this sounds like a poison pill. remember: the government has ultimate discretion here, not poloz. and, i would hope that the liberals sack him if he decides to seriously do this. this sounds like harper pulling strings in the background, trying to create a disaster.
a big part of the liberals' tax policy, as it is, is meant to find a balance that increases revenue and prevents capital flight. combined with the dollar continuing to crash, this announcement seems designed for the sole purpose of scaring investors.
a corporate tax hike, followed by direct spending, would be more effective because it would actually spend the cash. this is just going to send money flying out of the country...
i'm serious.
i think this is a partisan move, designed to sabotage the government. and, the government should react very swiftly.
but, i mean...
listen. i'm a leftist. i'm into high corporate tax rates. and, a large amount of the canadian economy is tied to natural resources, meaning the argument around flight falls apart. but, if we want to diversify, we need to look at building economies that are more mobile and finding ways to keep them there. and, the arguments around minimizing corporate taxation are meaningful.
it's probably going to be more effective to do this using the "backroom deals" model than trying to force people to spend. that is, by using the tools of rhetorical persuasion. by sitting down and talking with people and convincing them to invest in this or that.
these heavy-handed, top down, punitive approaches don't work. that understanding is supposed to be something that this government is rooting itself around.
this is a policy perspective rooted in the previous government's ideology. and, i think the government consequently has a valid prerogative in asking poloz to resign.
http://www.theglobeandmail.com/report-on-business/economy/what-are-negative-interest-rates-and-how-do-they-work/article27669897/
K Fitzwilliam
Really, still beating on Harper????
deathtokoalas
he appointed this guy. and, if we end up with a conflict between the minister and the governor, it reduces to a process of completing the transition.
canadians tend to interpret the relationship between the minister and the governor through the prism of the federal reserve. but, this is false. the minister can override the governor, and in this case should.
that said, i'm not aware of morneau's position on this. but, it strikes me as inconsistent with the government's position on holding the corporate tax rate steady. i'm deducing. a little clarification would help.
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Hallbfb
And seniors just keep taking it on the chin.....
deathtokoalas
boomers spent their entire lives trying to dismantle the welfare state, and now take a look around and wonder where it went. it would be easier to have empathy if they didn't play such a central role in the creation of the problems we have today.
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Robf2
Ok, so we have an "economic crisis" and the BOC is charging commercial banks for their reserves. Are these commercial banks going to increase lending during a crisis? No. They are going to discourage deposits with fees. And the depositors who have been shunned, what should they do? One clever idea (courtesy BOC research papers) is to prepay your taxes :)
Superscape
It's actually the opposite- by charging banks for holding reserves with the BoC, it means that banks will be discouraged from sitting on their cash, and therefore lend it out.
deathtokoalas
no. they'll just pass on the cost to creditors, who will in turn be discouraged from leaving their money in the bank. that doesn't necessarily mean spending, and in most cases won't - in most cases it will mean flight.