taxation

Ten proposals from the 2018 Alternative Federal Budget

I’ve written a blog post about this year’s Alternative Federal Budget (AFB).

Points raised in the blog post include the following:

-This year’s AFB would create 470,000 (full-time equivalent) jobs in its first year alone. By year 2 of the plan, 600,000 new (full-time equivalent) jobs will exist.

-This year’s AFB will also bring in universal pharmacare, address involuntary part-time employment among women, eliminate tuition fees for all post-secondary students in Canada, speed up implementation of the federal carbon tax, and increase the corporate tax rate from 15% to 21%.

-I’m particularly intrigued by the AFB’s poverty reduction measures, which include a sizeable top-up to the GST rebate, a $4 billion annual transfer to the provinces and territories, increases to seniors’ benefits, and $3.5B in new spending for housing.

The full blog post can be found here.

Ten proposals from the 2018 Alternative Federal Budget

I’ve written a blog post about this year’s Alternative Federal Budget (AFB).

Points raised in the blog post include the following:

-This year’s AFB would create 470,000 (full-time equivalent) jobs in its first year alone. By year 2 of the plan, 600,000 new (full-time equivalent) jobs will exist.

-This year’s AFB will also bring in universal pharmacare, address involuntary part-time employment among women, eliminate tuition fees for all post-secondary students in Canada, speed up implementation of the federal carbon tax, and increase the corporate tax rate from 15% to 21%.

-I’m particularly intrigued by the AFB’s poverty reduction measures, which include a sizeable top-up to the GST rebate, a $4 billion annual transfer to the provinces and territories, increases to seniors’ benefits, and $3.5B in new spending for housing.

The full blog post can be found here.

The Working Poor and the Working Income Tax Benefit

Published by Anonymous (not verified) on Fri, 23/02/2018 - 2:51am in

Tags 

poverty, taxation

Here is a short research paper I wrote for the Broadbent Institute.

https://d3n8a8pro7vhmx.cloudfront.net/broadbent/pages/7073/attachments/original/1519312305/Canada’s_Working_poor_and_the_Working_Tax_Benefit_-_Report.pdf?1519312305

And here is a short summary:

The Liberal government have promised to make progressive changes to the Working Income Tax Benefit (WITB) in next week’s budget.

Let’s hope that they deliver. The increased insecurity of work and low hourly wages for many workers mean that many Canadians live in poverty even though they have a significant attachment to the paid work force.

The WITB is directed to the working poor, that is, individuals and families who have significant earnings, and sometimes even work full-time for a full year, but still live in poverty. About one half of all working age persons living in poverty have significant earnings.

Higher minimum wages in some provinces mean that a single person working full time for a full year will earn enough to be above the poverty line. But most of the working poor can only find part-time and insecure jobs, and need additional income support

The WITB currently delivers a meagre average benefit of just $807 per year, and the benefits for a single person are phased out once income passes a very low threshold of just $12,000, well below the poverty line.

The benefit should be significantly increased, and phased out at a much higher level of earnings.

The WITB was also intended to make work pay and to help people transition from social assistance. But just 8.8% of social assistance recipients get any benefit from the program.

Many social assistance recipients would like to work, but face multiple barriers such as loss of health and housing benefits and high claw back rates on every dollar of earnings. The WITB could help, but benefits are paid only after a long lag of up to one year.

The WITB could, together with decent minimum wages, help lift the working poor out of poverty.

But major changes are needed.

 

 

 

The Working Poor and the Working Income Tax Benefit

Published by Anonymous (not verified) on Fri, 23/02/2018 - 2:51am in

Tags 

poverty, taxation

Here is a short research paper I wrote for the Broadbent Institute.

https://d3n8a8pro7vhmx.cloudfront.net/broadbent/pages/7073/attachments/original/1519312305/Canada’s_Working_poor_and_the_Working_Tax_Benefit_-_Report.pdf?1519312305

And here is a short summary:

The Liberal government have promised to make progressive changes to the Working Income Tax Benefit (WITB) in next week’s budget.

Let’s hope that they deliver. The increased insecurity of work and low hourly wages for many workers mean that many Canadians live in poverty even though they have a significant attachment to the paid work force.

The WITB is directed to the working poor, that is, individuals and families who have significant earnings, and sometimes even work full-time for a full year, but still live in poverty. About one half of all working age persons living in poverty have significant earnings.

