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Northern Insight: Ignorance occasionally has a purpose

Franklin D. Roosevelt, “Taxes, after all, are dues that we pay for the privileges of membership in an organized society.”

If you’re older than 30, you remember the nineties. Hard times, according to Milton Friedman, were produced by government mismanagement rather than by any inherent instability of the private economy and mismanagement is what occurred in BC for the decade that ended May 2001. Business writer John Greenwood recounted the disaster in a 2005 piece for the National Post. “…By the late 1990s, mining — once an engine of the economy — had shrunk to a point were companies (Read more…)

Political Eh-conomy: Where’s the tax in BC’s carbon tax?

British Columbia’s carbon tax has been getting some high praise lately. A recent article in the Atlantic called it “the crown jewel of North American climate policy”. Such assessments need some tempering. BC’s carbon tax can tell us important things about the limits of fiscal policy today, which in turn questions the potential it has for fostering significant environmental change.

Tales of the tax’s effectiveness focus on its environmental impacts. Almost six years since its introduction, it is indisputable that the carbon tax has had some impact on resource use and emissions. This is clearly a good thing. There is (Read more…)

Political Eh-conomy: Published elsewhere: Ontario is no California when it comes to debt

The Toronto Star just published an article I wrote in response to claims made by the Fraser Institute and the Toronto Sun that Ontario has a runaway debt problem worse than California’s.

The short version: I call BS. The slightly longer version: California has constraints, such as limits on the size of debt and difficulties in raising new taxes, that have severely hampered its ability to take on and manage debt. It has a smaller debt than Ontario on all measures but much worse credit standing. Ontario, on the other hand, still has a lot of flexibility to deal with (Read more…)

The Progressive Economics Forum: Flaherty’s Legacy: Ideological, reckless and just plain lucky

This piece was originally published at the Globe and Mail’s online Report on Business feature, EconomyLab.

There are two reasons why it is difficult to comment on the legacy of a finance minister.

1) It is a tremendously challenging job, anywhere, any time. Stewarding one of the largest economies in the world through a global economic crisis is no cakewalk, and it has clearly taken a toll on Jim Flaherty. (Canada has fallen from 8th to 11th largest economy since 2006.) Critiquing this performance, when so many factors are beyond an individual’s control, and so much soul-searching takes (Read more…)

cmkl: Flaherty’s legacy? Ideological, reckless and just plain lucky – Armine Yalnizyan

In the people’s republic of Chris, Armine Yalnizyan is finance minister. I really love how she dissects this “Jim Flaherty steady hand on the tiller” narrative that so many commercial media outlets are building now that he’s resigned. I love how she looks at the policies and their effects rather than just loading up the […]

The Progressive Economics Forum: BC proposes LNG tax

I posted this on CCPA’s BC Policy Note blog but others across Canada should pay attention to BC’s quest for LNG gold. I’d also recommend this comparison of the Quebec and BC budgets by Michal Rozworski, which highlights the stubborn emphasis on natural resource development in both budgets. It’s like the tax cut culture has so permeated Canadian politics that our political class cannot see beyond the lure of resource revenues to pay for essential services. Bad fiscal policy and bad environmental policy, not even good policy in terms of job creation, but seemingly good politics in the Age of (Read more…)

The Progressive Economics Forum: Affordable Housing and Homelesness

This morning I gave a presentation to an church group in Ottawa on affordable housing and homelessness. My slides can be downloaded here.

Points I raised in the presentation include the following:

-Though government provides subsidizes to some low-income households for housing, it is important to be mindful of the considerable funding available for Canadian homeowners as well (including for high-income homeowners). For example, there is no taxation on the capital gains raised from the sale of a person’s primary residence. On an annual basis in Canada, this tax exemption costs the public treasury almost $2 billion.

(Read more…)

The Progressive Economics Forum: Income Splitting Déjà Vu

This blog’s unofficial slogan has been “Tomorrow’s conventional wisdom, today.” After this week’s Conservative backpedaling on income splitting, we may need to change it to “Today’s conventional wisdom, seven years ago.” Or we could just stick with “You read it here first.”

My first-ever blog post, Income Splitting Redux, argued that this tax policy “would benefit an affluent minority at the expense of important public programs and create a disincentive for women to engage in paid employment.” I made the same case in an opinion editorial published in The Ottawa Citizen seven years ago this month (Read more…)

The Progressive Economics Forum: Missing In Action: Federal Budget 2014

Here’s the first section of the budget summary and analysis I’ve prepared for CUPE.

