Apparently Inflation isn’t a tax: Patrick Leblond writes ‘government’s coronavirus spending may not lead to higher taxes’ – May 11, 2020,
Inflation is called the silent tax because as prices for goods and services rise so does the revenue the government gains in taxes. As Canada loses it’s manufacturing base and becomes increasingly reliant on Imports, tariffs at the borders which are usually paid by Canadian businesses are often passed onto to consumers in higher prices and because Canada also has Protections in place to prevent certain industries from competition, there are a lot of segments in Canada, whose pricing mechanisms aren’t market-based, which inevitably also leads to higher prices for consumers.
Furthermore, the Canadian government especially when you’re including public sector worker wages and entitlements is a Behemoth that requires private sector growth in order to feed itself. Now, as everyone knows, Justin Trudeau has been growing the size of government and usually, when there’s an economic downturn there are calls to grow the public sector some more, now because fewer people are working and unable to invest or pay into investments like banks, insurance companies, pensions funds and other investment funds which are usually tied to employers.
It’s odd how Patrick Leblond would come to his conclusion. I’m not saying he’s not right, I’m just saying I don’t think he knows what he’s talking about. The companies he says will pay for Canada’s shortfall will also potentially be facing their own shortfalls.
This is usually the period in which insurance companies get the most claims and cancellations, this is usually the period in banks are losing money as fewer people who aren’t working are unable to pay the loans. Pension funds payout money and in regards to pension funds we’re in the era where baby boomers are retiring every single day and in fact COVID-19 might make people who thought of retiring later want to retire earlier, all the industries Patrick Leblond points out in his article which he assumes will pay taxpayers bills are all the institutions many of us see having challenging times ahead.
In the end, people can believe what they want to believe, but for the record, inflation is a tax, higher prices is a tax, a loss of your purchasing power is tax and the fact that most government workers have a pay rate that keeps up with the price of inflation, should be an indication that if austerity measures are off the table, inflation for the Canadian consumer with a larger deficit is inevitable!
Interesting times ahead!