^^ Harper cancelled the tourist tax rebate. That makes the Canadian tourist industry less competitive, especially when the Canadian Dollar is so strong. We're one of the only places in the world where overseas tourism has gone down.
How many tourists really took advantage of it? I doubt that tourism is down because of a canceled tax rebate. It has more to do with the high Canadian dollar and the tanking US economy which is keeping Americans at home.
And if he really cared about the Ontario car industry, why did he wait until now to announce funding? You'd almost think there was an election campaign going on!
This is exactly my point. I do not like his motivation for this funding....but I find it strange that all who criticize him for not doing something are now on the Conservatives for doing something. You can't have it both ways. Either he should not subsidize the auto industry or he should.
Cutting the GST is not sound fiscal management. It was the worst tax to cut, as you have acknowledged. It was crass politics, not sound fiscal management, but I can 'forgive' Harper this. He did after all have a 'mandate' (as he called it), with a whopping 36% of the ~60% of eligible voters cast a ballot in support of a conservative.
If that's your yardstick, find me a government at the provincial, federal or municipal (Hazel McCallion excepted) level in the last quarter century that has gotten more than 50%. If Liberal supporters really felt that the Conservatives were so evil they would have turned out in droves to prevent their election. You can't not vote and then complain about the outcome.
That's how democracy works.
Cutting GST stimulates spending, which is good in the near term, but over the long haul will have negative implications for Canadian competitiveness. The GST was at least somewhat a tax on foreign goods. Now the tax burden falls more heavily on domestic producers, and less so on foreign producers. Way to stimulate the domestic manufacturing sector!
How is it a tax on foreign goods? Given our incredibly liberal trade practices, very little of what comes into this country gets duties assessed against it. Yet, unlike domestic producers, foreigners aren't paying taxes every step of the way. Foreign goods are only getting taxed at the point of retail where GST is assessed. So we could say the GST hurts domestic producers more. I am not arguing for the GST cut, but your argument against it does not apply. And the point still stands, that for our current economic situation the GST cut was an excellent stimulus.
It will be phased in gradually, over four years, giving plenty of time to adjust. The tax, when fully implemented, is equivalent to $17.20 per barrel of crude ($40 per tonne, 0.43 tonne CO2 per barrel). Not exactly earth shattering, plus it will displace the existing excise tax on gasoline.
I haven't said it would be onerous when steady state is reached. But if you think that our manufacturing sector can become efficient in 4 years you are dreaming. Most companies use time frames of anywhere between 5 and 20 years for capital cost recovery. Phasing in a tax over 4 years would be well inside their capital cycles, and therefore would be devastating. This would be like giving someone 4 years to buy a new car before you jack up the price of gasoline. As presently implemented, a Liberal government would have to give much more than a few measly points off the corporate tax rate to pull of its 'Green Shift'. It would have to give a significant tax cut or risk rising unemployment as good chunks of our manufacturing sector decide now is the right time to move overseas. That being said, its not like they can't tweak the plan to make it better....ie forget that 2012 Kyoto deadline and find a target that industry can actually achieve with less pain.
Frankly, this tax will only be a mild incentive. It's a good start, and it will enhance Canada's competitiveness by attracting foreign investment through lower income tax rates. The Liberals have also committed to lowering the corporate tax rate at the same rate (or perhaps better, with the Green Shift), as the Conservatives. That, to me, means they have a more economy-friendly tax plan.
On this I agree with you....it's just too bad the Liberals did nothing on this front in the decade and a bit that they were in power. I find it more than a little hypocritical to accuse the Conservatives who have been in power for two years, of not doing anything, whey they had that long to get started on Kyoto. And they still haven't come out and explained their failure.
Remember, CO2 is not a 'good' like a car, toothpaste, or a haircut. It's waste: a means to an end. It is way more appropriate to tax the means, waste, than the end, wealth (income/capital tax).
I have never challenged the premise that waste should be taxed so as to encourage efficiency. It's a question of implementation for me.
First thing he did in office was change the rules on income trusts which he said wouldn't be touched severely impacting many retirement plans, increased income tax on Canadian workers, and lowered sales tax on primarily non-necessities imported from China.
I agree that their behaviour on the income trust issue was completely inappropriate. However, I strongly agree that income trust needed to be taxed. The tax leakage from this loophole threatened to undermine the very premise of corporate taxation in this country. I doubt you feel that corporations should be taxed significantly less than you and me. So why is closing this loophole a bad thing.
Increased income tax....of 0.5% for the lowest tax bracket? That's insane, I tell ya!!!! And the only reason they did that is because many of your tax credits....transit passes, charitable donations, etc. are linked to the lowest tax rate. As it is, it is mostly the middle class and upper class that pay most of the taxes in this country while social programs largely target the lower classes. I see no problem with a 0.5% increase so that more can be given towards transit passes and such...
He has since lowered sales tax further and cut income taxes again but now the country has little fiscal room to maneuver with and he is rushing to the polls before people see the deficits or spending/service cuts his tax changes are about to create.
See my previous points about a surplus. They don't necessarily help an economy either. Sucking 10 billion+ a year out of an economy for no reason, is not a good idea. What's more huge surpluses simply encourage wasteful unbudgeted spending as government go on spending sprees with the excess cash. I would rather see the government run small surpluses or deficits in a counter-cyclical fashion, then run surpluses even during a downturn. All that being said, most economists agree that they will get a surplus this year. Even his so called cuts have been fairly mild. What exactly has he cut that has really affected anyone here? The Harper government certainly didnt follow the Chretien government in giving us "the biggest tax cut in Canadian history", largely derived from slashing the Canada Health and Social Transfers.
As to his rushing to the polls....so what? Would any other party have acted differently? I don't think the recession is the fault of the current party. And if the Liberals were in power it would not have been their fault either. The US economy on which we are so reliant is hitting new lows daily, that's bound to have some impact on us. What's more, Alberta's boom has also brought about the onset of the Dutch disease, which is undoubtedly aflicting Ontario. And curing that is going to require tax policies like the Asian and Celtic Tigers.
The GST cuts did not stimulate the economy...
Most economists would disagree with you. Some argued that the government over-stimulated the economy and possibly contributed to inflation. Ideally, the cut would have been timed for a downturn, like now.
an increase in public sector spending stimulated the economy. Tax cuts have reduced the amount that can be spent.
Not quite true. That only applies if you are using deficit spending to execute a Keynesian economic policy during a downturn. Otherwise tax cuts and spending have pretty much the same effect on an economy.....they leave more money in the system.
David Wolf, economist at Merrill Lynch, Canada:
The annualized rate of economic growth was just 0.3% in the second quarter and government spending contributed one percentage point, annualized, to growth, meaning everything else shrank; that is the 78% of spending accounted for by consumers, private investment and net foreign demand.
So we have an economic slowdown? So what? We haven't had a recession in over a decade. And the last US recession barely touched us. So we are overdue for one. Given what's happening in our largest export market, and in several other markets owing a global credit crisis, record energy prices, and record food prices, we should expect some turbulence. It's rather arrogant and naive to think that Canada would go unscathed. And its rather simplistic to blame all of that on the government in power, regardless of the party. All we can demand, is that government do its best to mitigate those factors. And that's largely what i'll be looking for when I cast my ballot....which party can reduce the pain of this upcoming recession for Ontario and Toronto as much as possible.
