Federal government expects $32B more in red ink as it creates new bank to invest $81B

[Flash Walken]

Originally Posted by GGG

We are at the point of lowest taxation in our history.

You shut your mouth, my taxes are too high!

[rubecube]

Originally Posted by Handsome B. Wonderful

Thank you for confirming my point. People do complain about the GST.

Welp, serves me right for only reading half of the quoted post.

[zamler]

Originally Posted by GGG

We are at the point of lowest taxation in our history.

Corporate tax rates yes, personal no. In 40 years we've gone from 30% of government tax revenues coming from personal income tax to about 50% today.

[Azure]

Originally Posted by MattyC

Manufacturing what?

As long as people overseas can be paid a fraction of Canadian workers, we just won't be able to compete with many forms of manufacturing.

Automation has made it possible to manufacture in North America. We would be dumb to not take advantage of that. As to what? Well for starts the majority of stuff sold in Canada for the home renovation industry is manufactured in North America. Because of the expanding US economy and dollar difference it is a huge benefit for American buyers to come up here for their materials. Most of the businesses I've talked to in this industry are growing a lot.

There are other markets as well. We won't make the parts of the next iPhone, but there is a lot of stuff we could be making.

Originally Posted by bizaro86

Subsidies to businesses that wouldn't otherwise be viable without them is a terrible use of tax dollars. It takes money away from productive economic activity and diverts it to things that don't make economic sense.

Maybe we should just give all our money to Bombardier?

I don't get why people automatically assume that the money would go to non-viable businesses. Because of government investment into solar energy, the cost of producing the requires parts needed to 'go solar' has come down a lot. Because of that solar is growing like crazy. The US has been extremely aggressive in this regard, and Canada is sitting around worrying about the oil industry.

There is opportunity, but our government has a long history of letting our manufacturing advantage(i.e. the Canadian dollar) go to waste.

[Flash Walken]

Originally Posted by zamler

Corporate tax rates yes, personal no. In 40 years we've gone from 30% of government tax revenues coming from personal income tax to about 50% today.

Well duh, corporate tax rates have been lowered which means less money is coming in which means personal tax rates account for more revenue.

That doesn't mean income taxes have necessarily gone up, just that other sources of revenue have gone down.

[opendoor]

Originally Posted by zamler

Corporate tax rates yes, personal no. In 40 years we've gone from 30% of government tax revenues coming from personal income tax to about 50% today.

Any source for that? The numbers I've seen show that 40 years ago personal income taxes accounted for ~40% of revenue and now it's in the high 40s. The primary reason for the difference between then and now is the lower revenue from duties as free trade has become more common.

And for as much as people like to act like the introduction of the GST increased Canadians' tax burdens dramatically, that's not really true as its introduction actually lowered sales tax revenue for the federal government because it eliminated hidden taxes. In the mid '70s federal sales taxes accounted for 2% of GDP and in the mid '80s it was 2.3%. In recent years it has been around 1.6% of GDP.

[zamler]

Originally Posted by opendoor

Any source for that?

Why should I post sources no one else does. I can cite this stuff If I can dig it up again.

The numbers I've seen

Let's see them.

[opendoor]

Originally Posted by zamler

Why should I post sources no one else does. I can cite this stuff If I can dig it up again.
Let's see them.

http://www.fin.gc.ca/frt-trf/2016/frt-trf-16-eng.pdf

[AltaGuy]

Originally Posted by zamler

Corporate tax rates yes, personal no. In 40 years we've gone from 30% of government tax revenues coming from personal income tax to about 50% today.

That makes no sense. It's not an argument against GGG's statement at all.

(i.e. the relative proportion calculations of personal tax contributions to government revenue versus other sources is meaningless without context.)

[Frequitude]

All joking aside, I hope "The infrastructure bank will target large institutional investors to help finance 'transformational' projects in Canada and get them built more quickly and at less of a financial risk to taxpayers" does not imply partnering with CPP. Keep completely separated from partisan politics please.

[Cappy]

Originally Posted by Azure

Automation has made it possible to manufacture in North America. We would be dumb to not take advantage of that. As to what? Well for starts the majority of stuff sold in Canada for the home renovation industry is manufactured in North America. Because of the expanding US economy and dollar difference it is a huge benefit for American buyers to come up here for their materials. Most of the businesses I've talked to in this industry are growing a lot.

There are other markets as well. We won't make the parts of the next iPhone, but there is a lot of stuff we could be making.



I don't get why people automatically assume that the money would go to non-viable businesses. Because of government investment into solar energy, the cost of producing the requires parts needed to 'go solar' has come down a lot. Because of that solar is growing like crazy. The US has been extremely aggressive in this regard, and Canada is sitting around worrying about the oil industry.

There is opportunity, but our government has a long history of letting our manufacturing advantage(i.e. the Canadian dollar) go to waste.

So we pay companies to come to Canada to manufacturer?


Also, if corporate subsidies are not going to non-viable companies, then we give money to the viable (i.e. profitable) companies?

Much rather produce across the board cuts to corporate tax rates than start subsidizing corporations on a piecemeal basis

[Azure]

Originally Posted by Cappy

How do we get Tesla here?

We can't just throw money at manufacturing and hope for the best.

You need to create an environment where businesses (including manufacturing businesses) want to invest. The most effective manner of doing so is providing a low tax environment with effective and efficient regulation with great infrastructure and workforce.

