the last recovery. Maybe 10+ years.

Link to the sauder house price data:

Anyone care to comment on my conclusions? I’m very open to constructive criticism.

#67 Joe Realtor on 09.21.09 at 2:35 pm


Don’t think of this latest move by the Green Bank guys as them being the last to increase rates. This latest move affects customers who were grandfathered in and were not affected by the other moves in the last year to charge SLOC clients extra “above prime” rates.

From what I’m told by a TD Rep (who isn’t happy with the move either but unwilling/unable to assist), they are now “sticking it to their “best customers” under the guise of it costing more to lend money to them”.

Between this and the increasing number of stories I hear about TD refusing to pay out to those who have paid premiums for Mortgage insurance and either die or are diagnosed with terminal illnesses, because they do this shady practice known as post-claim underwriting, I’m wondering why I deal with them at all.

I guess the several hundred million dollars profit they made last quarter isn’t enough for them. Moreover, I just see this as the beginning of an increase in rates across the board with all Banks and Mortgage companies – while those of us not already heavy in debt struggle to keep our heads above water.

#68 TJ on 09.21.09 at 2:40 pm

Canadians are BRAIN DEAD – “where’s my check…..”?

Apathy, too much time eating Tim Bits and worrying about The Leafs, and blatant stupidity are about to bite millions of people in the Levis.

There is no free lunch.

You now compete with a guy in Taiwan, Delhi and Manila for the scraps left over by the Elite.

Don’t believe we can slide into Third Wold economic status?

We already match many of the sickest economies on the planet, in % of downturn in the last 4 quarters, and it is getting worse.

Something nasty this way comes and we have NO leadership in Ottawa.

Mr. Harper is an ideologue and a clever and determined political operative -but has no plan for what has been dumped on your front lawn.

Hold it: I was wrong – phew.

The Sun Prince has installed Jacques Demers in the Senate now and he’s ‘stimulated the economy’ by blowing $300 million dollars on ‘jet charters’ by the Federal Government hacks last year.
Thank goodness he got Barack Obama to let NHL Charters around the punitive American Airspace rules. I was sweating it there.

Wow, for a moment there I worried.

Back to your X-Box….pay no attention, nothing happening here….move on.

#69 jess on 09.21.09 at 2:45 pm

Cēterīs paribus

… economists say that efficient tax harmonization will save companies about $6.9 b and increase competitiveness in the two provinces.

Some of the savings will be pushed through to consumers but not enough to completely offset the increase in consumer prices.

#70 Bill-Muskoka (NAM) on 09.21.09 at 4:35 pm

Just relax. Everything will be fine.
#59 Bill

And so, how are things there in the Emerald City? We are supposed to obey and ignore the man behind the curtain, eh? I don’t think so!

#71 Eduardo on 09.21.09 at 4:51 pm

“Pay attention. It was the BoC I wrote about regarding efforts to dampen the dollar, not Flaherty. The GST cut was a stupid move, condemned by virtually all economists since it did little to help families while gutting fed revenues at the wrong time. I argued strongly that income taxes should have been reduced instead, and still do. The only politician to raise income taxes in the last generation was Stephen Harper. — Garth”

Ahhh you’re right about Flaherty/Carney. I’m an idiot.

Well Garth, if the Liberals are promising to cut all taxes then I’ll vote for them. Too bad you said that tax increases are inevitable going forward. Pick your poison, sales or incomes tax. It would have been a huge deficit whether you cut income or sales taxes. Revenue would have been gutted either way.

But now families are left with the same personal tax loads as before, and cannot avoid the hit even by reducing consumption. The GST cut was 100% political and has led directly to reduced demand, larger deficits and a Harper legacy as the most fiscally irresponsible PM in Canadian history. There’s no way to slap lipstick on that. — Garth

#72 Verdad on 09.21.09 at 5:01 pm

Alberta increases bond rate just past Canadian Government Bond rates. Probably not enough in value to make the Canadian gov bond rates go higher,… but still shows that as countries or provinces look for capital, you need to provide incentives to buy your bonds in the form of higher returns.

