Business
Carney government’s proposed tax cut misses the mark—twice
From the Fraser Institute
By Jake Fuss and Grady Munro
On Monday, Parliament returns to the House of Commons, and the new Carney government will now attempt to implement the policy agenda it sold to Canadians in this year’s election. The government’s first priority is to follow through on its promise to cut personal income taxes for Canadians—a change that is long-overdue at the federal level. But the proposed cut misses two important considerations that will limit its effectiveness.
Specifically, the Carney government plans to lower the bottom federal personal income tax (PIT) rate (on income up to $57,375 per year) from 15 per cent to 14 per cent. The Liberal election platform suggests this change would reduce taxes for a dual-income family by up to $825 per year.
To be clear, the government should lower the tax burden on Canadians. When you add up all taxes (income taxes, sales taxes, property taxes, etc.) Canadians pay, the average family spends 43.0 per cent of its income on taxes—more than on food, shelter and clothing combined. In other words, taxes are the largest single expense families face.
While the Carney government’s proposed tax cut could help chip away at the staggering tax burden imposed on Canadians, the design of the tax cut (beyond the fact that this tax cut is paid for by borrowed money) limits its ability to improve overall economic growth and prosperity.
First, the proposed tax cut fails to improve economic incentives for many Canadians.
“Marginal” tax rates refer to the rate imposed on the next dollar of income earned. For example, consider an individual who earns $100 in income and owes $15 in total tax. If they are taxed at 20 cents on the next dollar they earn, they experience a 20 per cent marginal tax rate.
A wealth of research shows that marginal PIT rates influence the behaviour of individuals. Indeed, for decisions about whether to work more hours, take a new job that pays more but has a longer commute, become an entrepreneur, or whether to save your money and invest it, marginal PIT rates directly affect the rewards you receive from those decisions.
If the government lowers marginal tax rates, it provides a greater incentive for individuals to choose to engage more in these types of productive activities. As a result, Canadians and the overall economy will be more prosperous.
But by only reducing the PIT rate for the lowest federal tax bracket, the Carney government will lower marginal tax rates for some Canadians but fail to meaningfully reduce tax rates for high-skilled workers in particular. Many Canadians won’t see better incentives to work, save or invest, and the positive effect on the economy from the tax cut will be limited. Put simply, the narrow scope of the government’s proposed tax cut limits its effectiveness at improving incentives and increasing economic growth.
Second, the proposed tax cut does little to improve the competitiveness of Canada’s tax system.
In today’s interconnected world, countries must compete to attract the people (doctors, engineers, entrepreneurs, scientists, etc.) and investment that help improve economic growth and prosperity. While there are many factors that determine how attractive (or unattractive) a country is, lower and more attractive taxes play a big role.
There are many things that make Canada an attractive place to live and work, but our uncompetitively high income tax rates are not one of them. If you compare combined (federal and provincial) marginal PIT rates in every Canada province with those in every U.S. state, Canadians in every province face higher tax rates than Americans in virtually every state, across a variety of incomes.
For example, in 2023 an individual earning $50,000, $150,000 or $300,000 per year (in Canadian dollars) would face a higher marginal PIT rate in every Canadian province than they would in every U.S. state. And Canada is not just uncompetitive with the United States but with other advanced countries worldwide at the top levels of income.
By only reducing a tax rate for the lowest income bracket, the Carney government’s proposed tax cut does little to make Canada a more attractive destination for doctors, entrepreneurs, scientists or other skilled workers. In fact, the rate cut will likely have little to no effect on the decisions of people to move to (or keep living in) Canada. And do little to improve our living standards and prosperity.
As the Carney government works to deliver on its campaign promise to lower personal income taxes on Canadians, it should consider that the current plan does little to meaningfully improve economic incentives and tax competitiveness. Instead, it should consider more ambitious and broad-based tax cuts that affect incentives.
Jake Fuss
Director, Fiscal Studies, Fraser Institute
Grady Munro
Policy Analyst, Fraser Institute
From LifeSiteNews
Changes to the law require companies to more rigorously prove their environmental claims.
The investment group in charge of Canada’s governmental pension plan has ditched its “net zero” mandate, joining a growing list of major institutions doing the same.
According to the Canada Pension Plan (CPP) Investments’ latest annual report, the entity is no longer committed to carbon “net-zero” by 2050. The CPP’s ditching of the target comes after a number of major institutions, including the Royal Bank of Canada (RBC), Toronto-Dominion Bank (TD), Bank of Montreal (BMO), National Bank of Canada, and the Canadian Imperial Bank of Commerce (CIBC), all made similar moves in recent months.
While ditching the net-zero effort, chief executive of CPP Investments John Graham maintained that it is still “really important to incorporate climate and incorporate sustainability” in its long-term investment portfolio.
The dropping of the “climate” target comes as recent changes to Canada’s Competition Act now mandate that companies prove any environmental claims they make, with Graham insinuating these changes were a factor in the decision.