Bridges and roads and trains are great for citizens but they are also great for businesses. They provide cheap and efficient access to markets domestic and abroad. They help keep the bottom line.

Also, it goes without saying, but consistency is key. Minimal threat of changes to these environments help companies invest long term.

Limited Tariffs and free trade is also pretty important. If I'm a US manufacturer with a steady base of clients in the EU, maybe i look at expanding my operation into Canada to skirt tariffs on my goods.

http://news.nationalpost.com/news/ca...nada-price-gap

You also need a lot of talent to do the work.

Like all those unemployed engineers in Alberta....

[Azure]

Originally Posted by Cappy

So we pay companies to come to Canada to manufacturer?


Also, if corporate subsidies are not going to non-viable companies, then we give money to the viable (i.e. profitable) companies?

Much rather produce across the board cuts to corporate tax rates than start subsidizing corporations on a piecemeal basis

You need to offer them talent, resources and tax cuts. Why is Tesla in Nevada?

Tax cuts are easy to do if there is political will, but offering them resources and talent to work there is a different story because a lot of it depends on a healthy ecosystem already in place where lots of people are already working in this industry.

Which means you need almost need to target cities across Canada where there are 'districts' that can attract this kind of talent and work. I know there is a district in Winnipeg where a lot of tech development is going on, and the city is working hard to promote it. There is also a good sized pharmaceutical R&D district that has been developed rather well to grow quite big over the years. Both of these are providing good jobs and numerous small businesses have emerged. There is also a huge cabinet manufacturing industry in Winnipeg that is absolutely thriving now due to the Canadian dollar. These are good paying, stable jobs that need to be developed by local, provincial and the federal government to help diversify our country.

Again, it is possible. But we've had 10 years worth of governments that have been completely schooled by the US when it comes to developing our biggest industry. Now we can't even fix that nevermind developing different industries across Canada.

Its depressing, but I highly doubt a penny of the $81B will get used for anything other than pet projects considering we can't agree on Energy East.

[jammies]

Subsidizing a particular kind of industry in order to encourage startups and relocation can be effective. The key is that the subsidies cannot go on forever, like Bombardier, if the industry targeted never manages to become profitable without the subsidy.

Although my personal preference would be straight-up granting money to small business startups with a viable plan. Especially in high-tech, small companies can grow into big companies in just a few years, if the idea/product is good and finds a market. A billion dollars spent giving $5 million to 200 startups is likely to create far more economic growth than a billion dollars given to one large company.

[getbak]

The infrastructure bank will target large institutional investors to help finance “transformational” projects in Canada and get them built more quickly and at less of a financial risk to taxpayers.

"Mr. Trudeau, there's a Ken King on the line from Calgary."

[CliffFletcher]

Originally Posted by jammies

Subsidizing a particular kind of industry in order to encourage startups and relocation can be effective. The key is that the subsidies cannot go on forever, like Bombardier, if the industry targeted never manages to become profitable without the subsidy.

Although my personal preference would be straight-up granting money to small business startups with a viable plan. Especially in high-tech, small companies can grow into big companies in just a few years, if the idea/product is good and finds a market. A billion dollars spent giving $5 million to 200 startups is likely to create far more economic growth than a billion dollars given to one large company.

From what I understand, Canada is not a bad place to start a tech company. We have talented people and a good climate for small business. The problem is that Canadian start-ups don't have access to the venture capital they need to grow from a start-up with 10-15 employees to a medium sized company of 50+. They have to go to the U.S. for that.

[Azure]

Originally Posted by CliffFletcher

From what I understand, Canada is not a bad place to start a tech company. We have talented people and a good climate for small business. The problem is that Canadian start-ups don't have access to the venture capital they need to grow from a start-up with 10-15 employees to a medium sized company of 50+. They have to go to the U.S. for that.

Ah, but why can't the government be more aggressive with these loans?

I've looked into grants and loans from government sources, and there is hardly anything there federally.

I think we should spend $5 billion to create a venture fund right away and start targeting these businesses. I know a few in Winnipeg that could take funding right away and would explode in short time. Not necessarily in tech either.

[Bownesian]

It sounds to me like you're describing the BDC - crown corporation investment capital without the usual expectations from institutional lenders. They are our management buyout creditors and while they're super cool about us not having to pay what we owe them, they're also frequently coming to us with expansion questions like "Is there someone overseas or here you might want money to take out?"

The feeling I get is they have investment cash and they're always looking for groups like your Winnipeg businesses.

https://www.bdc.ca/en/pages/home.aspx

[Alpine Fisher]

If Trudeau wants to transform our economy and shift it into a green economy, why doesnt he start giving people tax breaks to install solar panels on their homes or to switch to high efficiency furnaces?

How about funding geo thermal energy plants? Solar Panel Manufacturing?

What about manufacturing robots?

[accord1999]

Originally Posted by Alpine Fisher

If Trudeau wants to transform our economy and shift it into a green economy, why doesnt he start giving people tax breaks to install solar panels on their homes or to switch to high efficiency furnaces?

How about funding geo thermal energy plants? Solar Panel Manufacturing?

Canada's low CO2 emission electricity, climate and high latitude make subsidizing solar a terrible proposition while Chinese solar panel manufacturers aren't making money, let alone doing it in Canada.