Unlike the fools here in BC that voted to remove the HST and go back to the expensive and unwieldy two tax system. Then to top it off every NIMBY and NOPE that could get to BC legally or otherwise is busy protesting jobs.
Inflation boom causing banks to consider raising interest rates
- Thread starter mentalfloss
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Unlike the fools here in BC that voted to remove the HST and go back to the expensive and unwieldy two tax system. Then to top it off every NIMBY and NOPE that could get to BC legally or otherwise is busy protesting jobs.
You have just described why deflation is more difficult... The cost of your products and services in today's market are often a function of a global dynamic.
As the dollar falls in value, it costs you more for imports AND there is pressure from the outside (foreign) to buy-up domestically produced goods at a cheaper rate using more valuable currencies.
Borrowing becomes less available domestically as the capital pools gravitate to the markets that offer a better return.
AT this point, raising taxes is off the table and Gvt's only solution is to raise interest rates thereby increasing the cost of living punishing all in hopes that the economy will grow, including wages that will (hopefully) catch-up to costs.
The rich vs poor argument is also a non-starter.... Tax increases is a gvt move that creates winners and losers... Capital is highly mobile and will move to those investments, regions, etc that provide the best returns and security possible... That is the easiest hedge going and if you promote or allow deflation to set in (as a gvt), everyone takes it in the butt
I don't quite understand the HST fiasco so much. My belief was that it combined the PST+GST into one element... In theory, it should be a wash trade (ie a 0 increase/decrease)
That said, I do recall that when GST came in, the 'invisible taxes' were supposed to drop away and the cost of the product purchased was supposed to stay the same... Didn't happen.
Is this the kind of thing that you are referring to?
No, in Ontario, services were never subjected to PST, and now they are while at the same time items, such as insurance, that are exempt for GST purposes are still subjected to the Retail Sales Tax Act. So it was not a wash, it actually increased provincial government coffers significantly and cost the people of Ontario significantly. It's the main reason I felt strongly that the least they could have done is to reduce the provincial portion of the HST by at least a percentage or two.
The HST became a cash grab for any government willing to institute it. Some things that were not GST applicable suddenly became GST applicable. For instance: If you bought a used car in Ontario, you only payed 7% PST, but with the HST you now pay 12% because it`s harmonized and GST suddenly becomes applicable.
The public in BC revolted over the HST and it was recalled. While Ontarian`s just took it in the a$$. So, while I agree that both Provinces are essentially Nanny States now, the people in BC have showed a bit more spine.
Disclaimer: This is not to disparage those who openly railed against the taxes. There were some, myself included, just not enough of us.
That happened in BC too when the taxes were combined. Many things that previously had only GST now had PST as well. Kind of a provincial tax grab. BUt when it went back to a two tax system the PST didn't come off all the things not previously taxed. The HST is certainly a much simpler system.
Then again we have people here that are so stupid they want the taxes included in the sticker price so they won't have to see how bad the government is sticking it to them.
Between you and SLM, I have a far better understanding of the angst on this subject.
I suppose that I naively presumed that it was a wash-transaction... Obviously I am terribly mistaken
I think using the tax system to control money supply is probably the best solution there is. Raising interest rates in of itself is inflationary. After all, inflation is simply getting less with the same buck, if your mortgage rate went up because you were lucky enough to have to renew right after the "inflation controlling" hike, cost of owning the same home just went up. Interest rate hikes feed inflation, which in turn could lead to further increases.
The other part of this, with the taxes going up to slow things down, you can pay down some of the debt, which reduces the debt costs, allowing the government to do the same for less tax requirement. And if it reduced spending, which should happen in a heated economy (less social/corporate assistance), then the impact would be greater.
But if they must stick to the old doctrine, then how about the bank of Canada opening branches all across the land, and let them be the creators of money in this country, not the private banks. Then the billions in interest charges would go to the Bank of Canada, who in turn at the end of its fiscal year, passes its profits on to the Canadian Government. Just imagine if the Band of Canada lent the Govt of Canada funds, the Bank of Canada would have earned over 28 billion last year alone. And yeah, I know, OMGoodness, that's not possible. Why not, the charter banks lend money they don't have. They create it. They don't even have to hold any real money in reserve any more (GOC eliminated that need in 2006). But don't take my word on this, look it up, BofC explains the whole ponzi scheme on its site.
But back to this notion of using tax instead of interest rates to control the economy. Imagine, if you were a business, and were going to make an investment, you would have a good idea what the interest rate would be over a long period of time. Also, to get foreign investment, the country would be forced to manage its affairs better, making the country a country of choice for foreign investment; higher interest rates only garner temporary investment which shifts to the next country offering a better rate. Keeping the dollar volatile.
One thing is for sure, interest rate manipulation is not the answer, it is flawed, just ask the US who only this year ended quantitative easing (printing money to increase supply) because interest rate manipulation did not increase money supply. Whether anyone supports the tax system as a control point or not, the present system is ineffective, and too imprecise.
And finally, why, if we want to take money out of the economy, should the banks get it, why not the government?
It is a simpler system, no doubt about it, and there are many reasonable arguments for harmonizing the system. It streamlines the process for one thing, you don't have two separate and distinct tax agencies collecting. I'm actually not opposed to it in the end. However, they needed to give a little something for what they were getting is my belief and knocking the provincial portion of the tax down from 8% to 7% or even 6% would have gone a long way to reducing the hurt on the pocket book.
Actually, not to nit pick, but there is no GST on used car sales in Ontario but instead the rate of RST on used car sales is 13%, up from 8%.
Retail Sales Tax
Just another way they screwed us over though.
Yep, if you work hard and smart, then manage your money, thus getting rich, you must not get anything from society! It must all go to wimps like flossie........
Is this the part when I become a figment of your imagination like fagro?
There's medication for that you know.
Nope. Stagnancy is the cornerstone of every successful nation.
Stagnant labour is how this country was built.
Stagnant labour is how this country was built.