Higher minimum wages in some provinces mean that a single person working full time for a full year will earn enough to be above the poverty line. But most of the working poor can only find part-time and insecure jobs, and need additional income support

The WITB currently delivers a meagre average benefit of just $807 per year, and the benefits for a single person are phased out once income passes a very low threshold of just $12,000, well below the poverty line.

The benefit should be significantly increased, and phased out at a much higher level of earnings.

The WITB was also intended to make work pay and to help people transition from social assistance. But just 8.8% of social assistance recipients get any benefit from the program.

Many social assistance recipients would like to work, but face multiple barriers such as loss of health and housing benefits and high claw back rates on every dollar of earnings. The WITB could help, but benefits are paid only after a long lag of up to one year.

The WITB could, together with decent minimum wages, help lift the working poor out of poverty.

But major changes are needed.

 

 

 

Homelessness in BC

Published by Anonymous (not verified) on Tue, 20/02/2018 - 6:57am in

In anticipation of tomorrow’s provincial budget in British Columbia (BC), I’ve written a blog post about the state of homelessness in that province.

Points raised in the blog post include the following:

-Public operating spending by BC’s provincial government has decreased over the past 20 years.

-Even after controlling for inflation, average rent levels across the province increased by 24% between 1990 and 2016.

-Over the past several decades, various reforms to BC’s social assistance system have made it harder to qualify for benefits and have resulted in lower benefit levels to those who are eligible.

-A lack of affordable housing is making it very challenging for front-line practitioners to practice the ‘housing first’ approach (i.e., providing a homeless person with immediate access to affordable housing).

-BC’s new NDP government has undertaken important initiatives that may have the effect of reducing homelessness.

The full blog post can be found at this link.

Homelessness in BC

Published by Anonymous (not verified) on Tue, 20/02/2018 - 6:57am in

In anticipation of tomorrow’s provincial budget in British Columbia (BC), I’ve written a blog post about the state of homelessness in that province.

Points raised in the blog post include the following:

-Public operating spending by BC’s provincial government has decreased over the past 20 years.

-Even after controlling for inflation, average rent levels across the province increased by 24% between 1990 and 2016.

-Over the past several decades, various reforms to BC’s social assistance system have made it harder to qualify for benefits and have resulted in lower benefit levels to those who are eligible.

-A lack of affordable housing is making it very challenging for front-line practitioners to practice the ‘housing first’ approach (i.e., providing a homeless person with immediate access to affordable housing).

-BC’s new NDP government has undertaken important initiatives that may have the effect of reducing homelessness.

The full blog post can be found at this link.

Panel discussion at federal NDP policy convention

Yesterday I spoke on a panel discussion on economic inequality, along with Andrew Jackson and Armine Yalnizyan. We were guests at the federal NDP’s policy convention in Ottawa. The panel was moderated by Guy Caron.

Topics covered included the minimum wage, basic income, affordable housing, the future of jobs, gender budgeting, poverty among seniors, Canadian fiscal policy in historical perspective, and Canadian fiscal policy in comparison with other OECD countries.

The discussion was 30 minutes long. You can watch it here.

Panel discussion at federal NDP policy convention

Yesterday I spoke on a panel discussion on economic inequality, along with Andrew Jackson and Armine Yalnizyan. We were guests at the federal NDP’s policy convention in Ottawa. The panel was moderated by Guy Caron.

Topics covered included the minimum wage, basic income, affordable housing, the future of jobs, gender budgeting, poverty among seniors, Canadian fiscal policy in historical perspective, and Canadian fiscal policy in comparison with other OECD countries.

The discussion was 30 minutes long. You can watch it here.

Do tax revenues finance government spending?

