[Prometheus The Supremo]

don't you guys watch the commercials? steven harper knows where he stands. what else do you want?

 

[jade_lee]

With potentially more oil than Saudi and half the population it'll be 1AB$ = 5 CA$. I have always thought that the Albertans had much more of a reason to separate than the Quebecers....

Now that is not being a solid Canadian as I see it......this is a good example why this country is so divided, we live among people who would sell out their own country for the power of a buck.

 

[Hydrogen]

At least it's good to see that the Conservatives are finally acknowledging that what the Liberals did while in power was not so bad after all. That, or the Conservatives are just like (or trying to be like) the Liberals.

And look who's complaining!


An $8.8-billion roll in spending announcements

BRUCE CHEADLE
The Canadian Press
September 5, 2008 at 6:56 PM EDT

OTTAWA — The Conservative government maintained there's nothing untoward in trumpeting projects on the eve of a federal election, even as it heralded a fresh billion-dollars' worth of taxpayer-funded largesse Friday.

“It's the business of government,†said Chisholm Pothier, a spokesman for Finance Minister Jim Flaherty.

With Canada's faltering economy set to be a pivotal issue in an autumn election campaign that's already under way in everything but name, one of this country's traditional pre-writ ploys is in full swing.

Half a billion dollars for Canadian Forces Base Trenton, Ont., and another $140-million for Canadian Forces Base Gagetown, N.B.; $279-million into a Manitoba building fund and another $42.5-million for the province's roads; $3-million in security grants – it was all in a day's work for the busy Harper cabinet.

Even before Friday's spending crescendo, the penny-pinching Canadian Taxpayers Federation had compiled a list of almost 300 Tory announcements totalling $8.8-billion since June.

The NDP says it tracked more than $6-billion in the last week alone – and provided a spreadsheet to prove it.

“As opposition, the Conservatives lampooned the Liberals for doing this kind of shameless pre-election spending,†said taxpayer federation spokesman Adam Taylor.

“Now, lo and behold, the Conservatives in government are doing the exact same thing. It seems no matter who's in power, all politicians play this little pre-election game.â€

Mr. Harper will go to Gov. Gen. Michaêlle Jean on Sunday morning seeking the dissolution of Parliament for an Oct. 14 election date.

The economy and its stewardship will be a key issue, Mr. Harper's officials told reporters Friday at a not-for-attribution briefing at the Prime Minister's Office.

Voters will have to decide “which party leader is most like them,†said the anonymous Tory official.

He portrayed Mr. Harper as a “minivan-driving hockey dad from the suburbs†facing Liberal Leader Stéphane Dion, an “elitist professor†steeped in dogma and theory.

Left unmentioned was Mr. Harper's time spent in academia, and his master's thesis in economics from the University of Calgary – which, ironically, looked at the impact of political cycles and pre-election spending sprees on federal budgets.

The taxpayers' federation noted that the Conservative party website dutifully tracked Liberal pre-election spending before the 2006 election.

“They implied there was something wrong with that and that it was clear [Liberals] were up to shameless pork-barrelling,†said Mr. Taylor. “Now that they're doing exactly the same thing, their credibility on that is out the window.â€

Not so, responded Mr. Pothier.

All the freshly announced spending has been budgeted for, approved by Parliament and previously announced – some of it going all the way back to the previous Liberal government, said Mr. Flaherty's spokesman.

“The Liberals on the eve of an election would make all sorts of new spending announcements,†argued Mr. Pothier.

“These are not new spending announcements. These were all on the public record before.â€

Mr. Taylor agreed the Liberal spree before the 2006 vote exceeded the current Tory count. But he maintained that even legitimate spending, such as $4 billion in infrastructure for Quebec projects announced this week, is suspect.

“Don't tell me that doesn't have something to do with the federal election,†said the taxpayer watchdog.

“It seems curious on the eve of an election that all this money is released by the federal government. People should be cynical.â€

Mr. Harper himself made the same point just before the 2006 campaign: Liberals would have to explain on the election trail “why, if any of these things are important to them, they didn't do any of them long before this.â€

New Democrat MP Thomas Mulcair said some of the spending announcements are particularly galling because they directly contradict long-held and espoused Tory dogma about not picking winners and losers in the marketplace.

