Standard of living down

May 26, 2022   ·   0 Comments

By Franco Terrazzano and Kris Sims

There was a clash between reality and the federal Liberal Twitter account last week.

The self-congratulatory tweet claimed Liberals have been “making life more affordable” since 2015.

When Canadians look at gas prices, grocery store receipts and mortgage payments, that claim might raise eyebrows.

Does life feel more affordable now than it did seven years ago?

Here’s what the numbers say.

The price of food jumped by nine per cent over the year, the cost of homes skyrocketed, and many people can’t afford to fill their cars to get to work.

In 2015, the price of gasoline in Vancouver was $1.02 per litre. Now it’s more than doubled, costing $2.20 per litre. That’s more than $240 to fill a pickup.

Taxes are a huge factor in gas prices. While global unrest increases the price of oil and a lack of pipelines chokes supply, taxes make it worse.

In Vancouver, 75 cents per litre of the pump price is taxes, including two carbon taxes.

In 2015, there was no federal carbon tax. Now, it’s 11 cents per litre of gasoline. People pay the carbon tax on home heating and the carbon tax is also on diesel. That means we pay more for groceries and everything else delivered to us on a truck.

The feds try to explain away that reality by pointing to rebates, but the Parliamentary Budget Officer has concluded the carbon tax is a “net loss” for most families.

That analysis doesn’t include a second federal carbon tax embedded in fuel standards that’ll be in place by Christmas this year. It’s estimated to add 11 cents to the price of a litre of gas by 2030.

Within the next eight years, the two carbon taxes will cost about 50 cents per litre of gasoline.

Taxes are making life less affordable now, but Canadians should be worried about future affordability because today’s deficits are tomorrow’s taxes.

In 2015, the federal debt was $616 billion. By the end of this year, the debt will have doubled to $1.2 trillion.

Every month, taxpayers are paying more than $2 billion in interest on the debt. By 2025, the PBO expects interest charges to exceed $40 billion per year, more than double the cost at the onset of COVID-19.

The cost to buy a home has jumped since 2015.

Back then, the cost of a detached home in London, Ont. was $282,229. Today, those same homes cost more than $793,000.

Deficit spending has made inflation worse, which in turn has prompted domestic investor groups to park their money in real estate to hedge against inflation, adding to the rising cost of homes.

And the feds have been slow to demand good results in exchange for taxpayers’ money transferred to city halls that are strangling new home builds.

Simon Fraser University research shows a Vancouver home requires 18 inspections and five more for the garage. The city’s building permit fees are also twice the average rate of U.S. cities.

Why did Ottawa hand more than $3.9 million to the City of Vancouver in 2021-22 through the Community Building Fund when that city hall is making it nearly impossible to build homes?

Then there’s inflation.

In 2015, inflation was 1.1 per cent. That means things like new tires or a pound of apples cost about one per cent more than they had a year before.

Today, inflation is at 6.7 per cent. The Trudeau government is making inflation worse with big deficits because the Bank of Canada prints money to buy government debt, creating more dollars chasing fewer goods, which intensifies inflation.

A 6.7 per cent inflation rate is the highest since 1991.

Interestingly, it was about a year after that high inflation that Bill Clinton won the White House with the slogan: “It’s the economy, stupid.”

The top issue in Canada today is resoundingly: “Affordability, stupid.”

Franco Terrazzano is the Federal Director and Kris Sims is the B.C. Director of the Canadian Taxpayers Federation.

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