Letter to Horgan from ex-CEO of Canadian Western Bank

[Gone_Fishin]

Letter to Horgan from ex-CEO of Canadian Western Bank

Larry Pollock

Published on: March 22, 2018 | Last Updated: March 22, 2018 10:30 PM PDT


Subject: Proposed foreign speculation tax

Dear Mr. Horgan,

Having read much of the back-and-forth from both sides on this tax, and giving consideration to the macro-consequences of its potential, I felt compelled to share my views on your proposed “speculation” tax with the government before finalization of details and/or implementation of the tax (or some derivation of it).

snip

From my discussions with individuals in most of the larger financial institutions doing business in B.C. it appears they have significant concerns about the potential negative consequences of the tax. However, given that those institutions are more reactive than proactive in driving legislation, I suspect you likely won’t hear much from them during your consultation period as they prefer not to wade into politics, but rather will simply react to their effects once implemented.

When presented with such potentially deleterious legislation affecting their businesses, banks must undertake a full review of their current mortgage-loan portfolios to determine how many may be offside the loan-to-value ratios once the tax is implemented and property values fall as anticipated. As you are aware, becoming offside those loan ratios has significant and real consequences to a financial institution, requiring them to take certain steps to make sure they’re in compliance with the legislation.

In addition, the banks will be undertaking a review of their construction loan book of business, both current and proposed, in an effort to determine (1) how many of these projects will have misstated revenue numbers (innocently mind you, as they couldn’t have predicted the negative effect the tax was going to have on their retail prices); (2) what percentage will lose their pre-sales that collapse after implementation of the tax; and (3) which are offside of their loan covenants due to the impact of the tax on property values and borrowers’ abilities to repay their loans. Further, any loans that have been approved, but not yet drawn, will most likely be frozen until a further and better understanding of the tax’s impact is known. These projects will end up suffering significant losses due to this uncertainty and delay, resulting in many simply not proceeding, which causes a trickle-down negative effect on contractors, trades people, realtors and others in the economic chain.

In addition, the government should appreciate that all appraisals conducted by the banks in respect of future or pending mortgage applications will be of no use, as the banks will not be able to rely on them since they would be conducted before the implementation of the tax and thus wouldn’t have the impact of the tax built in to them. The true effect of the fall in prices may not be known until later this fall or next spring as the markets will need time to settle out after the negative impact of the tax. It’s likely that appraisals won’t become reliable for the purpose of approving loans until that time.

A regressive and punitive tax like the one proposed will immediately drain business confidence in the province, and make investors reluctant to consider B.C. as a place to invest their capital. Investors and business people have options as to where and when to invest their money, and the more B.C. is made to be a difficult and expensive jurisdiction to invest in, the less capital that will flow in, and the fewer jobs that will be created for the very people you’re trying to help in the province.

In closing, based on my knowledge of the banking industry and its propensity to be cautious and defensive in times of patent uncertainty such as will be the case with this new tax, my advice would be to withdraw from this regressive and potentially disastrous new tax and instead look for a policy that will achieve the desired result, being a significant and meaningful increase in the number of affordable-housing units in the province. Whether that be by way of incentives, subsidies, regulations, or restrictions, is entirely up to your government.

But to try to solve the problem by taxing unsuspecting Canadian owners is patently un-Canadian and ill-conceived, and in the end will be to nobody’s best interest. There is a tremendous amount of innovation and creativity available out there so why not tap into it.

Yours truly,

Larry Pollock, Retired CEO, Canadian Western Bank

http://vancouversun.com/opinion/op-ed/o ... stern-bank

[seewood]

Thanks GF. Great letter. Wonder if it will fall on deaf ears? To punish Canadians with an asset tax is just plain repulsive.

[LordEd]

Perhaps they should make a committee to look into the side effects. Start a committee now to select the committee selection committee and get this going.

[Bsuds]

Perhaps they should make a committee to look into the side effects. Start a committee now to select the committee selection committee and get this going.

Lets not forget the committee to look into the letter.

[Gone_Fishin]

Latest I'm hearing from my sources is that Horgan is planning to tax all capital gains on all principal residences in BC. The NDP groupies will scream loudly here and declare no way, then disappear into their basements when the news breaks as Horgan looks for funds to pay off his support base, and line Weaver's fanatics' pockets in his bid to hang on.

[Veovis]

Latest I'm hearing from my sources is that Horgan is planning to tax all capital gains on all principal residences in BC. The NDP groupies will scream loudly here and declare no way, then disappear into their basements when the news breaks as Horgan looks for funds to pay off his support base, and line Weaver's fanatics' pockets in his bid to hang on.

