Bank of Canada Hold Rates

[errolanderson]

Believe BOC has finally figured out that
the Cdn economy is no is very good
shape. BOC stated their bank rate will
be down for a long time this morning.
These comments are pressuring the
loonie.

With Alberta crude prices in-the-tank,
we have a brewing Cdn financial crisis
on our own doorstep (IMO). Alberta's
budget is likely to get a whole lot
worse through 2013/14.

Any indication of any rate hike in the
near futures is improbable (IMO).
There's just no way our economy could
absorb any interest rate hike without
serious consequences. In my view, Canada
is already in-recession.

My concern as a taxpayer is how quickly
politicians and their pie-in-the-sky
budgets are making a complete mess in
this country that will cost us all in
the years straight ahead.

Errol

[wd9]

Live it up till there is nothing left! At
least that's the attitude.

Or is it, live it up till you can't
borrow anymore!

[bucket]

I am a little worried that we are lacking leadership, not so much from Harper, but from ministers, premiers, and business people.

This country is so far behind in its infrastructure for the resources we have to export, that if this country wanted to go to zero unemployment, it could in a very short time.

There is a minimum of three dams that should be built in western canada.

Twinning of the railways between Thunder Bay and Calgary for a start by CP.

And a major upgrade of highways. Regina south to the US border should be 4 lane by now.

The potash mines coming on stream and the housing required creates a long term economy.

If the pipelines come, its another job creator.

I am not saying Canada is in the greatest shape, but having world class exports and no infrastructure in place delays any recovery of the economy.

[bucket]

errol

Do you think crude is in the tank in Alberta because there is no infrastructure in place to move it to higher value markets?

[boarderbloke]

errol, won't a lower $CDN in relation to $USD, help Alberta's budget by bringing in more $CND per bbl?
Is that also not supportive to Canadian grain prices, in the same fashion?

[bucket]

boarder

That is what has always been said, a lower cdn dollar should boost grain prices.

Although I remember a 70 cent dollar, shitty grain prices and outrageous machinery prices.

[TOM4CWB]

Errol,

Ally Redford's 'PC team' is looking to implement a
Sales Tax in Alberta ...to solve our problems...

"Taxing dilemma for Alberta’s finances


BY SHEILA PRATT, EDMONTON JOURNAL JANUARY 20,
2013

Ex-politicians (L-R) Ed Stelmach, Anne McLellan,
Shirley McClellan and Kevin Taft took part in a panel
discussion at the Shaw Conference Centre in Edmonton
on Thursday Jan. 17, 2013.

EDMONTON - It’s breakfast time in Salon 8 and
economist Bob Ascah is doing his best to start a
conversation about The Topic That Must Not Be
Named, especially around the premier’s office.

Bolstered with strong coffee, the audience of 250
mostly policy wonks and civil servants leans forward at
the Shaw Conference Centre as Ascah lays out
Alberta’s fiscal dilemma — “an anti-tax environment”
and “high expectations for quality public services,” and
a looming $3-billion deficit.

It’s time to ask, how are we going to pay for those
services and save for the future? says Ascah, who runs
the University of Alberta Institute for Public Economics
and organized Thursday’s seminar on provincial
budgeting.

On the stage with Ascah, former premier Ed Stelmach
talks about the need for stable revenue. Former Liberal
leader Kevin Taft and former federal cabinet minister
Anne McLellan actually mention taxes. Shirley
McClellan, who was treasurer under former premier
Ralph Klein, warns about keeping spending down.

Despite Albertans’ deep aversion to paying more
taxes, surprisingly, it’s not hard these days to find
other brave voices — in the business community,
academia, even among Conservatives — who want a
serious talk about whether Alberta needs to raise taxes
or take a serious look at tax reform — maybe a sales
tax, to avoid the roller-coaster of oil prices. Some say
the public is ahead of politicians on this one — that
people are frustrated by the fact that on March 7 they
will face yet another round of tough spending cuts in a
$40-billion budget because oil prices have dropped.

