January 20, 2022
Conservative MPs have called back the Finance Committee (FINA), of which I am vice-chair, insisting that it meet early, before Parliament comes back on January 31, to look at the impacts of inflation on our economy.
Finance Committee Looks at Housing Costs
The focus of our first meeting in 2022 was housing affordability. While this is not as big an issue in Calgary as it is in Toronto and Vancouver, it is nonetheless getting harder everywhere for young people and first time home buyers to purchase their biggest single investment.
Higher home prices translate into higher rental prices; and many people move further outside cities to find affordable housing, which puts pressure on small communities and increases commuting time and energy costs for those who work in person.
There is more than one reason for rising housing costs, but availability of supply is Economics 101. When demand exceeds supply, prices go up. Other factors include high taxes and fees on builders which get built into the house price, zoning restrictions which limit housing flexibility (such as alley homes, two townhouses on a single lot, or 4-unit corner condos), supply chain issues which boost the cost and timing of materials, and high property and utility taxes which make it harder to afford to own. The federal government may not be responsible for all of these factors, but that doesn’t mean they shouldn’t be looking for solutions and working with other levels of government to remove the obstacles to affordability.
The Generation Squeeze Proposals
Canada Mortgage and Housing (CMHC) supports a think tank in BC called Generation Squeeze. Generation Squeeze last year proposed that all homeowners selling their principal residences should be subject to a tax on the capital gain (the amount your house sold for minus what you paid for it). So if you bought for $400,000 and sold for $650,000, $250,000 of your sale would be designated a capital gain (there was no provision for deducting costs such as a major renovation that increased the value of your home). In Canada, 50% of a capital gain must be added to your regular income and is taxed at your marginal (highest) rate. That could be a big payment.
That idea landed with a heavy thud, so now Generation Squeeze is proposing that all homes assessed at over $1 Million should accrue an annual tax of between 0.2% and 1% on the portion over $1 Million (the tax rate increasing with the home’s assessed value). The annual tax would accumulate over the years and become payable when you sell the home. You could end up owing the government tens of thousands of dollars on your home sale. The proposal is that government would invest the proceeds into rental and co-op housing.
This is a tax on retirees whose homes have increased in value, most of whom have paid for, maintained, upgraded and invested in their homes as part of their retirement plans. Generation Squeeze acknowledges openly that this is a forced wealth transfer from older Canadians to younger Canadians. They essentially argue that the accrued value from your home investment is an ill-gotten gain. Read their argument here.
Conservatives are opposed to these ideas. The solution to high home prices doesn’t lie in forced wealth redistribution. It lies in facilitating the conditions that allow for more homes to be built, economically, in a variety of styles and locations that appeal to buyers, such that supply and demand are in balance.
You can follow the work of FINA here. We are currently looking at the effects of inflation on the economy, which of course includes but is not limited to housing.
INFLATION AND SHELTER COSTS: FINANCE COMMITTEE
On Monday, the Finance Committee questioned Mr. Anil Arora, the Chief Statistician of Canada, about inflation. In particular, I zeroed in on how StatsCan accounts for the escalating cost of housing in its calculations, and whether Canadians are getting a fair measure of how much their cost of shelter is inflating. I also wanted to know whether – and if so how – StatsCan is accounting for the Liberal trial balloons about taxing principal residences.
There were three rounds of questioning. This is my third round with Mr. Arora:
The Finance Committee meets again on Friday and we’ll be questioning Peter Routledge, the superintendent of financial institutions, and CMHC President/CEO Romy Bowers. We’ll have the chance to ask Ms. Bowers why CMHC is funding studies that recommend taxes on our principal residences.
CANADA SUMMER JOBS – DEADLINE APPROACHING
Applications are now open for businesses that would like assistance in hiring a summer student or youth under the Canada Summer Jobs program. The deadline is January 25 – next Tuesday.
The CSJ program provides wage subsidies to employers from the not-for-profit, public and private sectors to provide good-quality job opportunities and valuable work experience to youth between the ages of 15 and 30. The Government of Canada seeks to ensure that quality job placements occur in inclusive, safe and respectful work environments, and that young people, including those who face barriers, are given the opportunities they need to succeed in today’s evolving labour market.
For more information and to apply, go to the website here. You can also contact my office if you have questions or need support.
TAX FRAUD – DON’T BE FOOLED
Tax season approaches, and with it, fraudsters who want your money, especially targeting seniors and vulnerable people. This advice is from Canada Revenue Agency. For more information, visit Be Scam Smart or Slam the scam pages.
If you’d like some general information on preparing your 2021 taxes – what’s new this year, filing and payment deadlines, links to further information – you can get started here.
How to make sure the caller is a CRA employee and not a scammer
A legitimate CRA employee will identify themselves when they contact you. The employee will give you their name and a phone number. Make sure the caller is a CRA employee before you give any information over the phone. This will protect you from giving money or personal information to a scammer.
If you’re suspicious, this is how you can make sure the caller is from the CRA:
- Tell the caller you would like to first verify their identity.
- Request and make a note of their:
- phone number
- office location
- End the call. Then check that the information provided during the call was legitimate by contacting the CRA. Please do this before you give any information to the caller.
Once you complete those three steps, you may call back the CRA employee to discuss the reason for their call.Note that our individual tax, benefits and business enquiries lines offer an automated call back service. When wait times reach a certain threshold, you will be given the option of a callback, rather than waiting on hold. If you opt for a callback, we will give you a randomized four-digit confirmation number. This number will be repeated back to you by the call centre agent at the time of the callback. This is to provide you with assurance that the call is from a legitimate CRA employee.
When to be suspicious
Red flags that suggest a caller is a scammer include (but are not limited to):
- The caller does not give you proof of working for the CRA. For example, their name and office location.
- The caller pressures you to act now or uses aggressive language.
- The caller asks you to pay with prepaid credit cards, gift cards, cryptocurrency or some other unusual form of payment.
- The caller asks for information you would not enter on your return or that is not related to money you owe the CRA, for example, a credit card number.
- The caller recommends that you apply for benefits. You can apply for benefits directly on Government of Canada websites or by phone. Do not give information to callers offering to apply for benefits on your behalf!
AROUND CALGARY CENTRE
I had a productive meeting with the Network of Azerbaijani Canadians (NAC) @azcanet. Azerbaijan is a proud and diverse nation with a booming natural resources sector
Back in December, I attended the grand opening of Eclipse Bakery on Macleod Trail & 42nd Ave. They have delicious freshly baked goods and bread. Come check them out! Congratulations on your opening!
I also had the opportunity to meet and consult with Ms. Alisha Visanji, Member for Community Relations with the Ismaili Council for the Prairies in Calgary. Thank you for taking the time.
Please get in touch if there’s anything my office can do for you.
Greg McLean, M.P.