Brian Lewis – This is No Time for pre-Election Goodies

Alex Laurin and Nick Dahir – Don’t count capital gains tax revenues before they hatch

Published in the Financial Post. 

April’s federal budget announced significant changes to capital gains taxes, projecting an additional $10.6 billion in corporate income tax (CIT) and $8.8 billion in personal income tax (PIT) over the next five years. But our recent analysis shows these estimates are highly uncertain and rest on a number of assumptions that may not hold true. As Parliament considers enshrining these tax changes into law, legislators should look beyond projected revenues and focus on ensuring that tax policy supports the healthy and dynamic economy Canadians need.

Effective June 25, the capital gains inclusion rate for corporations rose from one-half to two-thirds. For individual taxpayers, only gains…

Brian Lewis – What to Watch for in the Ford Government’s Fall Economic Statement

Published in TVO Today.

Ontario’s upcoming fall economic statement presents the Ford government with an opportunity for strategic policy announcements ahead of a possible 2025 election. Traditionally an update on the province’s fiscal outlook, this year’s FES is likely to be shaped more than usual by political considerations — for example, the government plans to issue a $200 cheque to every Ontarian.

The Ford administration faces a delicate balancing act: introducing new initiatives while keeping an eye on provincial finances amid economic uncertainties. At a minimum, the FES offers insight into the government’s fiscal outlook and reports on key policy priorities. It should also tell us whether the province is focused on…

Graph of the Week: Rising Federal Debt Charges After 30-Year Decline

Brian Lewis – With an election on the horizon, Ford should resist the allure of costly new policies

Published in TVO Today. 

Ontario’s forthcoming fall economic statement has garnered increased interest as speculation mounts over a potential provincial election in spring 2025. While the FES is traditionally a routine update on the province’s fiscal and economic status, this year’s seems likely to serve as a platform for early, strategic pre-election policy announcements.  Look no further than the reporting that emerged last week indicating that the government is poised to send out cheques worth at least $200 to every Ontarian.

Finance Minister Peter Bethlenfalvy will deliver the update on October 30, two weeks earlier than is legally required. Amid signs of economic and fiscal improvement, the province faces…

Uncertain Returns: The Impact of the Capital Gains Hike on Ottawa’s Personal Income Tax Revenue

John Lester – ‘Pay-as-You-Go’ is a Far Better Policy than ‘Axe the Tax’

John Stapleton – There are Better Ways to Spend $3 Billion on Seniors than Boosting OAS

John Lester – A carbon tax election? Let’s vote on government spending instead

Published in the Financial Post

Pierre Poilievre has a slogan for fixing the budget: “pay as you go.” Though less catchy than “axe the tax,” it’s more likely to make Canadians better off. The Conservatives are pledging to balance the budget by reining in spending. A pay-as-you-go law would require new spending to be offset by reductions in existing spending.

Details of the spending cuts and the pay-as-you-go law are promised for the election campaign. Here’s some unsolicited advice on what the platform should say.

To begin with, a pay-as-you go law presupposes the existence of a cap on spending that would force new initiatives to be funded through reallocations. As I discuss in a recent C.D. Howe Institute paper, this…

Canada’s Productivity Problem with Michelle Alexopoulos and Jeremy Kronick

Since the mid-1980s, US labour productivity has grown by about 100 percent. But in Canada, it’s only grown by roughly 40 percent. Lower productivity means the economy grows more slowly — and that means Canadians’ paychecks grow more slowly as well. 

Why is Canada less productive? And what can be done about it? Michael Hainsworth speaks with the University of Toronto’s Michelle Alexopoulos and the C.D. Howe Institute’s Jeremy Kronick to get answers.

Graph of the Week: Core Inflation Components Fall Below 3% – A Sign of Broad Softening

Further Unfunded, Ongoing Spending Unsustainable for Ottawa: Fiscal and Tax Working Group

September 22, 2020 – The COVID-19 crisis has left Ottawa’s finances vulnerable to significant downside risks, meaning little room for major post-crisis spending initiatives without tax increases across the board, says a new report from a C.D. Howe Institute Working Group.

The Institute’s Fiscal and Tax Working Group, co-chaired by John Manley, former federal minister of finance; and Janice MacKinnon, former minister of finance of Saskatchewan, debated the question of whether the federal government’s fiscal trajectory is sustainable, given already announced plans. The discussion took place at the group’s second meeting on Thursday, September 17, 2020.

Many members of the group of experts from the private sector and…