BC – Surprise, surprise. It’s the same old NDP.
That’s what this version of the NDP, with the Green Party in tow, demonstrated with their first provincial budget in February that called for almost $6 billion in tax increases in just its first year in government. Not to mention driving the provincial debt up by $4.1 billion to $69.4 billion – the biggest single-year increase in six years.
It appears that despite 17 years on the opposition benches after a disastrous decade in power, the NDP hasn’t learn anything about the economy. It’s the same old tax and spend, and the all-too-familiar message to business: Look out. The wolves are back in the proverbial hen house, searching for nest eggs.
Particularly for those in the real estate market. And, gasp, small business – the “sector” the GreeNDP always claims they support.
Call this the first flexing of the GreeNDP’s boa constrictor effect on the economy. As they’ve been in power less than a year, it won’t be enough to stop the provincial economy’s momentum, since it will take a lot more than that to undo the progress that’s been made by free enterprise governments since 2000. But the budget is still an indication of where the business community feared this version of the NDP would tread.
Let’s look at a couple of areas: Real estate and small business
First, real estate, starting with two words: Supply. Demand.
These two words explain commerce in its rawest of forms. It’s a very simple concept, worked out in full view, every day in the marketplace.
If the amount of supply goes up and demand goes down, there is less competition and the price of supplies goes down, since there are less buyers for more products.
If there is a scarcity of supply and abundance of demand, prices rise because there is more competition and demand. It’s the same principle, with the opposite effect, as more purchasers for less goods means prices climb, because they can.
This is the most basic of any economics lesson. In regards to B.C.’s real estate market, arguably THE driver of jobs and revenue over the last decade, there isn’t enough supply, and with increased demand, prices rise. So what does the NDP do in its first budget? Start strangling demand, by introducing a potential $1.3 billion in additional real estate taxes, and hiking the punitive foreign buyers tax on real estate from 15 to 20 per cent. A headline in the Globe and Mail summed it up thusly: “B.C.’s NDP budget takes aim at real estate market”.
Former Premier Christy Clark introduced the 15 per cent surcharge during her reign, a wealth tax aimed at the well-heeled outside the country, to score political points with voters concerned about the high cost of housing. By squeezing the market by adding more taxation, the government has narrowed the number of buyers interested in purchasing homes, meaning retirees looking at their primary residences as their largest investment for retirement will now get less.
By attacking demand, the NDP is making it less appealing for foreign buyers to buy B.C. real estate. They think this is a noble pursuit, failing to acknowledge it is punishing our own citizens whose opportunities to sell their homes to fund their retirement for more money will diminish.
The real issue with real estate in this province is supply. There isn’t enough. The solution? Build more. Yet that isn’t really something the provincial government can control, because development decisions are made at the civic and regional district levels, which are, more often than not, led by no-development factions and layer upon layer of bureaucrats that set up roadblocks up to stop development, aka “delay, delay, delay”, that limits supply, which drives prices up even further.
And this brings us to a segue into Small Business. The NDP’s commitment to raise the minimum wage to $15 is a roundhouse kick to the solar plexus for small business owners more than anyone. It leaves owners with one of two options: Raise prices to cover the new wages which means inflation, or cut staff to keep overhead costs down if the market can’t bear higher rates.
Another punch in the gut for companies came with their announcement of an MSP payroll tax. One business owner with a $3 million payroll states that the NDP’s new tax will take an additional $60,000 from the firm each year.
We haven’t even touched on the extra carbon tax adds “hidden” costs for company vehicles, deliveries, etc. All these tax hikes make the miniscule reduction in the provincial small business tax rate meaningless.
Here again is NDP ideology-over-reality at work once again. It’s as if they believe by boosting pay to a so-called “living wage”, that minimum wage workers will suddenly be able to buy homes, for example.
Minimum wage jobs don’t pay enough to allow workers to purchase homes. They never have been, and never will be.
Maybe the GreeNDP deliberately intends to discourage high-end real estate purchasers from investing in B.C., and by lessening demand, they think it will make real estate more affordable. Or perhaps they think that by hiking the minimum wage, those same minimum wage earners will be able to buy homes.
Either way, the NDP is wrong. And they’ve now officially begun to squeeze B.C.’s economy.
