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Canada's Minister of Finance Chrystia Freeland. Photo by Fabrice Coffrini/Getty Images
More taxes, eh?

Capital gains taxes won’t fix Canada’s terrible housing market

Canada's proposed solution to its housing crisis may exacerbate the problem instead.

Jack Raines

Canada’s Finance Minister, Chrystia Freeland, made waves yesterday when she announced that Canada would be increasing capital gains taxes, beginning in June 2024, as part of a broader initiative to “build more homes, faster, help make life cost less, and grow the economy in a way that helps every generation get ahead,” as well as to limit the size of the government’s annual budget deficit.

I struggle to see how raising capital gains will fix Canada’s woes.

As Canadian capital gains tax policy currently stands, only 50% of one’s capital gains are eligible to be taxed, and the taxable amount is taxed at one’s marginal tax rate. This new policy, which is Canada’s first change in capital gains levy in more than two decades, will raise the threshold to include 67% of all capital gains over C$250,000 (US$181,000).

Canada has one of the worst housing markets in the world right now, with Toronto leading UBS’s global real estate bubble index in 2022. Canada needs more homes, and increasing capital gains could exacerbate this problem by disincentivizing further real estate development.

According to Bloomberg, Alberta Central’s chief economist, Charles St. Arnaud, also warned that this move could deter business investment in Canada, saying, “While the tax changes are marginal, they have the potential to impact the perception of Canada’s business environment.”

Implementing a policy change that increases short-term government funding at the expense of longer term business investment and real estate development feels risky, and it also fails to address Canada’s real problem: an explosion in government spending.

Ignoring pandemic-era stimulus packages, Canada’s federal government spending has climbed 40% from prepandemic levels, and Freeland expects a C$40 billion deficit again this year. But this issue isn’t just financial: it’s political.

Prime Minister Trudeau’s approval rating has plummeted in polls, and with an election just 18 months away, he is hoping to use expanded government programs to improve his standing with disenchanted younger Canadians.

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Tom Jones

The most watched soccer match in US history got less than a third of the views the Super Bowl did

Between a top-spot finish in the group stage, a sweeping performance against Bosnia and Herzegovina in the round of 32, and the president’s controversial intervention, Monday evening’s USMNT game against Belgium had, to put it lightly, shaped up into a box-office clash.

And though the US players’ performance on the pitch might not have lived up to the high drama off it, American soccer fans certainly showed up. According to early estimates, the 4-1 defeat against Belgium was the most watched soccer telecast in US history, hauling some 40 million viewers on average across the coverage on Fox and Telemundo.

That may be a record tally in the US for the sport that much of the world calls some variant of “football” — besting the 36.2 million who tuned in to watch the team’s previous knock-out match — but it’s still peanuts in comparison to the sport that shares the same name in the States.

World cup viewers chart
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Reddit’s advertising business is getting bigger. It’s already booming.

The platform will plow more money into its ad offerings as it cements itself as a “trove of human intelligence.”

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45% of Americans say they’re not taking a summer vacation this year, mostly due to costs

Flight comparison site Skyscanner is recommending some cheaper alternatives closer to home.

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Despite slight declines, Japanese tourism figures are still hovering around record highs

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