Fiscal and Tax Policy - Op Eds

By Benjamin Dachis

The B.C. government, among others, is taking a close look at the province’s property transfer tax. But broadening or raising the transfer tax will have harmful economic consequences for current homeowners. The province should instead look to replace the property-transfer tax with less harmful taxes.

Many provinces and municipalities across Canada levy property or land-transfer taxes. The buyer pays a tax proportional to the value of the purchase. British Columbia has a progressive rate on transaction values. Buyers pay 1 per cent on the first $200,000, and then 2 per cent on the rest of the value.

Many people think that transfer taxes also curb housing speculation. But there is…

By Christopher Ragan

There has been much confusion amid the discussion about budget deficits in the federal election campaign. These numbers mean almost nothing unless they are expressed relative to our national income. Once these numbers are better understood, it becomes clear that small budget deficits for the next few years, used to finance productive investments, would be good for the Canadian economy.

Let’s start with some basic facts about the federal government’s fiscal position over recent history. In 1985, the federal budget deficit was $40-billion, but that deficit was a whopping 8.1 per cent of gross domestic product (GDP), the largest in our postwar history. The accumulated net debt was then a modest 42.9 per…

The federal government announced last week that it has balanced its budget ahead of schedule. After a deficit of $5.2 billion in fiscal year 2013-14, Ottawa posted a surplus of $1.9-billion in 2014-15.

Good news? Not everyone thinks so. Balancing the federal books has hurt Canada’s economy, said some critics. We even heard calls for a return to deficits.

If asked, some of those critics might acknowledge that deficits are dangerous. Committing to cover all spending with taxes sets a higher bar. Want another dollar in programs? Okay, justify taxing another dollar. Want tax relief? Great, just show the offset. Borrowing lowers that bar – one reason why deficits easily become chronic.

But, those critics would say, we’re…

Published in the Globe and Mail on July 20, 2015

Benjamin Dachis is a senior policy analyst at the C.D. Howe Institute.

Across Canada, 2015 is shaping up as a key year for cities looking for new ways to raise money, through taxing powers or other revenue tools. But what powers should cities have? What principles should guide decisions? One practical principle is that the people who use a municipal service should be the people who pay for it.

Vancouver-area cities tried, and failed, to seek the power to levy an extra sales tax to finance public transit. Now they must look to new ideas to deal with economy-stifling congestion. The Alberta government plans to introducemajor changes to municipal taxation…

Pubished in the Globe and Mail on July 14, 2015

By Christopher Ragan

Christopher Ragan is an associate professor of economics at McGill University in Montreal and a research fellow at the C.D. Howe Institute in Toronto.

The global economy has been stuck in a slow-growth recovery for six years, and now it’s gearing down even further. The same is true for Canada. This situation naturally raises the question of whether our macro policy makers are doing all they should to enhance growth. It’s hard to avoid the conclusion that our “mix” of monetary and fiscal policies is off kilter, and that electoral politics is partly to blame.

When the federal government released its budget in April, after oil prices had…