Wednesday, October 31, 2007

A GST Alternative

Credit to Andrew Coyne for inspiring this idea with his stand in favour of carbon taxes.

Now that Canada is headed toward a 5 per cent GST, is there any turning back? What political player would be able to pass a straight-up GST increase and survive? What circumstance would allow that rabbit to pull out of the hat? Here's a hypothetical that should probably never be played out, but highlights an unusual but perhaps useful direction.

Stephane Dion and the Globe’s 20 surveyed prominent economists have panned the move. The sense is simple: in a hot economy, we don't need to directly stimulate spending with a sales tax cut. Income tax reductions clearly give people more flexibility with their money.

Ignoring the income that it generates for the government, the GST is a useful policy tool for tempering the Canadian economy. Boot it down if you see a recession coming on, kick it up to encourage people to save. In tandem with incentives, it could allow effective market adjustment.

Personal taxes, on the other hand, do not seem as useful. If anything, jumps between brackets encourage people on the margins to turn down higher paying job offers for fear of simply paying more to the government. In a knowledge economy, this is deadly.

Considering the GST is much more useful, why don’t we shift the balance: lets jack up the GST and dump all those savings into deep income tax slashes.

I’m talking significant cuts. Each GST point is worth about $5.5 billion to government coffers. Considering the government took in $134 billion in personal and corporate income taxes in 2005/6, a boost to a10% GST from five would afford a 21 per cent tax reduction across the board, without any distribution to favour lower tax brackets in the reduction.

Imagine keeping one more dollar for every five you pay out. The GST on that $5 would only be 50 cents. Consider the extra burden shifted onto prices for big-ticket items.

Plus, a 10 per cent tax would have more room for effective adjustment. If you reduce the current tax by say, 3 points, to eat up the budget surplus, you are reducing it by 50 per cent (more once the 5 per cent reduction kicks in). Even varying it by fractions of points on an ongoing basis (similar to adjusting the Bank of Canada overnight rate) would allow the government to help fine tune the economy and ward off recessions.

It would, as well, be a nearly irresistible incentive to save and invest, for both business and individuals. Canada is sorely lacking right now on both fronts.

Certain sectors, including the auto and housing industries, could well suffer under the higher GST as people may, at least temporarily, cut back on big spending. The law of diminishing returns suggests that the 10th tax point would not bring in as much as the 5th or 6th. However, we are on strong fiscal footing without the increase, and well placed to further cut income taxes or offer relief for specific industries.

Tuesday, October 30, 2007

Long-needed royalty rework requires too much, too late

A column from the Oct. 29 edition of The Hinton Parklander:

It has become easier to understand why such a ruckus awaited the Oct. 25 announcement of a new royalty regime for Alberta.
An earthquake occurs when built up pressure is released in a snap, shaking everything within a wide distance.
I won’t resort to Liberal leader Kevin Taft’s tired dramatics in saying that waiting seven years to rework royalties amounts to “the most expensive scandal in Canadian history.” But, it is clear that Albertans have suffered from Ralph Klein’s mismanagement of royalties.
You can hear Klein’s frank voice asking why we are complaining, since the vast majority of us have jobs and Alberta is the wealthiest per capita province in the country. Heck, he even sent us all cheques. The credit for making our province rich lies with the corporations that ate the risks, but mostly with the international market and the high price of oil. No rock bottom royalty rate ever equalled the stimulating power of a $90 barrel of oil.
Klein didn’t get in the way, but he hardly paved it. There’s a tremendous infrastructure, human resource and social deficit that today holds back rather than helps industry. Yes, he paid off the debt and kept taxes low, but other oil-wealthy countries managed to amass hundreds of billions of dollars in their reserve funds during the same period. This province has enough money on hand that we should not have to face make-or-break decision between massive job losses and fair economic rent on resources shows.
By ignoring frequent calls from his top bureaucrats and stifled political opposition to slowly adjust royalty rates, Klein has tied Ed Stelmach’s hands in that he cannot raise royalties to a proper level without paying deep economic costs.
Though it hasn’t become clear in the public debate, the real issue with the royalty hike is not the price increase so much as its scale.
Any successful businessperson understands that escalating costs are a reality of the business world, and they plan accordingly. However, few businesses can sustain a 20 per cent increase all at once. It would have been responsible and business-minded for Klein to slowly and reasonably raise royalties over years within a smarter framework and reinvest those extra dollars directly in infrastructure. Improved road and rail access, smartly planned communities, and suitable healthcare and housing are assets to business. A business grows slowly with its profits, and so should the government’s services to those profit motors.
Instead, we face corporate backlash while we sit without many of the infrastructure and service improvements that a smart business plan could have afforded.
I applaud Premier Stelmach for his measured response, especially in considering the needs of the deep well gas industry, but even his good management will not make up for seven wasted years.
Sadly and ironically, Albertans voted for Klein in droves; voter beware.
Please direct questions or comments to

