When the Communist rulers of the Soviet Union realized in the 1980s their grand experiment in central planning needed tweaking, they opted for Communism lite. As described by the New Palgrave Dictionary of Economics, this new milder and gentler version of bureaucratic control involved manipulating “prices, taxes, the rules governing enterprise behavior, the rate of exchange etc.”
That pretty much describes current policy-thinking across much of the Canadian economy, but nowhere more so than around the housing bubble that is allegedly ballooning out of control over Canada’s largest cities and threatening to engulf other parts of the country.
The intervention schemes, some already imposed in Vancouver, are popping like wild mushrooms out of the fertile brainpans of Toronto politicians and economic schemers.
Toronto Mayor John Tory joined the fungal production line this week by raising the possibility that the city might impose a tax on empty houses and condos. Emerging from a roundtable meeting with experts assembled to find “solutions” to the housing-price problem, the Mayor suggested “a tax we might put on vacant homes.” If such a tax were imposed on the city’s 65,000 empty dwellings, it might “incentivize” the owners “to put those houses back into the supply.”
But hold on. We have another mushroom over here of a different kind. One of the bank economists said recently it might be a good idea to put a tax on short-term speculators who may be driving up the price of housing. “A number of possibilities exist to do this,” he said, “such as introducing a tax on sellers who flip a property within a certain period of time.”
So we have one proposal to punish owners who sit on their housing properties for maybe longer than six months, and another to punish owners who flip their housing properties in less than six months.