The full version is on-line on CUPE’s website at http://cupe.ca/economics/missing-action-federal-budget-2014 together with CUPE’s press release at: http://cupe.ca/economics/federal-budget-2014-help-hurt-canadian

Missing In Action: Federal Budget 2014 CUPE Federal Budget 2014 Summary and Response

Conservatives ignore pressing economic needs with a Do-little budget

Using more of their doublespeak, the Harper government calls the 2014 federal budget “The Road to Balance: Creating Jobs and Opportunities.” Little could be further from the truth. Instead it’s a budget that glosses over the problems facing Canadian workers and continues to (Read more…)

The Progressive Economics Forum: Do High Tuition Fees Make for Good Public Policy?

This afternoon I gave a presentation to Professor Ted Jackson’s graduate seminar course on higher education, taught in Carleton University’s School of Public Policy and Administration. The link to my slide deck, titled “The Political Economy of Post-Secondary Education in Canada,” can be found here.

Points I raised in the presentation include the following:

-Tuition fees have been rising in Canada for roughly the past three decades. Yet, individuals in the 25-44 age demographic have the highest levels of household debt in Canada. This raises an important question: Is it good public policy to be saddling this demographic (Read more…)

The Progressive Economics Forum: The relentlessly hypocritical Gwyn Morgan

Another column by Gwyn Morgan in the Globe and Mail and another case of a 0.1 percenter telling the rest of us to “Do as I say, not as I do.”

This time, it’s Gwyn recycling trash from the CFIB and Fraser Institute to claim defined benefit pensions for public sector workers are too generous and are simply unaffordable, and that governments need to “defy union resistance to pension-plan changes by all available means, including back-to-work legislation and imposed contracts that reflect fiscal realities. And the strongest tool available is the reduction of union monopoly power through private-sector contracting (Read more…)

The Progressive Economics Forum: Capital Gains and the Incomes of the Wealthy

Yesterday’s release from Statistics Canada on the income share of the wealthy generated some interesting coverage and commentary. It reported that the top 1%’s share of total income in Canada remained steady that year in Canada, at 10.6 percent — but still significantly higher than in the 1980s.

Most observers did not mention, however, that this oft-cited income share statistic does NOT include capital gains in the calculation of incomes and income shares. A capital gain, of course, is a realized benefit resulting from the disposition of an asset (buy low, sell high … unless you are a (Read more…)

The Progressive Economics Forum: Canada’s (not so incredible) shrinking federal government

Buried in the federal government’s recent Update of Economic and Fiscal Projections are figures showing the Harper government is set to squeeze federal government’s role to the smallest it has been in seventy years. (Bill Curry at the Globe also just wrote about this, but without figures further back than 1958).

Total federal government spending as a share of the economy is projected to drop to a 14% share of the economy by 2018/19. This would be the lowest since at least 1948. Because the government has tied the federal public service up in knots, actual spending will likely (Read more…)

Northern Insight: Baksheesh, bustarella, schmiergeld, kuroi kiri

What’s in a name? That which we call a rose, by any other name would smell as sweet. – William Shakespeare

Organizations that aim to safeguard assets create effective operational and audit controls. They also respect codes of ethics like that of SCMA, a group of professionals working in procurement, contract administration and materials management. It states, “…members must ensure that the objectivity of their decisions is not compromised or unduly influenced by the acceptance of gifts, gratuities, or hospitalities of any kind. Members should be discerning in their business and social relationships and activities…”

Protections are particularly (Read more…)

Northern Insight: Subsidies for some, higher fees for others

Despite claims that natural gas will last almost forever and drop massive wealth into BC’s treasury, I’ve demonstrated here, with numbers taken from finance ministry documents, that natural gas production contributes little to BC’s public treasury through royalties.

The amount that might otherwise be payable for current production is reduced by credits allowed gas companies; credits that amount to public subsidies of the fossil fuel industry. At the end of fiscal year 2013, $934 million of credits that will reduce future natural gas royalties remain outstanding. Despite previous complaints of Auditor General John Doyle, government has not recorded this amount (Read more…)

Northern Insight: Resources giveaway

After Telus, Teck Resources Limited ranks as the largest BC company, by sales. In three years 2010 to 2012, Teck booked revenues of $31 billion, almost half from the sale of BC coal. According to audited financial statements, Teck accrued resources tax of less than $600 million, under 2% of gross revenue.

In the same period, 2010 to 2013, the British Columbia government collected $8 billion from all exploitation of resources, including metals and minerals, oil and gas, forestry, water, land tenures and other.

Right-wing partisans often denounce the transfer of wealth from the rich to the poor. They fall (Read more…)

Northern Insight: Talking with Ian Jessop, CFAX 1070 Friday 1pm

I’ll be with Ian Jessop on CFAX 1070 today, discussing natural resource revenues accruing to the British Columbia government.