The lie and the allowance

A column from the March 1, 2007 edition of The Uniter

"I firmly believe that the goal I laid out---that Americans will use 20 per cent less gasoline over the next 10 years---is going to be achieved, and here's living proof of how we're going to get there," said George Bush after sticking his head under the hood of an electric-powered SUV parked on the White House lawn, the Associated Press reported this week. This is the much-maligned George W. Bush, former oilman and governor of Texas, talking about alternative fuels in this fashion, talking about the goal he set during his state of the union address.

Granted, weaning America off its dependence on unstable Middle-Eastern and socialist Latin American oil is driving the legislative agenda on alternative fuels more so than some environmental furor; but there are some even more powerful and surprising allies of green economic measures surfacing in the US, namely some large corporations.

The United States Climate Action Partnership, a seemingly unholy union of General Electric (technology, media and finance), Dupont (chemicals), Alcoa (aluminum miner), BP America (oil and gas), Caterpillar (industrial vehicles), along with a few of America's largest electric companies and environmental groups took the message directly to President Bush earlier this month, calling for strict and immediate emissions caps across all large industrial sectors. These corporations, ones that take the lead in pressing for and implementing efficiency standards, are expected to advance and profit in their markets for getting on the reduction bandwagon early.

Painful as it is, I have to look to Kyoto-renegade U.S. for examples of meaningful and significant political dialogue on climate change and the economy. Why? Because Canada is seeing nothing of the sort.

Our politicians, and the daily media covering them, threaten to falsely disassociate environmental action and economic robustness; for all I hear, every ounce of CO2 taken out of the air costs one job. For those who'd believe, and especially the ones that push this acidic misunderstanding, there's some reading you should do.

Last November, Macleans magazine published a sizable article covering a major report from the Conference Board of Canada (the same group whose report calling for free trade between Canada and the US preceded the signing of the FTA, later NAFTA), a damning report that exposes our economy as a mere empty shell.

Indeed, Canada is enjoying low unemployment and low inflation. Currency, and corporate profits, has hit record levels across a number of sectors, and federal surpluses have hit the double digit billions. However, don't be fooled. Even though Canadians work some of the longest hours and take the least vacation time in the world, we are falling behind in our productivity. The big issue: efficiency. Though our raw amount of export has gone up since the mid 1990s, overall, we produce less and make less per unit of input, be that your extra hours of work or pounds of metal we dig out of the boreal forest.

That inefficiency is forcing us to work longer hours and carve up our planet more than needed, but it is also grossly failing to maintain our prosperous status. According to The IMF's September World Economic Outlook, 135 other countries' economies will grow faster than ours in 2007. Our gross domestic product (a measure of how much goods and services we produce) is still among the eight largest in the world, meaning we still punch with the big fellows in the G8 power group of developed countries. As the Macleans article says, though, "Spain, Mexico and Brazil gaining fast, our place at the G8 table is increasingly more symbol than substance. (The Spanish media has been openly advocating that they should replace us in the G8.)"

As young people, we should be crapping our pants. If this trend continues, we'll be working 80 hours a week to make half as much as those slackers in more profitable and efficient countries. So, what's they key to making sure we'll have more than two days vacation per year? The report suggests that we follow the lead of countries like Norway, Ireland, the Netherlands and Denmark, all of whom have long embraced environmental sustainability as a cardinal rule, all of whom are enjoying fantastic growth and rising incomes and standards of living, working fewer hours and pumping less CO2 into our air.

Now, instead of getting real with our sagging economic potential before we run out of oil and beg for international economic support, we are busy hacking back and forth over the golden word: Kyoto.

Its funny that the United States, a non-signatory on the international greenhouse gas pact, has seen some great progress, with certain states catching on to the economic opportunity presented in a green economy---opportunities so clear that massive oil companies like Royal Dutch Shell are drafting energy efficiency and alternative fuels plans. The formula is simple: reducing green house gasses forces you to invent better technology and cut wasteful use of precious resources. More university graduates are employed producing those technologies, and we hack up the earth less because we don't need as much fresh oil, metal, etc. Better yet, you export these technologies to less advanced economies like China and India that don't have the educational and research capacities we do; we make money off of that too, while helping to green those countries. Sounds like the best deal since the Uniter office got a free Red Bull fridge.