“Recent legal developments in Canada have introduced, kind of, new considerations around how net-zero commitments are interpreted, so that’s caused us to change a little bit how we talk about it, but nothing’s changed on what we’re actually doing.”
Over the past decade, left-wing activists have used “net zero” and “environmental, social & governance” (ESG) standards to encourage major Canadian and U.S. corporations to take particular stands on political and cultural issues, notably in promotion of homosexuality, transgenderism, race relations, the environment, and abortion.
Outside of Canada, many major corporations have announced they are walking back DEI and other related policies. Some of the most notable include Lowe’s, Jack Daniel’s, and Harley Davidson. Other companies such as Disney, Target, and Bud Light have faced negative sales due to consumers fighting back and refusing to patronize the businesses.
Since taking power in 2015, the Liberal government, first under Justin Trudeau and now under Mark Carney, has continued to push a radical environmental agenda in line with those promoted by the World Economic Forum’s “Great Reset” and the United Nations’ “Sustainable Development Goals.” Part of this push includes the promotion of so called net-zero energy by as early as 2035.
Quick Hit:
President Donald Trump condemned Russia’s largest aerial assault on Ukraine’s capital, calling Putin “crazy” and warning sanctions are “absolutely” on the table if the bloodshed continues.
Key Details:
- Trump blasted Putin for launching nearly 300 drones and 69 missiles into Kyiv, killing at least 12.
- Speaking in New Jersey, Trump said he’s “not happy” with Putin and accused him of “killing a lot of people.”
- On Truth Social, Trump said the war “would never have started” if he were president and slammed both Zelenskyy and Biden for their roles.
Diving Deeper:
President Donald Trump issued some of his harshest criticism yet of Russian President Vladimir Putin following a devastating barrage of missile and drone attacks on Kyiv that left at least 12 civilians dead and dozens more wounded. The assault, the largest of the war in terms of aerial firepower, saw 298 drones and 69 missiles launched by Russia.
Speaking to journalists at Morristown Municipal Airport in New Jersey on Sunday, Trump did not hold back.
“I’m not happy with what Putin is doing,” he said. “He’s killing a lot of people, and I don’t know what the hell happened to Putin. I’ve known him a long time, always gotten along with him, but he’s sending rockets into cities and killing people, and I don’t like it at all.”
The strikes hit Ukraine’s capital and other cities just as tenuous negotiations for a ceasefire were underway. Trump noted the timing, saying, “We’re in the middle of talking, and he’s shooting rockets into Kyiv and other cities.”
Later on Truth Social, Trump doubled down, calling Putin “absolutely CRAZY!” and asserting, “I’ve always said that [Putin] wants ALL of Ukraine, not just a piece of it, and maybe that’s proving to be right, but if he does, it will lead to the downfall of Russia!”
But Trump didn’t spare Ukraine’s president either. “Likewise, President Zelenskyy is doing his Country no favors by talking the way he does. Everything out of his mouth causes problems, I don’t like it, and it better stop,” Trump wrote.
“This is a war that would never have started if I were President,” he added, laying blame squarely on “Zelenskyy, Putin, and Biden,” and insisting he’s only stepping in to try to extinguish “the big and ugly fires” caused by their “gross incompetence.”
Despite hesitation from Biden administration officials—particularly Secretary of State Marco Rubio—about levying sanctions that could disrupt ongoing talks, Trump made it clear where he stands: he would “absolutely” consider new sanctions if Putin’s attacks continue.
Ukrainian President Volodymyr Zelenskyy, in a post on Telegram, urged the international community to respond with tougher action. “The silence of America, the silence of others in the world only encourages Putin,” he wrote, saying every new Russian strike is “reason enough for new sanctions.”
(Sergey Guneev, Sputnik, Kremlin Pool Photo via AP)
Canada as an energy superpower would empower thousands of families for generations
Canmore attempting to tax its way out of housing crisis
FDA plans to require placebo trials before approving COVID boosters for healthy people
The Conventional Energy Sector and Pipelines Will Feature Prominently in Alberta’s Referendum Debate
Legal group releases report warning Canadians about central bank digital currencies
The Oracle of Omaha Calls it a Career
WHO assembly adopts ‘pandemic agreement’ binding countries to unified response
-
Business1 day agoNew Towns Offer a Solution to Canada’s Housing Crisis
-
Business1 day agoTrump delays 50% EU tariffs after Brussels begs for more time
-
Censorship Industrial Complex24 hours agoTrump admin probing U.K.’s crackdown on free speech
-
Alberta15 hours agoHow Trump and Alberta might just save Canada
-
National2 days agoFleecing the Electorate: Timeline of a Campaign Built on Fear
-
Business13 hours agoOntario government will spend more—for less housing
-
Censorship Industrial Complex2 days agoCanada’s PM Mark Carney Revives Online Censorship Agenda
-
Business12 hours agoThe Liberals Finally Show Up to Work in 2025