News   Dec 13, 2019
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Ontario Should Tax Foreign Purchases of Real Estate

Euphoria

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The big secret that's kept the major economies afloat since 2008 is quantitative easing. Basically, the central bank prints money and buys debt. As long as the country's currency doesn't collapse in value (as long as the markets don't put a big 'sell' flag on the currency), the central bank can do this forever. The U.S. has only recently decelerated this practice. Britain has been doing this at full speed since Brexit. Incredibly, at a time when these countries should've had to raise interest rates to shore up falling currency values, they've been able to keep interest rates low, as inflation has been the least of our worries. Some countries have been dabbling in negative interest rates to spur spending. Basically you lose money by keeping it in the bank. Japan has faced this for years.

The reality is that interest rates can't get very high anywhere, as household debt levels are too high everywhere, so we will remain in a low interest rate environment for the foreseeable future, no matter how much Trump primes the pump or the Federal Reserve threatens to raise interest rates. The world economy is in a very fragile, fine balance right now. What I'd like to see is direct investment from the Bank of Canada in infrastructure. Basically, the City of Toronto issues debt bonds to pay for subways and other transportation infrastructure, and the Bank of Canada buys those bonds, all of them if need be. As long as our currency value holds up, do as much of this as possible. We should've done this when our dollar was worth $1.10 U.S. We should also have bought foreign reserves (currencies) in a big way. My understanding is that decades ago, before the Bank of Canada joined the G7, all profit earned from interest by the Bank of Canada was used to pay for infrastructure. I realize I'm getting off topic, but it does relate to the issue of how China has been able to expand its infrastructure and economy. Basically China can print money and buy as much debt as it wants, as long as markets don't overreact. China sets the value of the Yuan. The challenge for China going forward is the same one that Japan and all countries that have become 'developed' in the last century have confronted: the demand for higher wages, benefits, and labour standards from workers. How long can China remain a low-cost manufacturing jurisdiction? At some point it will have to join the club of the wealthier countries, trying to add value to products and enhancing productivity.

On a side note, Canada will have a harder time maintaining low interest rates as Trump primes the pump. We are also adding to the cost of living by having carbon taxes that will make us less globally competitive. Trudeau is extremely naïve in this. Trump and Putin will laugh all the way to the bank as the rest of us try to be good little boy scouts and get poorer in the process.
 

shal1n

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Get on the Kevin O'leary train if you want this country to move in a different direction.

https://olearyforcanada.ca/

I'm signed up and will donote my time to get Kevin in office. I can't stand the usual folks inthe conservative party but these tax and spend fiberals need to go.

I see Kevin as an anti-establishment type figure!
 

W. K. Lis

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Get on the Kevin O'leary train if you want this country to move in a different direction.

https://olearyforcanada.ca/

I'm signed up and will donote my time to get Kevin in office. I can't stand the usual folks inthe conservative party but these tax and spend fiberals need to go.

I see Kevin as an anti-establishment type figure!
Where's the "Unlike" button?
 

shal1n

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Where's the "Unlike" button?

I take it ur a leftist spend & tax, handouts for all, and money grows on trees type of guy huh?
 

Euphoria

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Maybe he can do something to turn things around. Someone has to. I find generally that the commentators on here have very in the box solutions that almost always involve overspending. People support cost of living increases such as highway tolls and carbon taxes as though the high cost of energy isn't already an incentive to conserve and create efficiencies. As much as people complain about the Harris days, the reality is that under Harris spending was brought under control in Ontario, our credit rating improved, and we saw new investments in infrastructure. Waterfront Toronto came out of that era. We dreamed bigger, with plans for burying the Gardiner and hosting the Olympics. Wynne and Trudeau say 'yes' to everything yet accomplish little. How much of the Health Premium (tax) that McGuinty's Liberals brought in has gone towards paying wage increases for employment groups such as the OPP? Trudeau and Morneau increased our debt and deficit on their first day in government. Trudeau's signature accomplishment will be the settlement of refugees, an extremely expensive though arguably noble program. Trump would say we've let in ticking time bombs. There will be no money left for anything else. We need at least a 15% across the board cut in spending in all departments. The savings should go towards reducing government debt and building infrastructure. Trudeau will spend the time remaining to him back-peddling on promises and making up for it with more self-righteous, posturing speeches and shirtless selfies. He would never have gotten in if he wasn't a Trudeau and if he wasn't 'cute'. Wynne will leave behind a mountain of debt and government waste. See what comes of this so-called infrastructure spending the Liberals have promised. My guess is very little. Don't get me wrong, the conservatives made missteps too. We need transformational change.

A 15-20% tax on home purchases by foreigners would reduce housing demand and lower home prices, if only marginally. Foreign buyers can try to recapture this tax upon the sale of their properties, but sale prices are set by what markets are willing to pay.
 

shal1n

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[QUOTE="He would never have gotten in if he wasn't a Trudeau and if he wasn't 'cute'. Wynne will leave behind a mountain of debt and government waste. See what comes of this so-called infrastructure spending the Liberals have promised. My guess is very little. Don't get me wrong, the conservatives made missteps too. We need transformational change.

A 15-20% tax on home purchases by foreigners would reduce housing demand and lower home prices, if only marginally. Foreign buyers can try to recapture this tax upon the sale of their properties, but sale prices are set by what markets are willing to pay.[/QUOTE]

Lets hope Kevin O'Leary gets into office and #DrainsTheCanadianSwamp

https://olearyforcanada.ca/
 

Migos

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The bad news with 30% tax is that in the future, they'll try to sell at a price that includes the taxes, expenses, renovations, and other costs. And a profit, of course.
If that were true, why wouldn't they just sell at a price including a 30% tax now? They can try to sell for whatever they want, but the market will dictate the price, not the costs they've incurred.
 

shal1n

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No beneficial policies are going to come down the pipe with these establishment politicians.

You can hope all you want about foreign tax and infrastructure spending but it ain't going to happen with the perpetual deficit spending Fiberals (who need and want outside money) or the crony Conservatives.

Only one man can #DrainTheCanadianSwamp whether you like him or not.
 
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ducati0000

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I would welcome a 15% tax on foreign buyers,it help Vancouver cool off some of the bidding wars but prices have not come down though.Still hearing from agents that some new projects are being sold by floors to foreign buyers not by units.China on the verge of collapse by the recent growth numbers and the only reason it has not is government is pouring billions into the market to keep it a float.Rich asians are scrambling to get the money out before government cracks down on out going money.
 

rbt

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This CTV news video seems to indicate Vancouver prices are plummeting
This indicates asking prices are too high. Nothing in that news real indicates sale prices are plummeting (they might be; they didn't show it though).

They could have dug up any number of comparables with recent sales for the properties they showed in the news cast; they even interviewed a realtor who should be doing that type of work several times a day for clients.
 

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