Drummond Misdiagnoses Ontario’s Economy

The Harvard International Review has posted an interview with Don Drummond. I have posted the following response: It is good Drummond confesses that his free-market policy prescriptions failed to improve productivity, but old habits apparently die hard: “We have an Employment Insurance scheme that basically dissuades people from going where…
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McGuinty’s Business Tax Breaks

An interesting nugget in last week’s Drummond report is Table 11.1, an updated version of Table 2 from “Ontario’s Tax Plan for Jobs and Growth” (2009). It provides a sectoral breakdown of the McGuinty government’s recent business tax breaks: HST input tax credits, cutting the corporate income tax, and eliminating the…
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Deflating Drummond

Statistics Canada reported today that consumer prices jumped in January (by 0.4% or 0.5% seasonally-adjusted), offsetting the drop in December. As a result, the annual inflation rate is now 2.5% and the Bank of Canada’s core inflation rate is 2.1%. Monetary Policy Both measures are well within the central bank’s…
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Drummond: The Good, The Bad and The Ugly

The Drummond Commission reported today. The Good While the McGuinty government prevented the Commission from considering tax rates, it proposes some sensible measures to raise revenue. Chapter 18, “Revenue Integrity,” recommends combating corporate tax avoidance and cracking down on the underground economy. Businesses sometimes hire workers as “contractors” to avoid…
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Corporate Taxes and Investment in Ontario

Last week, Ontario’s Ministry of Finance released the Ontario Economic Accounts for the third quarter of 2011. As The Globe reported, business investment was less than impressive: . . . investment in machinery and equipment fell slightly by 0.2 per cent between June and September, 2011, prompting Ontario Finance Minister…
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Lies, Damned Lies and Graphs

Further to Jim Stanford’s excellent critique of the Ontario Conservative platform’s graphs, I am similarly struck by the Liberal platform’s lone graph. “Cutting Ontario’s Taxes on New Business Investment in Half” (page 25) purports to show that corporate tax cuts are required to get the province’s “Marginal Effective Tax Rate”…
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