A new tool to understand Canada’s fiscal sustainability

A new tool from Finances of the Nation helps make sense of the long-term fiscal future of Canada’s federal government. Under several reasonable scenarios, the government’s finances are sound. But under others, concerns around long-run sustainability may mount. Read this articleA new tool to understand Canada’s fiscal sustainability

Does the Canada Workers Benefit enhancement achieve its purpose?

The CWB increases supports lower-income workers, and recent enhancements have made it more generous. The change also allows for the addition of new beneficiaries, which is particularly important for dual-earning couples. However, the reform also increased the effective tax on earned income for some workers, and therefore potentially lowers the incentive to work. This is especially notable for couples with children where two spouses work. Read this articleDoes the Canada Workers Benefit enhancement achieve its purpose?

The case for a vaccine tax

A vaccine tax is less coercive and more socially efficient than a vaccine mandate. We estimate that a tax of $1,500 per vaccination or booster per year is needed to effectively encourage opponents to get their shots. This amount is large enough to be salient to vaccine-hesitant, yet small compared to penalties imposed on daily smokers and heavy drinkers – where the economic case for penalties is far weaker than it is for COVID-19. Read this articleThe case for a vaccine tax

Why won’t Canada increase taxes on capital gains of the wealthiest families?

The current tax preference for capital gains costs $35 billion annually – with high-income families accruing most of the benefit. The recent passage of Bill C-208 exacerbates these issues. To fix these problems, the inclusion rate for capital gains should rise to 80 per cent from the current 50 per cent. Read this articleWhy won’t Canada increase taxes on capital gains of the wealthiest families?

Will federal finances improve this year?

The ongoing recovery from COVID has been stronger than many suspected and many emergency support programs have ended. Using the latest federal Fiscal Monitor data, we explore revenue and expense trends. We present a simple forecasting model to project revenue, expense and the federal deficit to the end of the fiscal year. Read this articleWill federal finances improve this year?

The effect of COVID on provincial finances

While the economic and fiscal disruptions from COVID-19 were substantial, provincial governments across Canada fared far better than many anticipated. The latest data from Statistics Canada reveals the scale of the shock — with important implications for not only provinces, but also the federal government. Read this articleThe effect of COVID on provincial finances

Canada’s new wage subsidies: Better targeted, or just better hidden?

The Canada Recovery Hiring Program (CRHP) is a 50% wage subsidy for employers and the new centrepiece of federal job support programs. CRHP is targeted at employers who hire new workers or expand hours worked – which should make it better targeted than the previous federal wage subsidy. But the restriction of the program to private corporations, and the lack of guardrails to prevent abuse, could be a problem.  We propose reforms that would make the program more cost-effective in increasing employment and raising workers’ pay. Read this articleCanada’s new wage subsidies: Better targeted, or just better hidden?

Canada is a big spender on health care but we lag behind countries in results

In the end, it is not only how much or how little you spend but what you spend it on and what you get for it. Canadian health care is not bad, but it could be better, given the amount of money being spent. Read this articleCanada is a big spender on health care but we lag behind countries in results