Despite a projected $3-billion deficit, however,
Premier Alison Redford has firmly ruled out tax
increases or any new taxes.

“My preference is clear, I don’t want to see new taxes,”
Redford said earlier this month. “I have a commitment
and I’m sticking to my commitment — tax revenue
won’t change.”

But look no further than her former finance minister
Ron Liepert for a different view.

“I’m not saying Albertans are screaming to have new
taxes,” Liepert says. “But if framed properly, they’d be
prepared to engage in a discussion of what is the right
level for paying for services.

“It may very well be Albertans would sooner have
schools in their neighbourhoods and pay a little more
in some sort of tax, maybe a health tax to preserve the
level of health services.”

As finance minister a year ago, Liepert startled some
and relieved others by calling in his budget speech for
a talk about taxes.

“I’m a little disappointed it didn’t start sooner,” says
Liepert. “It’s not just about taxes but about the next
10 to 25 years and what this province’s revenue
stream should look like. I’d put it all on the table.”

That would include Alberta’s famous 10-per-cent flat
tax on personal income, along with user fees, some
kind of sales tax, consumption taxes on alcohol and
cigarettes, the hotel tax, health premiums dumped just
a few years ago.

Like others before it, the Redford government is
caught in the age-old trap of relying on the roller-
coaster of international oil prices. Bitumen from the
oilsands now fetches only $45 to 50 a barrel compared
to $65 in March 2012. Natural gas prices have
slumped.

To avoid that volatility, the government may need a
new mix of taxes, says Carman McNary, former
president of the Edmonton Chamber of Commerce,
who in past years also called on the government to
come up with a savings plan.

The last time Alberta raised personal income tax was
26 years ago, in 1987, when oil prices collapsed to
$10 a barrel. The province implemented a temporary
one-per-cent increase on all taxpayers and an eight-
per-cent surcharge on high income earners, which was
later removed. That was part of a package of tax
increases, including booze and cigarette taxes, that
raised $1 billion for the Getty government that year.

In 2001, the Klein government reduced all income tax
rates to a flat 10 per cent, which lowered taxes for
upper income earners and reduced revenue to the
treasury by $1.5 billion that year. Exemptions also
reduced the tax burden for the poor.

McNary says he and others in business circles would
like to look at some form of sales tax for the future.
(According to Ascah, a one per cent HST would raise
$750 million.)

One key question is — how long will low bitumen
prices last? Is this a temporary revenue problem or a
longer term issue?

“If it’s a short-term problem, say 18 months, and new
pipelines will come on stream quickly to resolve the
problem, then the discussion about taxes probably
needs to happen, but it’s not so urgent,” McNary says.

“But if it’s longer term, that’s different. The public
needs to know which scenario the government thinks
is more likely.”

Energy Minister Ken Hughes said this week that low
bitumen prices won’t be resolved quickly, even with a
new pipeline, because new supplies of oil in the U.S.
are changing the market significantly. But former
Suncor CEO Rick George thinks prices could be better
in 18 months.

When the Stephen Harper government cut the GST by
two points, Alberta should have moved in with a
harmonized sales tax collected by the feds, says
McNary.

“That’s low hanging fruit and even better, it’s a lot of
fruit,” says McNary, noting that a sales tax generates a
robust revenue stream.

At the same time, there needs to be serious talk about
how much government spends, “because that’s where
the Wildrose is coming from. Many citizens don’t think
they get value for their tax dollars.”

Jack Mintz, the influential tax expert and policy guru
who runs the school of public policy at the University
of Calgary, says Alberta keeps its taxes low by
spending its inheritance — energy revenues.

In 2007, he wrote a report that predicted the province
would be running deficits by 2012 if it didn’t change
the tax mix. That report and others warned that
Albertans on average only pay about 70 per cent of the
cost of their services.

Even if Redford manages to cover this year’s deficit,
the province still doesn’t have a savings plan.
Spending royalties on daily expenses, Mintz says, is
“like borrowing from future generations, it’s another
form of debt.”