Wouldn't that be an ignorant piece of cash grab. Wouldn't shock me though. If you wanted people to never sell that would motivate that action.

[Urban Cowboy]

Anyone think Horgan will give a damn about that letter?

I mean I hope he does, but not holding my breath for a moment.

After all he's getting schooled by a banker, and that can't sit well with an NDP mind.

I don't think he'll be happy until he drives us straight into a full blown recession.

[Veovis]

Anyone think Horgan will give a damn about that letter?

I mean I hope he does, but not holding my breath for a moment.

After all he's getting schooled by a banker, and that can't sit well with an NDP mind.

I don't think he'll be happy until he drives us straight into a full blown recession.

No he won't as math is a sin in the eyes of that party, always has been.

[Urban Cowboy]

Anyone think Horgan will give a damn about that letter?

I mean I hope he does, but not holding my breath for a moment.

After all he's getting schooled by a banker, and that can't sit well with an NDP mind.

I don't think he'll be happy until he drives us straight into a full blown recession.

No he won't as math is a sin in the eyes of that party, always has been.

Agreed.

He'll just lead us into recession, then go "oops" errrrrrrrrrrrrrr.............................. Liberals -> Bad!

[burnedatstake]

horgan shouldnt care about the letter or opposition. continue his policies and vision in a blind way like the liberals did for 16 years. the precedence has been set. bc governments dont have to be accountable to all voters - just some. the liberals made their base happy. and now the ndp is doing the same. nothing nefarious about that at all.

[Gone_Fishin]

horgan shouldnt care about the letter or opposition. continue his policies and vision in a blind way like the liberals did for 16 years. the precedence has been set. bc governments dont have to be accountable to all voters - just some. the liberals made their base happy. and now the ndp is doing the same. nothing nefarious about that at all.

Sacrificing virgins to the gods made some people happy too, but eventually greater intelligence got us to move beyond that. Horgan's sacrificing the province to make his small group of lunatic, irrational supporters happy. We must move beyond being led to our deaths by a clueless idiot like Horgan and the NDP.

[Gilchy]

They’ve admitted to making up policy on the fly, so not sure about any grand “vision”...

[Queen K]

horgan shouldnt care about the letter or opposition. continue his policies and vision in a blind way like the liberals did for 16 years. the precedence has been set. bc governments dont have to be accountable to all voters - just some. the liberals made their base happy. and now the ndp is doing the same. nothing nefarious about that at all.

Sacrificing virgins to the gods made some people happy too, but eventually greater intelligence got us to move beyond that. Horgan's sacrificing the province to make his small group of lunatic, irrational supporters happy. We must move beyond being led to our deaths by a clueless idiot like Horgan and the NDP.

No one is leading anyone to "their deaths" - geeezzz, hyperbole much?

Changed my mind. ETA: April 10/18.

Decided the loss of KM and the new tax on delivery has done it in.
Greater intelligence will get BC a third viable party which is a good democrat business blend with socialist safety net ideals.
Not clutching your pills at that idea are you GF?

[The Green Barbarian]

and now the ndp is doing the same. nothing nefarious about that at all.

how is this idiotic plan by the NDP making anyone happy, even the moronic NDP base? That makes no sense. This is stupid policy put together by brainless NDP simpletons. They have no ability to judge the consequences of their actions. The NDP is a dumpster fire of a party that doesn't deserve to be in power.

[burnedatstake]

and now the ndp is doing the same. nothing nefarious about that at all.

how is this idiotic plan by the NDP making anyone happy, even the moronic NDP base? That makes no sense. This is stupid policy put together by brainless NDP simpletons. They have no ability to judge the consequences of their actions. The NDP is a dumpster fire of a party that doesn't deserve to be in power.

if anything you just said had any basis in fact or reality - the ndp wouldnt be in power at the moment. and weaver would have been wooed by the liberal negotiators and team. instead - the liberals were inept at negotiating (as seen with the bctf debacle) - and their leader at the time abdicated leadership - until she called weaver at the last possible moment. a call that went straight to voicemail - while horgan and weaver were on a podium consolidating their victory. and the icing on the cake? wooing a liberal as speaker. a master stroke. which gave coleman a stroke. if any of this NDP/green scenario even sounds like mindless idiots to you - then i think that you and many others are projecting your stupidity on others. much like the liberal meltdown that happened as a result. imagine the blame game in that room.....oh to be a fly on that wall. and as usual the liberals and their ilk couldnt take responsibility for their actions - they blamed the system. or the LG Guichon which clark tried to castigate. or the voters. or our governing constitutions and traditions. and until the liberals and their supporters have that moment of reflection - they will call others stupid while looking so themselves.