Dear John,

Inflation – it’s a word we have heard a lot of lately.

Canada’s inflation rate recently jumped to a 31-year high of 6.7%!

Most Canadians born after 1990 have never experienced a serious episode of inflation like this, and don’t know what to expect.

As you might know, our motto here at the Fraser Institute is “if it matters, we measure it”. Since not much more matters than the overall health of the Canadian economy, we have spent a lot of time studying this recent rise in inflation.

One recent study noted who the beneficiaries of high inflation are: governments.

You won’t hear that from our political leaders, but it’s true: governments are the clear beneficiaries of inflation, in two main ways.

First, by reducing the purchasing power of the Canadian dollar, inflation effectively reduces the real cost of servicing and retiring outstanding government debt.

Considering that the latest federal budget projects federal debt will reach $1.3 trillion by 2025, the federal government stands to benefit hugely from higher inflation.

Second, while personal income taxes are indexed to inflation by the federal government, asset values used to calculate capital gains taxes are not.

This means that increases in the values of equities, real estate and other assets – that are purely the result of inflation – will push many Canadians into higher tax brackets when they are sold, increasing government tax revenues even though the inflation-adjusted incomes and wealth of most Canadians do not.

John, when the news of the recent Bank of Canada interest rate hike came out, we took to social media with a series of posts to explain not just the effects of inflation, but why the sudden increase in inflation is significant.

I’m happy to report that these posts reached tens of thousands of people on social media. They guided people to our study, which was viewed thousands of times on our website. And our op-eds on the subject reached millions of people in outlets from coast to coast!

That is what we do at the Fraser Institute: give Canadians the facts and numbers they need to hold governments accountable!

If you’re able to, please consider making a donation today [[link removed][campaignid]].

We do not accept government grants for our research, we rely entirely on supporters like you. Each donation helps us reach even more Canadians!

Thank you for your continued support.

Sincerely,

Niels Veldhuis

President

The Fraser Institute

STAY UP TO DATE

SUPPORT THE FRASER INSTITUTE

The Fraser Institute has been ranked the #1 think tank in Canada, and the 14th best think tank out of more than 8,200 around the world! We keep Canadians – and decision-makers! – informed.

But we are only as strong as our supporters. We do not accept government grants or payments for research - we depend on individuals like you to continue our good work! We are a charity - your donation entitles you to a generous tax credit at tax time!

Contact Us [[link removed]] Privacy Policy [[link removed]] Unsubscribe [link removed] The Fraser Institute's mission is to improve the quality of life for Canadians, their families and future generations by studying, measuring and broadly communicating the effects of government policies, entrepreneurship and choice on their well-being. Email is one of the best tools we have to accomplish these goals. If you no longer wish to receive e-mail updates from us, click here to unsubscribe [link removed].

Fraser Institute 4th Floor, 1770 Burrard Street Vancouver, BC V6J 3G7