In the last seven years, provincial revenues from ferry fares and medical services premiums increased almost 40% but natural gas royalties declined by 91%. Actually, that doesn’t tell the whole story because government provides credits to gas producers that will offset future royalties. BC Liberals choose not to record the accumulated liability for these credits.  They amount to $934 million in 2013, an increase of $160 million in the liability during the fiscal year. Were generally accepted accounting principles in (Read more…)

Northern Insight: Of business, by business, for business

British Columbia’s revenue from natural resources totalled $4 billion in fiscal year 2001. The Bank of Canada inflation calculator shows the equivalent in current dollars is $5 billion.

Natural resource revenue received by the province in fiscal 2013 was $2.5 billion, half the value, in constant dollars, returned to the province by the resource sector when BC Liberals took office.

Petroleum, natural gas and minerals returned $1.3 billion in 2013 compared to $2.4 billion in 2001, adjusted for inflation. That seems strange considering commodity prices are up by well more than inflation. Examples:

BC coal production: ( (Read more…)

Northern Insight: "Revenue neutral" carbon taxes – hollow claim

In its June budget update, the BC Government said,

“When the carbon tax was introduced, one of the key principles was that the tax would be revenue neutral – that all carbon tax revenue would be returned to individuals and businesses through reductions in other taxes and not used to fund government programs. The principle of revenue neutrality will be maintained.”

How do we know the carbon tax is revenue neutral? Well, because the BC Liberals say it is. They cannot demonstrate reductions – except in corporate accounts – so the only available claim is that citizens would have (Read more…)

Northern Insight: They assume we’re feckless idiots and they might be right.

Before the May 2013 election, BC Liberals promised the entire provincial debt, budgeted this year at $62.5 billion, could be eliminated within 15 years with government proceeds of natural gas production.

In fact, the time frame is likely a bit longer. Actually, more than 500 times longer.

The most recent financial reports show natural gas royalties contributed $169 million to BC government revenues in the fiscal year ended March 31, 2013. However, drilling credits owed producers grew by $161 million in the same period.

Failure to record credits was one of the issues that prevented Auditor General John (Read more…)

Northern Insight: That was then; this is now

Much of my youth was spent in the coastal mill town of Powell River. Paying excellent wages, the pulp, paper and lumber company directly employed almost 2,500 workers. It hired the town’s young people and provided trades training through apprenticeships and skill development programs. Managers and supervisors were promoted from the regular workforce. Retirees lived their final years with reasonable pensions that included extended healthcare and pharmaceutical coverage.

Small enterprises in Powell River had the company as their best customer because it bought many supplies and services from nearby businesses. It paid substantial property taxes to the municipality and contributed (Read more…)

calgaryliberal.com: University of Calgary Liberals mentioned in Wikileaks

Turns out the Young Liberals at the University of Calgary is seen as an organization of real influence by the US State Department. Below is a quote from Wikileaks that talks about how the UofC Liberals were able to influence the policy of the party and shake up a whole other party. 6. (SBU) The […]

The Progressive Economics Forum: Why Is Tom Mulcair Opposed to Tax Increases?

A recent online article suggests that Federal NDP Leader Thomas Mulcair is opposed to increasing federal tax rates. I find this quite surprising.

According to the August 8 article:

Mulcair seemed surprised when he was asked if taxes would go up under an NDP government.

“You’re the first person who’s ever asked me that,” he said, adding quickly that they most definitely won’t.

“I am categorical on that,” he said. “Several provinces are now at the 50 per cent rate. Beyond that, you’re not talking taxation; you’re talking confiscation. And that is never going to be part of my policies, (Read more…)

The Progressive Economics Forum: Funding Cuts to Alberta’s PSE Sector: There Are Alternatives

It has recently been reported that the University of Alberta wants to “reopen two-year collective agreements” with faculty and staff “to help the university balance its budget…”

This appears to be in direct response to Alberta’s provincial government announcing in its March budget that there would be a “7% cut to operating grants to universities, colleges, and technical institutes.”

This strikes me as a curious turn of events, for several reasons.

-Alberta’s top income tax rate (i.e. the provincial share) is a mere 10%. This is the lowest of any Canadian province or territory. By contrast, (Read more…)

The Progressive Economics Forum: How Offshore Tax Havens Destroy Governments

Last fall, Greek magazine editor Kostas Vaxevanis published in his magazine Hot Doc a list of 2,000 wealthy Greeks who were hiding taxable savings in the Geneva branch of HSBC. The list had been furnished years earlier by the then French finance Minister Christine Lagarde to the Greek government, who did nothing in regards to chasing after the money or the offenders (the list has since been labelled the “Lagarde List”). In fact, one former Greek finance minister, George Papaconstantinou, claimed that he had “lost” the list. He is currently being investigated by Greek’s parliament for altering the list by (Read more…)