New Democrats pitched targeted help for the auto industry last year, he noted, but the Conservatives dismissed the notion out of hand.

“Then on the eve of the election they realize they have ridings in play and they do what we've asked them to do. Of course it has everything to do with the election.â€

Mr. Mulcair said this kind of budgeting “destabilizes†what had been “a formerly balanced economy.â€

Even the Liberals, past masters of the pre-election spending tsunami, took a few licks at the Tory largesse on Friday.

“It's very much what a government on the verge of extinction tries to do,†said Liberal MP Bob Rae.

Mr. Rae questioned whether Mr. Harper is spending Canada into a deficit in a bid to win re-election.

“He came in with a $12-billion surplus. We've been running eficits the last few months. It's a very troubling situation when you think about where we've been.â€

 

[kEiThZ]

Now that is not being a solid Canadian as I see it......this is a good example why this country is so divided, we live among people who would sell out their own country for the power of a buck.

I think you missed my point that they are much more economically independent than the rest of the country...and that its Albertan oil that's holding the dollar up....

 

[kEiThZ]

Harper good for economy?

Let's see our economy was stable until the Conservative/Reformers took over. Now it's facing trouble and Harper has been slow to acknowledge this.
...
Given this preformance people think Harper is more qualified than Dion? Harper's steady hand is steering up onto the rocks.

I agree that the comments regarding Ontario's economy were unfair. But you should recognize that for the politics that it was. It was a response to the attacks that Queen's Park were making....so try to put that in context.

As to Harper's supposed mismanagement....what's he done wrong? Point it out. Show me one specific policy that's ruined the economy. The GST cut provided more stimulus per capita than all the US tax cuts last year combined. The simple fact is that our largest export market (the US) is tanking. Harper has his faults but I am not going to blame the tanking of the US economy on him. And now apparently when he is trying to invest Ontario...that's also wrong. So doing something and not doing something are both wrong?

As for Dion...the Green Shift might be a good idea for the boom times. What impact do you think re-jigging the tax structure is going to have if we are in the midst of a recession?

 

[urbanfan89]

^^ 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.

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!

 

[afransen]

As to Harper's supposed mismanagement....what's he done wrong? Point it out. Show me one specific policy that's ruined the economy. The GST cut provided more stimulus per capita than all the US tax cuts last year combined. The simple fact is that our largest export market (the US) is tanking.

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. 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!

As for Dion...the Green Shift might be a good idea for the boom times. What impact do you think re-jigging the tax structure is going to have if we are in the midst of a recession?

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.

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.

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).

 

[EnviroTO]

As to Harper's supposed mismanagement....what's he done wrong? Point it out. Show me one specific policy that's ruined the economy. The GST cut provided more stimulus per capita than all the US tax cuts last year combined.

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. 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. The GST cuts did not stimulate the economy... an increase in public sector spending stimulated the economy. Tax cuts have reduced the amount that can be spent.

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.

 

[Dichotomy]

In an ideal world it would be nice to shrug off our manufacturing base and only allow 'clean' industries to operate here, but this is not an ideal world.

Let us not forget that the main reason North America won WWII was because when Detroit (figuratively speaking) transformed from auto manufacturing to munitions and tanks, North America could out-build and out-innovate the Axis Powers 4-1. The manufacturing capacity of the 'rust belt' and southern Ontario was nothing short of awesome.

I have made this point on various car-based forums that those who apparently could care less about the demise of the Detroit Big Three should remember this point. When Roosevelt went to Detroit and commanded they stop building cars, the shift of production was virtually instantaneous.

In a future war, where will a future President of the US get their tanks and airplanes from? China? Japan? Considering its entirely plausible a future war is going to involve the former, we should tread very carefully when we make light of job losses in Oshawa and Oakville.

If we lose our manufacturing base, we lose all the attendant technologies that go with it. Look at all the patents and intellectual property that Canada has already lost, mostly to the U.S. Avro Arrow? We damned near lost the Canadarm.

Where will future engineering students work if all the manufacturing jobs have been offshored to Asia and Mexico?

