May 31, 2022
Whoever said that the rich would get “richer” seems to have been right, especially lately. But is that a bad thing?
It’s becoming increasingly clear that governments all over the western world dumped money into their economies to support people and businesses that were suddenly hit hard by the COVID-19 lockdowns and this is where I have to confess to being a “boat guy” not an economist, but if you flood the economy with liquidity, wouldn’t you expect the result to be inflation?
So, it seems to me that those who were rich enough to own property, particularly those who own second homes and waterfront properties, have seen the value of those assets inflate or rise rapidly, adding to their wealth.
Conversely, those who were not property owners (as an example) have seen the value of condos, homes and vacation property move further out of their grasp. Luxury cars and boats have certainly risen in value, (probably aircraft as well but I don’t follow that market) and our government has planned to “tax the rich” as one of their strategic political moves announcing their Luxury Tax on new cars and aircraft worth over $100,000 and new boats worth over $250,000.
All of Canada’s marine trades associations have railed against this non-stop and you can certainly imagine that the auto industry and aviation have done the same. Is there still a chance that we can stop this tax?
Well…it ain’t over yet. My best friend who also happens to be a top market research exec, sent me an article from the Globe & Mail that said, “Parliamentary Budget Officer Yves Giroux says the federal government’s planned luxury tax will reduce sales of autos, boats and planes by more than $600-million a year. (my underlining – ED). The PBO released an updated assessment of the new tax last Thursday, and Mr. Giroux later appeared as a witness before the House of Commons finance committee, which is studying the government’s latest budget legislation, C-19.”
The article went on to say, “MPs on the finance committee have heard widespread concerns about the tax from Canadian businesses with connections to the three sectors, either through manufacturing or related services such as marinas.” (again, my underlining – ED).
So, we can hope that our message is getting through and back to my original point; is it a bad thing to have rich people? Canada’s superstar finance minister thinks it’s only fair and reasonable that the rich pay more but my point is that by encouraging rich people to buy yachts and spend lavishly (relatively at least), the government gains at a minimum the GST on the $600 million in sales of luxury cars, aircraft and yachts. That’s almost $8,000,000 in GST alone, but then we know there are all the other costs of ownership, the employment benefit to the expenditure of $600 million and all the income tax that gathers.
I could go on and on, but I’m certain you already saw that situation clearly. Let’s hope Ottawa figures it out before it’s too late.
Andy Adams – Editor