Updated: Sep 16, 2021
The writing was on the wall a few years ago, when Liberals introduced a tiered carbon tax targeted at the Oil and Gas industry, and at same time starting the narrative around 1-2 percenters. The 1 percenters being Canadians with a net worth of approx +$10.5mm, and 2 percenters having net worths of approx +$2.5mm.
Now that Covid has added $270B and rising to the Canadian deficit, and Liberals are well on their way to claiming “Robinhood” status, the Liberals out-of-control spending, with little opposition, are on the hook with Canadians to find a way to get that money back without losing too many votes. What easier way to do this than to tax the wealthy, after all who cares about 1-3% of the votes, especially when this action is likely to pick up +3% of the straggler votes? It’s already obvious that Liberals pander to the east, and snub the west and their wasteful and environmentally-unfriendly ways at every opportunity? It’s all mind-control stuff......
Recently a luxury tax was announced targeted at these 1-2 percenters, imposing a new 10% luxury tax on the value of any new vehicle, and 20% luxury tax on any gas-burning vehicle over $100k in retail value. This includes, boats, planes, and automobiles, etc.
Furthermore, there is $17.6B assigned to green spending, primarily assigned towards incentivizing EVs in corporations and businesses. So if you’re driving a gas-guzzling truck for work which you also enjoyed the perk of towing your 30-40’ holiday trailer with, get ready to have a new EV in the future!
What is the message? Reduce your carbon footprint!
Where will it all end? Reduce your carbon footprint!
..... and, if you can’t change yourself, the government will change you!
That may sound a bit redundant, but what I predict is it will end when the Liberals get the $270B back in taxes from everyone who overusing carbon products, and/or is living a life of luxury beyond their “true needs”. It likely won’t end until a new crisis takes priority or technology emerges that is widely accepted in mainstream society. Even at this point it doesn’t truly end, just loses steam as people pivot and adapt, and the government relaxes imposing new taxes targeted at carbon. It wouldn’t surprise me one bit to see this tax applied to housing over a certain value ($1mm?) and/or above a set footprint (sqft living area per person), and/or the associated utilities and costs going towards excessive housing footprints? That would definitely cool off the $1mm+ housing sector? You will see mass downsizing and selloffs and a flood in the housing market. You may see additional tax on energy and carbon use at all levels? Everything the government does is very calculated and a test, to see how people will behave and how their popularity is affected in the polls. We will be boiled like frogs with carbon-reduction initiatives.
You want to cool the economy and inflation down a bit without increasing interest rates, this seems like a clever (pre-planned) way to do it? It is also a bit of a risky way to do it, as many of the jobs in the country are created by the people and corporations that are now feeling and going to feel the hurt of these new, surprise programs. There are two ways this can go in my opinion. First way: people and company behaviours will change, further reducing demand and revenues, which turns into cost-cutting effort (maybe jobs) at companies and loss of spending from people with most to spend. That’s a double-whammy. The second way it goes: the rich keep spending regardless (cuz they can and it’s hard to change the spots on a leopard), and companies find new ways through technology and innovation to stay competetive, profitable, and keep jobs.
In reality, you will likely see a little of both happening? This will lead to some more stock market uncertainty, as well as more stock market activity as investors wade through the new goverment messaging and new data, dumping new risks in their portfolios while acquiring new oppotunities.
As we are primarily global, index-tracking ETF investors we just truck along, watching these new developments and their impacts on various markets, sectors, and pundits. It wasn’t 3 days ago I authored a BLOG called “Head Spinning Stock Market”, and was talking about how the market is affected by unpredictable news and events, and that if all things remain unchanged you may be able to take a stab at a prediction? Here’s a new one, the Liberals plan to tax the hell out of wealthy, to get out of this deficit! There will be radicals on both sides of this, jumping on and off the bus? Global, index-tracking, ETF funds have remained largely unaffected by all the news lately, taking their lumps during crash, making gains throughout the recovery, all while enjoying less risk due to high diversification. You can definitely minimize your risk through quality stocks and diversification. That’s the beauty of of index tracking ETFs, something is always going up when something else is going down.
If you can’t see the taxes for living-large and carbon use ramping up, you haven’t been paying attention the last few years! I doubt it’s all over with this luxury tax? Will the government show all the cards in their hand, just when the economy is just opening up? That would be super-silly, because they NEED YOU (the other 97%) TO SPEND NOW! Once most of that money back is in circulation, they will implement the next steps of taxation to continue to curb carbon footprints, drive their platform agendas, and recover the debt. There is little incentive in being well-off any more, because the government will control how you enjoy it (or basically not let you enjoy it)? I'd definitely think a little harder about how you are spending in the future, and if it aligns with the current messaging and impending costs to you.
On a different note, Lithium prices are trending up.....