This may seem to be overstating the case for a few jobs lost at Ford, but we are selling all of our futures up the river if we lose our manufacturing.

 

[kEiThZ]

^^ 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.

 

[afransen]

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.

Harper gained the smallest minority in history, and took that to mean he had carte blanche. He played chicken with an opposition that couldn't afford to stage an election, because they were broke. He very deliberately avoided any real attempt at collaboration, which I would argue is what the public asked for by giving Harper the weakest mandate ever. I don't think that behaving in this way because the opposition parties are financially stressed is particularly in the spirit of democracy.

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.

Think of it this way, the higher the value added tax (GST), and the lower the corporate tax, the more we can shift the tax burden onto foreign producers and off of domestic producers. This makes our producers more competitive, and better able to export goods, while simultaneously making imports relatively less attractive. It's tipping the playing field in favour of our firms. Don't believe me? I think the C.D. Howe website has a paper on the subject. I'll repeat, the GST cut was the worst tax to cut. The least bang for the buck. Yes, cutting tax was a good thing--they cut the wrong tax. Ask any economist.

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.

If companies are making 20 year capital investment decisions without considerations for mitigating the risk of future energy cost increases, they are foolish and neglecting their duty to shareholders.

The tax will not be devastating, as you say. The price of oil has already declined from its peak by well over the size of the carbon tax. From present prices, the carbon tax works out to a 3.8% annualized increase in the cost of oil. If this would be devastating, the price spike of the past year must have caused the Canadian economy to close up shop for good.

I think you're also understating the effect of reducing corporate income and capital taxes, and way overstating the effect of the carbon tax. The industries that might be threatened by the carbon tax are those which aren't particularly good for our economy, such as pulp and paper. Most other industries, the ones that actually form the basis of our economy, would do quite well.

 

[Hydrogen]

Remember, CO2 is not a 'good' like a car, toothpaste, or a haircut.

CO2 is very much a good; it is essential to life on this planet. The great majority of it is produced naturally so it can hardly be considered a pollutant. The globally averaged atmospheric temperature has been dropping for eight years, showing no significant correlation between human CO2 emissions and temperature. Taxing it is pointless.

 

[kEiThZ]

Harper gained the smallest minority in history, and took that to mean he had carte blanche. He played chicken with an opposition that couldn't afford to stage an election, because they were broke. He very deliberately avoided any real attempt at collaboration, which I would argue is what the public asked for by giving Harper the weakest mandate ever. I don't think that behaving in this way because the opposition parties are financially stressed is particularly in the spirit of democracy.

It is the duty of the opposition to OPPOSE the government if they think the ruling party is overstepping its bounds. I don't see anything undemocratic in pushing bills through parliament. If the Liberals were in financial distress after a decade in power, that's their fault and problem. I don't think the ruling party should be going gentle on the opposition parties just because they are weak. That would be undemocratic. At the end of the day, they were elected on their platform, and we the voters expect that to be pushed through.

Think of it this way, the higher the value added tax (GST), and the lower the corporate tax, the more we can shift the tax burden onto foreign producers and off of domestic producers. This makes our producers more competitive, and better able to export goods, while simultaneously making imports relatively less attractive. It's tipping the playing field in favour of our firms. Don't believe me? I think the C.D. Howe website has a paper on the subject. I'll repeat, the GST cut was the worst tax to cut. The least bang for the buck. Yes, cutting tax was a good thing--they cut the wrong tax. Ask any economist.

You are muddling two concepts. I agree that taxing consumption is an effective economic policy and method of raising revenue. However, your argument that the GST helps hold off foreign competition is flawed. It's trade barriers such as duties that hold off foreign competition. The GST is especially ineffective if it applies to products that were manufactured in other (lower tax) jurisdictions. For example, most countries don't tax exports. Now if we have free trade with one of these countries, the exports come here and are only taxed at the point of sale, when GST is applied. Conversely, the domestic manufacturer has to pay GST for his supplies, and he charges GST to the retailer who then also charges GST to the consumer. That's exactly what makes the GST so effective, that it takes a cut at every step of the process. And that's exactly what makes it ineffective against many imports.