Published by Anonymous (not verified) on Tue, 13/02/2018 - 6:10am in

The Economist had a piece  on Britain’s tax base in its 25th January edition. It begins with a reference to Denis Healey’s speech to the 1973 Labour conference, in which he promised that tax increases  would be met with “howls of anguish” from everyone, not just the rich. As it happens, I have been reviewing the record of Labour Chancellors this last week. With the exception of Hugh Dalton, they were all financially orthodox, and almost all resorted to raising taxes and cutting government spending. In other words, they believed that government budgets were like household budgets, and government expenditure could only be financed by raising taxes.  They felt it imperative to be remembered as “prudent” Chancellors, committed to “balancing the government’s books”. – above all else.  None of them succeeded of course, because Chancellors and their governments, no matter how powerful, popular or smart, cannot ‘balance the books’. Only the economy can. By which I mean that the balance of the government’s “books” is determined by the health and prosperity of the economy as a whole – including that of the private sector. If those Labour Chancellors had focussed on strengthening investment, productivity and employment – they would have raised more money from taxes, and would have had a much better chance of ‘balancing the government’s books’.

When the economy is powering along, when investment and employment and wages are high, when interest rates are low, and banks are supporting the real economy,  not just gambling on property price rises – then hey presto, the government’s books ‘balance’. When the economy is weak, when investment falls, and employment is low, or insecure, or low-paid; when private indebtedness and real rates of interest are high and the finance sector out of control – then government revenues from taxation will fall, and the government’s books will not balance.  If the government encourages workers to take up self-employment, insecure work on zero hour contracts – then invariably the government’s tax base narrows further. This is like sawing off the branch of a tree supporting the government. George Osborne as Chancellor in the 2010-2016 Coalition and Conservative governments, was skilled at sawing off the tax revenue ‘branch’ on which the Treasury was perched.

One big argument against raising taxes in today’s weak economic environment is that such a move will drain income (tax revenues) from an economy which is already weak –  constrained by high levels of private debt; by low productivity, low levels of investment and low incomes. (Wages have still not recovered to pre-crisis levels). While it will always be right to ensure that the rich pay taxes, and that HMRC is resourced to tackle tax avoidance, draining more income from the weakened economy – at this point in time – would not be wise. What the economy desperately needs is the injection of more finance and investment, not the extraction of income.

But perhaps the most flawed aspect of the Economist’s argument for “raising taxes” is this: governments do not finance their investments, or even their activity, from tax revenues. Most of the government’s big expenditures are financed via the issuance of gilts – government bonds. The sale of gilts provides the government with finance for investment and expenditure. (And at the same time gilts provide a safe haven for pension funds to invest savings deposited with them. In due course  (when we retire) those pension funds return the gains from investing in gilts to us, the UK’s pensioners, savers and taxpayers.)

It is public investment and expenditure, coupled with private investment and expenditure, that generates government income. This is because government investment and expenditure creates and pays for jobs. And those in employment both pay taxes, but also trigger more tax revenues when they spend on housing, food and other goods and services. And if that spending generates profits, and shopkeepers and companies pay corporation tax, then government benefits from yet another revenue stream.

When the private sector is too timid or greedy to invest to create jobs that generate tax revenues , that is when a government – backed by a central bank – ought to use its heft to raise finance and invest to create employment and thereby generate income in the form of tax revenues.

Of course it is really important that government should repay its borrowing. And that is where tax revenues come in – after the investment, taxes provide the income needed to pay back the government’s debts, and  ‘balance the books’.

But taxes are not the source of government financing, and are not necessary for government to spend. 

When the economy is weak – when the private sector is weak – then squeezing citizens dry by raising taxes, is very bad economics. The best strategy for the government in those circumstances is to invest to expand employment.

Expanded employment – especially in skilled, well-paid, productive work – will generate more tax revenues for the government, without tax hikes. And public investment will benefit the private sector – both directly and indirectly.

Its not rocket science!

 

 

Why building more houses will not solve the housing crisis

Published by Anonymous (not verified) on Mon, 29/01/2018 - 10:19am in

Tags 

Housing, taxation

I wrote a piece for the Saturday (26 January 2018) Guardian. Its been described by many as “counter-intuitive” – because in it I draw on the research of others (notably that of Ian Mulheirn – director of consulting at Oxford Economics)  to argue that building more houses will not dampen house prices.

I posed this question: “what has bitcoin mania got in common with house prices, especially in the capital? For starters, both are speculative bubbles. Vast sums of money have been poured into finite supplies of bitcoins and London property. Both have consequently exploded in value, albeit over different time periods. And so both have become financialised assets that deliver capital gains far in excess of people’s ability to earn income from work, or from investment in the real economy. And as with bitcoin, so with London property: speculators are convinced that prices will continue to rise for ever.”

For more, please follow this link to the Guardian’s website.

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