Fiscal and Tax Policy - Op Eds

Published in The Globe and Mail. 

When headline inflation increased to 2.9 per cent in May, up from 2.7 per cent in April, there was much speculation that the Bank of Canada would pause its rate cuts. However, it ticked back down to 2.7 per cent in June. That, plus a weakening labour market and stagnating per capita GDP, made it practically certain the bank would cut on Wednesday. It did.

Whether the bank has entered an easing cycle is no longer the question. The only question left is how far and how fast the Bank of Canada continues to cut interest rates.

There are several upside risks to inflation in the near future which could cause the bank to pause its rate cuts. We think it shouldn’t. Here’s why.

The…

Published in the Financial Post

It is 29 days since the 2024 federal budget announced major changes to capital-gains taxes. Their centrepiece, replete with "make-the-rich-pay” rhetoric, was higher inclusion rates. Other announcements, framed (with no apparent sense of irony) as supporting risk-taking and investment, promised a lower inclusion rate on some gains for some business owners and an increase in the lifetime capital-gains exemption for Canadian owners of farming and fishing properties and small businesses. The budget said many of these changes, most notably the higher inclusion rates, would take effect on June 25.

June 25 is now only 41 days away. That timeline is a big problem, getting bigger every day. Right now,…

Published in the Globe and Mail

Throughout my career, the Income Tax Act has grown increasingly complex – complicating even the simplest transactions. This underscores the need for a thorough review of the ITA.

That’s a sentiment shared by CPA Canada in our 2024 pre-budget submission, which recommended prioritizing a principled approach to tax policy and administration that is driven by purpose and vision. After all, simplicity, fairness, efficiency and competitiveness are among the most basic principles of a good tax system.

Unfortunately, recent approaches to specific tax issues have created rules that escalate compliance costs and administrative burdens, often involving excessive and needless reporting. While tax…

Published in the Globe and Mail

Last month’s budget unveiled a working group led by former Bank of Canada governor Stephen Poloz to collaborate with pension fund leaders to encourage funds to invest more of their assets in Canada.

This initiative is not consistent with the proper management of pension fund assets. It also lacks proper supporting evidence, is unlikely to be effective in achieving its objective except under one unacceptable condition and ignores the use of alternative tools to achieve its stated goals.

The legislation creating the Canada Pension Plan Investment Board includes a statement of “Objects and Powers” that summarizes the approach to investing consistent with fulfilling the fiduciary duty of the…

Published in the Financial Post

Last month’s federal budget has been called “the worst … in decades.” It is hard to disagree. Spending is clearly out of control, the cost of servicing Canada’s debt is ballooning and a balanced budget is not even on the horizon. In this, the feds are not alone. At every level of government, with few exceptions, Canada’s fiscal health is in a death spiral. Unless a new course is struck, the harm to Canadians will last for generations.

Over the past nine years, the federal government’s net debt has skyrocketed. In 2015, it was $612 billion. This year, the budget projects, it will be $1.4 trillion. Of the large provinces, only Alberta foresees a surplus for the coming year. Ontario, Quebec and…