Another argument that you have ignored for the GST cut is that sales taxes are regressive. The less you make, the worse the sales tax is for you because you are likely paying sales tax on many 'essentials'. For most low income Canadians who pay little to no tax, the GST cut was the only tax cut they could get.

If companies are making 20 year capital investment decisions without considerations for mitigating the risk of future energy cost increases, they are foolish and neglecting their duty to shareholders.

No company can predict energy prices that far down the road. But there are many things you can't buy based on a 4-5 year capital cycle. You probably have no experience in any major or heavy industry so you are unfamiliar with this. Airlines buy aircraft expecting 20 years out of them. Should Air Canada ground all its aircraft in 4 years? Likewise for transit services like the TTC which expect 12-15 years life expectancy at minimum out of a bus. And that's just the transport sector. As a general rule, the more expensive and complex the machinery, the longer the capital cost recovery period. 4 years is ridiculously short. And they have chosen this time frame just so can they claim they tried to hit the Kyoto deadline. It's stupid. What they should have done was set much higher targets with a longer deadline...10 years for example, something that was acceptable for the industry's capital cycle.

The tax will not be devastating, as you say. The price of oil has already declined from its peak by well over the size of the carbon tax. From present prices, the carbon tax works out to a 3.8% annualized increase in the cost of oil. If this would be devastating, the price spike of the past year must have caused the Canadian economy to close up shop for good.

Large sectors of the economy are already taking a hit from high energy prices....Ontario is in quite a funk from this and the high dollar. That being said, I am not against a carbon tax, but 4 years is much too short. It's an unrealistic target that they won't meet, and they will make industry pay for their failure. If you work in manufacturing, you might want to start re-training.

I think you're also understating the effect of reducing corporate income and capital taxes, and way overstating the effect of the carbon tax. The industries that might be threatened by the carbon tax are those which aren't particularly good for our economy, such as pulp and paper. Most other industries, the ones that actually form the basis of our economy, would do quite well.

I have never challenged cutting corporate taxes....and I haven't challenged the premise of the carbon tax. What I have challenged are the proposed implementation plans under the Green Shift.

As for your view that certain sectors aren't good for our economy, such as "pulp and paper"....have you checked where you live? This is Canada. We are a country that has a resource based economy. That will never change. If you want to improve the manufacturing base, how do you plan on doing it when you slap on corporate taxes, carbon taxes, payroll taxes, etc. and China does none of that, isn't a Kyoto signatory, and exempts the company from most labour and environmental regs. In my view, Kyoto as presently designed will just drive industry away from the first world, to the developing world.... And if you want a knowledge based sector, please tell me how you compete with the likes of India, which has the largest educated english speaking population in the world. And in case you didnt know the IT industry is yet more energy intensive than any light indsutry.

All that said, I am not opposed to the premise of the Green Shift. But let's not pretend its a benign thing to shift the entire corporate tax base from income to energy as the yardstick in 4 years. I am hoping the Liberals are bluffing on the timeframe and they'll come to their senses once in power.

 

[Glen]

Keithz,

You should google input tax credit.

 

[CDL.TO]

You are muddling two concepts. I agree that taxing consumption is an effective economic policy and method of raising revenue. However, your argument that the GST helps hold off foreign competition is flawed. It's trade barriers such as duties that hold off foreign competition. The GST is especially ineffective if it applies to products that were manufactured in other (lower tax) jurisdictions. For example, most countries don't tax exports. Now if we have free trade with one of these countries, the exports come here and are only taxed at the point of sale, when GST is applied. Conversely, the domestic manufacturer has to pay GST for his supplies, and he charges GST to the retailer who then also charges GST to the consumer. That's exactly what makes the GST so effective, that it takes a cut at every step of the process. And that's exactly what makes it ineffective against many imports.

That isn't how the GST works. Only the final consumer has to pay GST (and thus is paying a tax on all the value that was added along the way). It does NOT take a cut at every step of the process (and therefore is not a tax on a tax). Producers get credited the GST that they pay. So only Canadian producers pay Canadian corporate tax, but both local goods and imports pay the same level of GST. The MST, which the GST replaced, did work the way you describe and reduced our manufacturing competitiveness.