Canada has the third-lowest business taxes of ten countries examined in a study released as part of KPMG’s 2008 Competitive Alternatives report. The spin from KPMG has been that “If the provinces follow the federal lead and reduce their rates as well, Canada’s advantage will be enhanced.” Canadians should be asking a different question. If we already have a substantial “tax […]
Read moreBack in the 1960s and 1970s there was a big Canadian pensions debate, centred mainly on the issue of how to address the then pressing problem of poverty and income security in old age. It resulted in the launching of the contributory CPP/QPP and the improvement of the demogrant Old Age Security/ Guaranteed Income Supplement. Public pensions in tandem now […]
Read moreRoutledge has just published a book comparing Australian, Canadian, and Mexican experiences of free trade with the United States. There are three chapters on each country examining long-run socioeconomic development prior to free trade, the specific free trade deals, and future policy alternatives. I wrote the Canadian chapter on the Canada-US Free Trade Agreement and NAFTA. A “pre-print” version follows. […]
Read moreToday at the Canadian Economics Association meetings, the PEF officially awarded the first John Kenneth Galbraith Prize in Economics to co-winners Mel Watkins and Kari Polanyi Levitt. We had a packed room for the event, which featured opening remarks by Jamie Galbraith, and a historical retrospective of their works by Jim Stanford. Below is the text of Mel Watkins’ Lecture. […]
Read moreLast week, Industry Minister Jim Prentice appeared before the Senate Banking, Trade and Commerce Committee to make the case for TILMA as a means of overcoming those dreaded interprovincial trade barriers, examples of which, according to the Minister “are legion”. What examples does the Minister cite? Here is what I can find: For example, some Canadians, such as teachers and […]
Read moreExcellent analysis by Marc and Andrew leaves me with relatively little to add. The Steelworkers and NDP made many of the same points. Budget 2008’s minor new investments in public programs will amount to only one-sixth the value of recent corporate tax cuts during the next fiscal year. Budget 2008 (Table 1.1, page 10) proposes $1.4 billion of new spending […]
Read moreEverybody seems to think that next week’s federal budget will be a pretty boring, stay the course, “prudent” document because there is almost no room for fiscal manouevre. I wonder. True, there is next to no surplus left for 2008-09 due to the big Conservative tax cuts made last Fall. But Flaherty is still sitting on top of about a […]
Read moreA significant challenge in the TILMA debate has been that journalists often uncritically accept the premise that alleged inter-provincial barriers are a serious problem. Murray Campbell bucked this trend in Saturday’s Globe and Mail, where he drew the link between TILMA and last week’s Ontario-Quebec initiative. Electronically, his column appears under the headline “Premiers try to fix something that isn’t […]
Read moreToday, Premiers McGuinty and Charest kicked off “free trade” negotiations between their provinces. The key question is whether this process will be a sweeping “race to the bottom” like the BC-Alberta Trade, Investment and Labour Mobility Agreement (TILMA) or a focused effort to develop common standards in the few areas where problems may exist. As usual, the rhetoric about “inter-provincial […]
Read moreTuesday’s Financial Post featured an op-ed by William Robson, President and CEO of the C. D. Howe Institute, arguing that “The expansion of the public sector in an economy with no slack is squeezing the private sector, driving up interest rates and the dollar in the short run, and threatening Canadian prosperity in the long run.” Today’s Financial Post includes […]
Read moreThe Globe and Mail’s mini-budget coverage was such that, even after Marc’s thoughtful and thorough critique, a couple of important criticisms remain to be made. It identified Bruce Campbell as “executive director of the left-wing Canadian Centre for Policy Alternatives” (page A5). In addition to several economists from banks and finance companies, it quoted representatives of the C. D. Howe Institute, […]
Read moreYesterday, the C. D. Howe Institute released a Backgrounder supporting TILMA by Kathleen Macmillan and Patrick Grady. They make the most sensible case for the deal that I have read, but give short shrift to its pitfalls. They previously co-authored papers on internal trade and labour mobility for a federal conference that I attended. Days after this conference, Grady largely […]
Read moreOn Friday, the Finance Minister and the Treasury Secretary signed the Fifth Protocol of the Canada-US Income Tax Convention. The Canadian government lined up several business organizations in advance to provide endorsements, which have dominated the media coverage. One of these organizations, the C. D. Howe Institute, made the case for the amended treaty through an op-ed in Saturday’s Financial […]
Read moreThe Financial Post has picked up on my response to the C. D. Howe Institute’s Tax Competitiveness Report and corporate-tax brief to the House of Commons Finance Committee. The Canadian Labour Congress submitted this brief, and one by Andrew on personal income taxes, in August before the prorogation of Parliament delayed the committee process.
