This week, Finance Minister Chrystia Freeland referred to Canada experiencing a “vibecession”, a term coined in the U.S. to describe public sentiment that the economy is on the downturn, even while macro-economic indicators are looking up. The GST holiday is meant to make us spend again despite our angst, “because how Canadians feel really does have a real economic impact,” explained Freeland. Many Canadians likely felt a sting of frustration from the minister’s comments. The pain Canadians are feeling isn’t an irrational reaction, it stems from structural economic failures driving inequitable outcomes for Canadians that the federal government has yet to adequately address.
Groceries and rent: hard numbers, harsh realities
The latest Consumer Price Index (CPI) data shows that grocery prices rose by 2.7% year-over-year in October, outpacing the 2.0% increase in overall inflation. This marks the third consecutive month that food inflation has outpaced headline inflation, putting a squeeze on household budgets. Meanwhile, rent prices remain stubbornly high, with a 7.3% annual increase in October. Even as the pace of growth slows, rent has risen by 21.6% since October 2021—a crushing burden for those already struggling to keep a roof over their heads. Visits to food banks are at record highs, homelessness and housing insecurity are rampant in most of Canada’s major cities, and scurvy is reemerging in remote areas, highlighting a broader issue of food insecurity in rural communities.
These aren't just "vibes." They’re the unavoidable costs of living in a country where corporate profits are prioritized over people’s basic needs. Research from Canadians for Tax Fairness has shown that soaring grocery prices aren’t just a result of inflation, they’re driven by grocery sector profit margins that have doubled since the outbreak of the COVID-19 pandemic. In the absence of excess profits taxes and strong competition to prevent profit-seeking, the sector lined their pockets unabated. Similarly, the real estate sector has benefited handsomely from tax breaks, including preferential treatment for Real Estate Investment Trusts (REITs) and years of low capital gains inclusion rates, which reward speculative investments over affordable housing solutions.
Corporate windfalls amid the cost-of-living crisis
While Canadians make sacrifices, large corporations have been raking in record profits. Grocery giants like Loblaws have posted massive gains while passing higher costs onto consumers and enriching their already wealthy owners. In the housing market, the real estate sector collected $50.4 billion in profits in 2023, 40% higher than its pre-pandemic record. Despite these substantial returns, the federal government abandoned its efforts to rein in the financialization of rental housing in May of 2024.
The government has made gestures toward affordability, such as pausing GST/HST on rental construction or the GST/HST tax holiday announced last week. Yet these measures barely scratch the surface. They fail to tackle the systemic issues, like corporate concentration and tax avoidance – that drive long-term inequality and perpetuate the current cost-of-living crisis. Even programs meant to help the most vulnerable, like the proposed Canada Disability Benefit, are woefully insufficient, offering a meagre $200 a month to those in desperate need.
The cost of inaction
The consequences of this inaction are visible everywhere: underfunded schools, overcrowded hospitals, longer lines at food banks and growing numbers of encampments for the unhoused. When corporations and wealthy investors avoid paying their fair share, the burden falls disproportionately on ordinary Canadians. These systemic inequities are not just worsening cost-of-living challenges, they're eroding Canadians’ faith in an equitable future and tearing apart the social contract that’s supposed to bind us together.
Minister Freeland’s “vibecession” remark trivializes these hardships. It suggests that if we all just enjoy our two-month GST holiday, focus on the 2% headline inflation figure and feel better about the economy, things will improve. But optimism doesn’t pay the rent, and it certainly doesn’t put food on the table.
From vibes to action: time for real solutions
Canada doesn’t need better vibes – it needs bold policy action. That starts with progressive tax reforms. The federal government must eliminate tax breaks for the real estate sector, such as the preferential treatment of REITs and follow through on its commitment to close the capital gains loophole. It should also introduce windfall and excess profits taxes on corporations that take advantage of crises like the pandemic and continued global instability to generate outsized profits.
These measures would do more than generate revenue, they would send a signal to Canadians that their government is serious about addressing inequality and building a fairer economy. With a federal election looming in 2025, it’s time for all political parties to put tax fairness at the forefront of their platforms. Canadians deserve leaders who prioritize their well-being over corporate profits.
The hardships Canadians face are not overstated. They are the predictable outcome of policies that protect wealth and privilege at the expense of everyone else. Canada’s leaders must choose: continue to protect corporate profits or provide for the millions of Canadians struggling to make ends meet. The solution isn’t a shift in feelings, it’s a shift in policies.