This was my point some days ago in my mini-opus on how the bond market works. In the end, capital, not central banks, dictates interest rates. — Garth

#73 asp on 09.21.09 at 5:09 pm

Businesses that operate in a competitive market will be forced by their competitors to pass the savings onto their customers.

The only way around this is to be in a monopoly situation or to collude with your direct competitors.

#74 andthen on 09.21.09 at 5:16 pm

Here is a bubble you can’t inflate

9.4 per cent of Canadian offices sit empty in the third quarter this year
In Calgary, the oil and gas slowdown helped push the rate from 4.7 per cent last year to 13.1 per cent.

#75 Eduardo on 09.21.09 at 5:59 pm


You can keep saying things like “Harper legacy as the most fiscally irresponsible PM in Canadian history. There’s no way to slap lipstick on that. — Garth”

I’ll continue saying that the other parties had the power to stop it and didn’t. They were also barking for more spending and threatened to take the government down for it.

Whose stance was not to spend on stimulus before they were threatened to be removed?

The Liberals love pointing the finger after forcing someone else into a corner. Sounds like an accountable party and someone I’d like to vote for.

#76 Eduardo on 09.21.09 at 6:03 pm

“But now families are left with the same personal tax loads as before, and cannot avoid the hit even by reducing consumption. The GST cut was 100% political and has led directly to reduced demand”

Are you seriously arguing that reduced consumption taxes led to reduced consumption?

Your point about reducing consumption not resulting in dollar saving doesn’t even make sense.

Reduced incomes and recession lead to reduced consumption. So a drop in the consumption tax does little to alleviate financial stress when families are forced to consume less. — Garth

#77 Too Old Bob$ on 09.21.09 at 6:17 pm

Whoa wait a minute, maybe I got too overly excited about this. I now read that this is soooo good.

Benefits of the HST, according to the provincial government:

Eliminates embedded taxes along the “value chain” and replaces it with a single tax;

At 12%, B.C. will have the lowest rate in Canada.

Six of the 10 provinces have, or are moving to, a value-added tax with B.C. as the seventh, covering over 90% of Canada’s population;

Will reduce B.C.’s Marginal Effective Tax Rate by 40% (below Ont. and Alta.);

The tax burden in B.C. will remain the second-lowest in Canada;

Will support job-creating industries in every region of the province;

$1.9 billion in taxes will be removed from business inputs; and

HST will bring in federal dollars reducing the prospect of future debt or tax increases.

Source: Ministry of Finance

Well crap, there you go, I’m moving asap!

Oohh Honeyyyy! where’s the wheel barrel?

#78 Eduardo on 09.21.09 at 6:28 pm

I mean to write commodity export nation, if it wasn’t clear.

#79 Future Expatriate on 09.21.09 at 6:34 pm

#6… Korea…. right… Dude, NK has NUKES. And are raving paranoid nutcases.

Talk about life on the edge…

#80 Nostradamus jr. on 09.21.09 at 6:55 pm

After the HST watch for RE commissions to plummet by half.

…Will be the end of Real Estate Board’s Monopolies…

Nostradamus jr.

#81 Barb .. a reader in Calgary on 09.21.09 at 7:25 pm

Garth, looks like the RAC war room is keeping busy with their little attempted drive-by misinformation posts.
But that’s good, each of their crooked little posts gives you yet another opportunity to snuff out their attempts with real facts.

#82 Dan in Victoria on 09.21.09 at 7:59 pm

Okay I get it.Taxes going up.I’m just worried that the bullies in BC and Ottawa are going to steal my lunch money too.

#83 blobby on 09.21.09 at 8:06 pm

Im still trying to figure out what the TD letter says – i can just about read the first paragraph about keeping interest rates low?