New Liberal leader St phane Dion ran on essentially this exact platform during the recent Liberal Leadership. However, he's since been a poor advocate for his cause by focusing his criticism solely on meeting Kyoto targets. The Kyoto protocol, in the end, is only useful because it forces fat and wasteful countries like ours, who use huge amounts of energy per person, to go to the economic gym and back away from the resource buffet. Yet, the Liberal party has been busy using Kyoto targets as a political wedge (fruitlessly, I might add), not questioning the government on its lack of economic foresight in refusing tough measures demanding transformative economic change. Previous Liberal governments under Jean Chr tien and Paul Martin shared the same lack of green economic vision, and perhaps the grand old party's caucus needs some more time to get with it.

The NDP, who arguably and logically may have the best environmental platform (never being scared to stick it to corporations as they are), are trying to come up with some new pamphlet points for next election on how much they affect legislation in the House. Sitting down with the Conservatives to redraft the half-hearted Clean Air Act is a dangerous liaison, as the current document doesn't even address economic remodeling. It will take nothing short of a miracle to beef up the bill to that point, and supporting anything less will be a sellout of the worst kind: purely political.

The Conservatives, environmental Johnny-come-latelies I firmly believe that the goal I laid out---that Americans will use 20 per cent less gasoline over the next 10 years lies and authors of roundly denounced, toothless greenhouse gas legislation, are up to some tricky and sinister business. Perhaps because they are new to the whole belief in climate change, they are still shouting that any significant green house gas reduction in the short and medium term come at the costs of jobs, threatening the crippling of our economy.

"I want to see greenhouse gas emissions reduced, with a growing economy at the same time," Environment Minister John Baird said earlier this month, quoted in the Toronto Star. Prime Minister Stephen Harper is quoted as saying, "As economic policy, the Kyoto Accord is a disaster," in a 2002 speech. They cite job losses in current industries, but fail to account for job creation as new industries arise, ones that pay higher wages. Many powerful and successful CEOs understand the faultiness of Harper's logic, but the national media doesn't have the same affliction of knowledge or care.

Aside from a rash of feature articles dealing with Kyoto and dire predictions of perfect storms and beach-bound polar bears, the day-to-day coverage of the Kyoto debate rarely gathers opposing opinion from groups like the EXCEL Partnership, Canada's answer to the United States Climate Change Partnership; EXCEL's membership includes Canadian miner Teck Cominko and Alberta oil powerhouse EnCana, along with two large environmental groups. In a time where the opposition parties are dropping the ball, we need the national media to step up with some insightful coverage. Politics has always included much that doesn't happen on Parliament Hill, a simple bit of wisdom that national reporters are not grasping in this debate. If politicians alone define the public debate, we are failing as a democracy.

As young people, we suffer the most harm from the sham climate change debate. Just as earlier action on greenhouse gas reduction by the previous Liberal government would have made our lives easier now, delayed action and economic scare-mongering threaten to put us further behind in the race to the pot of sustainability gold at the end of the Kyoto rainbow. We'll be the ones living in a substandard, outdated economy if the Harper economic outlook prevails. We need to put old stereotypes about business, politicians and the populace aside and look boldly at the economic opportunity in front of us, lest we become the resource warehouse of the world, and get paid like stock boys.

It's time to get real about religion and society

A column that appeared in the Sept. 7 edition of The Uniter:

Canadians, without knowing it, were the model of religious tolerance prior to Sept 11 having built a natural resistance to extremism by doing something that may seem strange to many today: embracing religion and belief as legitimate and immovable viewpoints in society. This seems so odd because, in the five years since those horrible events, we've done the exact opposite.

Historically, when compared to the U.S., Canada has had a much lower percentage of population that identify with more fundamentalist views of faith. In particular, the percentages of evangelical and fundamentalist Christians has been many times lower than our Southern neighbors. In Canada, the largest Protestant denominations are the United Church of Canada and the Anglican Church of Canada, both relatively liberal churches. In the U.S., the largest group is the Southern Baptist Convention, which is quite conservative.

