As economics professors, we cannot resist grading Finance Minister Bill Morneau on the package of corporate tax changes announced in this week’s fiscal update.
It’s a B-plus, which is not bad at all. But there’s room for improvement still. Here’s how.
First, the good. Canada had to act, following the big corporate tax rate cut and other changes in the United States earlier this year. Standing pat would have risked a loss of corporate investment and tax revenue to south of the border.
But Mr. Morneau was wise to resist matching the big U.S. tax rate cut, which some in the business community have been calling for. That would have been a mistake.
For one thing, it would be expensive. A rate reduction of 10…
On Oct. 17, Canada will be the second country in the world to have fully legalized production and retail distribution of recreational marijuana. There will be considerable international interest in the Canadian experiment, in order to understand what works and what does not. One of the prime objectives of legalization was to stamp out the black market. However, it is now clear that this is extremely unlikely. Both federal and different provincial governments should accept responsibility for this.
Black markets exist if there is insufficient legal supply or if they can offer comparable goods at lower cost. Based on available data on the number of licensed producers and medical-marijuana production and inventory levels, we estimate…
Since the 2008-09 recession, the unemployment rate has fallen to prerecession levels. Unprecedentedly, the employment rate has also trended downward, raising questions about the health of the labour market. It may seem odd for both of these metrics to go down at the same time, but there are circumstances in which this can happen.
An aging population is the main factor explaining the trend. Increases in employment of seniors were not high enough to reverse the decline in overall employment. To reverse the trend, we need policies that encourage greater labour-force participation, particularly among seniors.
Labour market indicators such as unemployment and employment rates are useful metrics for assessing the…