#84 Dan in Victoria on 09.21.09 at 8:07 pm

Post#71 ASP I can just about tell you to the penny what my competitors charge/make.The only time it turns competetive is when work slows down,then we can’t cut each others throats fast enough.The fellows that started their construction related businesses in the early part of this decade have never experienced this,its been a pretty good run up.Wait till it does get competetive.There will be some sad stories.

#85 North of Upper Middle on 09.21.09 at 8:19 pm

“This is absolutely the wring time to be broadening and increasing the sales tax base, just as it was wrong for Harper to cut a progressive consumption tax instead of a regressive income tax.” Garth
I agree this is the wrong time for an HST however, the above statement seems backward to me. I thought a regressive tax was one that was charged at the same rate thereby hitting low income earners harder, while a progressive tax was one that hit at low rates for low income earners but hit at a progressively higher rate as income rises.

#86 taxpayer like you on 09.21.09 at 8:29 pm

“The mutual funds industry claims that $500 million a
year will be drained from investors because of HST in
Ontario and BC.” — Garth

Do you have a link cuz I’m not following. Exactly what are
they charging HST on?

Verdad @70. Nothing unusual there as far as the rate being slightly higher than the fed rate. Generally, provinces are seen as a slightly higher risk than the feds.
(Even if it is Alberta)

#87 Jonathan on 09.21.09 at 8:37 pm

Here is the deal with that letter.

It use to be that banks kept the line of credits on the books. But as of January 19 of this year, banks can now use the CMHC MBS program to securitize their HELOC’s with a full government guarantee. This keeps them off their balance sheets.

However at the same time they are now using the bond market rather than the Bank of Canada’s lending rate.

So that’s why they need to increase interest rates and why the BOC’s rate is becoming less and less effective.

#88 smw on 09.21.09 at 9:06 pm

#26 Al

I’ll second and third that… McGuinty is part of the problem.

Whats even cuter is both the HST queens, Campbell and McGuinty are the premiers of the provinces with the biggest housing bubbles.

On the brighter side, commercial RE is getting cheaper, maybe a few conversions to residential to keep this bubble going.

#89 Justin on 09.21.09 at 10:03 pm

#64 Gary on 09.21.09 at 2:08 pm

You’ve touched on an excellent point in your last paragraph.

When folks in their there mid to late fifties and upward see interest rates start to rise, with no end in sight, and the resultant home devaluations I anticipate an absolute avalanche of listings. They simply cannot afford to suffer anymore financial losses after the shellacking they have taken on their investments.

But what about the Markets? Aren’t they a sign of better things to come and a better return on certain investments? I do not believe so as the gains have largely driven by speculation as has been noted by others. I’m anticipating a delayed but certain market downturn to begin starting this January or February. The current world economic cycle is broken and can only return if the North American consumer returns to spending (not likely to happen) OR the banksters implement a new economic order which they can implement in a very expeditious fashion.

#90 FTHB (forget that house buying) on 09.21.09 at 10:19 pm

my parents got the letter. Secured LOC going up 1%.

#91 Mark on 09.21.09 at 11:00 pm

Don’t know about what kind of engineering you’re talking about OttawaMike, but maybe the NRC shouldn’t be having any problem hiring engineers. Maybe they’re insisting on experienced candidates at entry-level salaries. Maybe they’re too rigid in their job descriptions. Maybe they’re not creating a career path for the engineering staff they already have.

I’ve worked in the electric utility industry as an engineer — they complain they can’t hire ‘qualified’ people, but then they set, as a starting salary, an amount that is actually *less* than what they pay a secretary with 10 years of experience. Or, in that same organization, an HR clerk is paid more than a senior engineer. I suspect the same sort of dynamics are at work at the NRC.

#92 dondiego on 09.21.09 at 11:09 pm

They’re raising LOC rates cause they’re seeing what gold is doing and getting a whiff of future inflation.

Wasn’t there a post a couple of weeks ago about rates
moving up in 1% increments?

#93 Frugalistas on 09.22.09 at 5:37 am

If the current government didn’t call in the taxes from the income trusts, everyone would have converted to them and it would have been even a bigger problem.

Tax leakage… and the Government wants more back!