Read moreIn successfully seeking the 1980 Republican nomination for President, Ronald Reagan embraced the Laffer Curve theory that tax cuts would increase tax revenues. At the time, rival candidate George Bush Sr. derided this notion as “Voodoo economics” and it has been since been discredited many times. Jack Mintz struggles to revive the theory in today’s 2007 Tax Competitiveness Report, declaring […]
Read moreAs noted yesterday, Canadian advocates of corporate-tax cuts have proliferated alternative measures of corporate taxes. The C. D. Howe Institute’s “Tax Competitiveness Program,” which largely consists of papers by Jack Mintz and Duanjie Chen, has focused almost exclusively on marginal effective tax rates (METRs) on capital, expressed as percentages of pre-tax rates of return. There have been a couple of […]
Read moreOn Wednesday, The Globe and Mail ran the headline, “Taxes Are Falling, But Not Here: Global Business Tax Rates Are Dropping, But Canada’s Remain High, KPMG Report Finds,” immediately above a table showing Canadian corporate taxes to be within the lower half of G8 countries. Today, The Globe printed the letter from yours truly that is pasted at the bottom […]
Read moreLast week, the Green Party issued a press release claiming that a “secret government study backs $50 carbon tax”, which is convenient since the Green Party recently endorsed a $50 carbon tax. My initial response to the Green’s carbon tax was one of skepticism, mostly in regards to the likely non-impact on driving, and the flawed emphasis on tax shifting. […]
Read moreIn this month’s Fraser Forum, Robert Knox attacks the critics of TILMA. Knox, who was one of the folks leading the charge for the Agreement on Internal Trade, mostly takes aim at legal interpretations by Ellen Gould and Steven Shrybman that contemplate areas where TILMA’s broad scope could lead to perverse rulings by trade panels. His counter-argument goes something like […]
Read moreA year ago, I was concerned that the Harper government, in the name of “fixing” the “fiscal imbalance”, would endorse ideas coming from the Canadian Council of Chief Executives and the CD Howe Institute for a radical decentralization of fiscal federalism. This would have entailed eliminating the non-equalization transfers to the provinces (that fund health care, post-secondary education and social […]
Read moreRecently, CLC President Ken Georgetti sent the following letter to Jim Flaherty: May 8, 2007 Honourable Jim Flaherty, P.C., M.P. Minister of Finance House of Commons Ottawa, ON K1A 0A6 Dear Minister: On behalf of the Canadian Labour Congress (CLC), I write to express our support for your promise, in Budget 2007, to end the corporate-tax deduction for interest on […]
Read moreA Saskatchewan Federation of Labour Vice-President has reported back from a meeting on TILMA organized by the C. D. Howe Institute.
Read moreOther than the occasional call for Canada to adopt the US dollar, discussion of Canadian monetary policy mainly consists of the C. D. Howe Institute and the Bank of Canada praising inflation targeting. As Thomas Palley reminds us, another perspective exists: The Case Against Inflation Targeting A few months ago the Federal Reserve seemed to be inexorably moving toward adopting […]
Read moreRiddle: When is a Liberal budget, not really a Liberal budget? Answer: When big business loves it! There’s a fascinating sidebar to Jim Flaherty’s big-spending vote-buying budget last week, in the strongly favourable reaction which it received from the business community. All the pundits’ complaints about the budget being “more Liberal than the Liberals” are actually welcomed by the Tories, […]
Read moreYesterday, Finance Canada released “Tax Expenditures and Evaluations 2006.” The tax-expenditure figures confirm Andrew’s suggestion that the partial inclusion of capital gains now costs the federal government about $3 billion per year of forgone personal taxes: the 2006 projection is $3.1 billion. This partial inclusion cost an additional $3.4 billion of forgone corporate taxes that year. By comparison, the research-and-development […]
Read moreThis afternoon, I attended Kenneth McKenzie’s presentation at Industry Canada on “Taxes, R&D and Enterprise Formation.” To a large extent, it was based on his C. D. Howe Institute Commentary. His main message is that governments seeking to promote R&D can “push” by reducing its cost through incentives (i.e. subsidies) or “pull” by increasing its benefit through lower taxes on […]
Read moreThis is bad news indeed. Right-wingers are no strangers to the hallowed halls of the Department of Finance (Jack Mintz held this position in the past before heading off to the CD Howe Institute), but for my money Crowley is much more a Fraser Institute clone right-wing ideologue than credible professional economist. He has been a strong opponent of minimum […]
Read moreThe Conservatives are at it again. As reported in the Globe and Mail on October 31, federal Finance Minister Flaherty is reviving and polishing-up the Conservative Party’s ill-conceived election proposal to end taxation of individual capital gains if the proceeds are re-invested. Light taxation of capital gains compared to wages is undoubtedly a gift to the rich. In the 2003 […]
Read moreI wrote a recent column for the Globe and Mail on the issue of working hours. It was a repsonse to a report from the Institute for Competitiveness and Prosperity that bemoaned that Ontarians worked significantly less hours than Americans (about 130 hours less per year, on average). In the Institute’s view, this makes Ontarians $3700 less “prosperous” per year […]
Read moreThe Howe released today yet another study on marginal effective tax rates on business (METRs) by Jack Mintz today, this time calculating METRs for many countries. http://www.cdhowe.org/pdf/ebrief_34.pdf The CD Howe’s METR findings and methodology seem to be taken at face-value almost universally these days eg cited by the Department of Finance and the latest OECD Economic Review of Canada. Yet […]
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