When comparing the histories of evangelical and fundamentalist movements in Canada and the U.S., you see a similarly stark difference. These movements have run through harsh extremes of boom and bust, at times sweeping the nation, and at times being driven underground. During the revivalist years of the early 20th century, mass public congregations were held in the streets of major cities. People were reacting to perceived changes in society that required a complete change of purpose and lifestyle. After the Tennessee vs. Scopes "monkey trial" where evolution won out over a foolish presentation of creationism (even by the movement's own standards), fundamentalist Christianity shamefully sunk into an underground that wouldn't resurface until the 1970s, another period where moral values were apparently going too far astray. During that hiatus, a time where their views were ridiculed and suppressed in the mainstream sphere, they focused, became institutionalized with their own education centres and community organizations, and built a core organizing strength. Ignited by Gerry Fallwell's Moral Majority initiative, fundamentalist Christianity reared its head as a well-entrenched network that was ready and able to capture conservative sentiments of the time and actuate them into political power; from that followed Ronald Reagan.

In Canada, there has been little if any such marginalization, no boom and bust; we've ridden the moderate way. Flashpoints that mark defining moments of decision haven't come to fruition in the same manner. Canada has a liberal tradition that has always been more comfortable with pluralism, and many in Canada do trace heritage to some form of religious group, even if they don't always practice. Without a large and defined government or a public to unite against, fundamentalists never built the architecture that turns religious views into outward activism: no threat, no problem.

This system began to attract attention from countries around the world that were dealing with mass migrations of religious citizens into their countries, such as France and Britain. How was it that we were able to keep fundamentalism at a low? Well, our simple solution was beginning to be heard, and implemented...until Sept 11.

Now, it seems too risky to be tolerant of any views that have anything to do with the views of terrorists. Canada's discourse has not, as it should have, focused ever more on its strength of letting believers believe along side people who didn't believe, feeling no outward, public ire between the two. Religion is now the scary element that threatens a liberal pluralistic way of life: an entirely untrue assumption. It is perceived simply as the illogic that is making the world seem so out of grasp for the logical crowd. Yet, this precious logic isn't seeing the value in a very strategic move back to boldly accepting and embracing faith as our history has dictated.

Canada need not take that deep of a look into its stated values and its past to find a way to, once again, be the leader in combating terrorism and its root, extremism. Embracing different religions and ways of that not near the definition of multiculturalism?

The beginning

Before I put too much on the record, let me set it straight.

Its incredibly intimidating to think that these words on this blog will follow me for the rest of my life. I have no clue how they will be used on me, or if I'll even agree with them after time.

However, I'm going on the public record weekly at this point, so I may as well embrace the risk.

Faith-based school flap glazes over bigger identity issue

A column that appeared in the Oct. 15 edition of The Hinton Parklander:

Being a political junkie as I am, I’ve spent an unacceptable portion of my free time recently keeping track of the Ontario election, primarily because of the odd campaign that came about there.
PC leader John Tory’s plan to extend public funding to private religious schools became the leading issue in the campaign, which is odd because Canadian tradition holds that the citizenry cares little about religious issues aside from when they feel threatened by this or that right-wing group gaining power (ask Stockwell Day about a certain purple dinosaur).
Tory was sacrificed at the alter of what has come to be known as the “reasonable accommodation” debate, or how much mainstream society should change to fit non-mainstream ideas, and visa-versa.
Ontarians voted on the issue with their feet by running away from Tory’s campaign in droves. He failed to even win a seat running against, ironically, the Liberal’s education minister.

A similar sentiment in Quebec where Mario Dumont’s won a major electoral breakthrough by becoming the poster boy for social intolerance.
This is all backwards and counterproductive in an era where we are trying to fight intercultural intolerance that breeds blind hatred, and terrorism from that.
Prior to 9/11, Canada was coming to be seen as a model by many countries for our seemingly illogical ability to allow different religious and ethnic groups to do as they wished and not bomb each other.
Canadians’ stay out of the bedroom and out of the temple approach gave a variety of groups space to practice without feeling threatened, and returned to us with drastically lower rates of fundamentalist manifestation than our neighbour to the south. Yet, as in a recent case when a small town felt the urge to pass an anti-stoning ordinance, some seem willing to throw away a brilliantly successful tradition to satisfy ignorant fears.
Government has a role to play in beating back the anti-minority sentiment building in this country. Sadly, the Liberals in Ontario and the Action democratique du Quebec, a conservative, nationalist and populist provincial political party in Quebec, have now scored political points by playing up the fears of an electorate that should, but unfortunately does not, see past an illegitimate fear of different world views in our society.
Letting the majority rule on minority rights is an abomination and like assigning the fox to watch the hens. It is an assault against the spirit of our Charter of Rights and Freedoms that protects every single individual’s rights in this country.
Sacrifice it, lest you be in the minority some day.
Governments who sell to populist fears will be beholden to them for years to come, stripped of their ability to stand up for minority rights as their newly-formed political bases threaten to drop them as they did John Tory.