#94 steven rowlandson on 09.22.09 at 8:48 am

Hello Garth

HST on the sale price of real estate. Excellent!
Now the consumer has a choice:
1. He or she can pay the tax on the full market price like a good little sheeple. Or.

2. Refuse to pay such a huge price and radically bid down the price of real estate until both the property price is affordable and the HST tolerable based on the new deflated price. What I mean by bid down the price is to something between 2 and 10 cents on the dollar….

3. I suppose a third way is to do it the primative way and live like the natives did 500+ years ago.
This might be the most affordable on one hand and the most risky from a security stand point on the other.
The governments, the real estate companies and the banks would send the police or military in to kill/arrest and burn out those that try it…
Presumably they would call it trespassing on crown land.

They can’t bear the thought of any one escaping their system of taxation and high expenses.

If there is a fourth choice short of emigration or being a boat person/ refugee from canada it would be renting.
No doubt that would be taxed.


#95 steven rowlandson on 09.22.09 at 9:57 am

Garth #3 comment looks inaccurate to me. According to Noneplus the poor pay no taxes. On the contrary they do pay taxes. First of all on a profit of between 10 to 16 thousand a year which is piss poor earnings I pay around 10 or 11 % and a lot of it is CPP which will be a joke if I can collect it. If I have to move I might wind up homeless because there is no affordable real estate in canada near a job and that includes with in commuting distance.
Also I do pay GST and PST on what little I have in personal expenses. So the poor do pay taxes even if its a small amount.

As a self employed worker/stair builder supplying my services to a stair company I have to compete with the unemployed which means no raises in pay and no COLA. And to top it all off WSIB have deemed all self employed people to be employees and soon they will be subject to Employment Insurance premiums and that will soon include their clients. On May 26th 1986 I was told you either self employed or unemployed.
So I was self employed with a small raise from $6 an hour to $8 an hour routering stair stringers and doing joinery. 23 years later my pay is $15 an hour untill the 8th of january 2009 . Now I am on WSIB collecting $781.84 every 2 weeks and hoping I can go back to work after losing 10mm off my left 3rd meta carpal bone. My car died this year and I had to buy a used one. So needless to say I can’t afford any significant increase in my expenses unless I can call it a business expense and then may be.
So you people have to understand that a man getting market pay rates and faced with legal hostility and extreme costs of living has to impose the most ruthless frugality on himself or he just doesn’t survive or even save money. On a good year my savings rate rivals the japanese savings rate.

The price paid for this frugality is no sex life, no buying a house, no wife ,no children and no living like a play boy ,no drugs or booze and I must pay all my bills or I lose credibilty. Do I like going without a life as most people know it? No ! But there really is no choice.
Its be thrifty or perish. Is there away to a better life through investing? No! Not by following the crowd or doing the will of others. Otherwise you will lose out to short sellers,misinformation and othe forms of market hanky panky.
If there is a way it is to own and controll that which is usefull and or has value while being fully paid for and having the asset in ones posession. No debt or counterparty risk.

I oppose all political correctness even if in public it appears otherwise. Political correctness tends to be favorable towards satanic and communist agendas which I dispise to the marrow of my bones.
I consider this to be a moral virtue to oppose political correctness.

When I call for the radical reduction of government spending and real estate prices and the methodical paying down of debt it is because not to do so would be contrary to common sense and decency.
I am a capitalist and not a communist and therefore can not vote for a canadian politician regardless of the party. They just don’t have the smarts to run the country except into the ground.
Which is where this misled country is heading.


#96 smw on 09.22.09 at 10:43 am

#86 taxpayer like you

Easy, citizens will have $1.5K to $2K less disposable income a year to invest.

#97 taxpayer like you on 09.22.09 at 9:09 pm

96 smw. Thanks for your reply, it may actually be as simple as that. The original post at 43 suggested the funds themselves would be taxed and Garths reply that
“industry claims that $500 million a year will be drained from investors…” gave not detail as to how the drain
would be applied.