He favours a sales tax because it’s stable and easy to
collect (right on the spot), it doesn’t hurt the economy
and can encourage economic opportunity. He calls it
“mildly progressive” if low income people are given
some tax credits.

“We need to shift to more stable sources of revenue.
That’s critical. It’s about changing the mix of taxes,”
says Mintz

Former Liberal leader Kevin Taft, however, says the
sales tax is too tough to sell in Alberta.

“It’s much easier to go back to progressive income
tax,” says Taft. “We should still aim to be a low tax
jurisdiction. But we’re so far out of the normal range
(of other provinces) we can’t afford to build roads.”

The province noted in last year’s budget that if Alberta
had B.C. tax rates, the government would collect $11
billion more in taxes.

“So there’s plenty of room to move and still maintain
the lowest tax rates,” says Taft.

In the last 20 years, personal incomes in Alberta have
risen by 34 per cent, Taft told the seminar at the Shaw
centre.

Corporate profits have increased by 300 per cent in
the last two decades, so there’s plenty of room to take
a little more there, too.

Taft doesn’t believe that government spending is out
of control. On a per-capita basis, Alberta spends about
the same on public services as it did in the 1980s,
when the dollars are adjusted for inflation.

Brian Mason, leader of the New Democrats, says the
conservatives are still trying to run the province on a
Klein-era low-tax regime that won’t work.

“We have a strong economy and yet the government is
in a weak fiscal situation, it can’t afford to build
schools and roads,” he says, adding that people will
accept higher taxes.

But the Wildrose Party is fiercely opposed to tax
increases and wants to lower spending.

“Alberta collects more in government revenues and
income taxes (per capita) than any province in the
country; the problem is the Redford PCs spend more
than any other province in the country as well,” says
the Wildrose’s Rob Anderson.

“If the PCs campaigned on raising taxes, running a $3-
billion deficit and going back into debt, Albertans
would have delivered a different verdict last spring.”

Mintz says if the government really wants to tackle tax
reform, it needs to establish a serious committee to
get the discussion going, “as opposed to floating trial
balloons. That’s been happening too much.”

Ontario managed to get voters to accept the
harmonized sales tax by doing good public
consultation and giving people lots of information, he
says.

Liepert says there are ways to deal with the anti-tax
voices.

“In my riding, there are a lot of highly educated people
on good incomes who don’t want to sit in traffic for
hours and they want schools,” says Liepert.

“If framed properly, they’d be prepared to engage in a
discussion about what is the right level of paying for
services.”

“The way I’d deal with the Wildrose is to present a
better plan for the next four years and you’ll get re-
elected.

“But I haven’t’ seen much of a plan. I’d just like to see
(the Redford government) become more bold.”

Former deputy prime minister Anne McLellan also says
tax reform is possible.

“People in Alberta are highly intelligent and if you
involve them in the discussion, they will support you.”

© Copyright (c) The Edmonton Journal
http://www.edmontonjournal.com/news/Taxing dile
mma Alberta finances/7846484/story.html

[errolanderson]

As you can probably sense, I'm in a
fairly pissy mood right now. Any time a
politician is on TV making comments on
the economy, my BP jumps.

This morning, Mr. Flaherty's statement
after the BOC statement that an interest
rate hike is 'less imminent' is
laughable (IMO). Mr Flaherty . . . wait
until you get a sniff of deflation.

Bucket . . . Alberta can't access
premium U.S. oil markets and U.S.
fracking is overwhelming our market
share. The Keystone pipeline (IMO) is
critical for American access. Moves by
Nebraska this week (to change the route)
suggest there is again hope.

The Cdn dollar will not experience a
major setback in my view because so many
countries are in worst shape than us.
Suspect the loonie will remain above par
for some time. But currency markets are
known to make me look quite stupid,
quite easily.

Tom . . . a Redford sales tax as a
savior? Wait until the public
understands the hole that is currently
being dug. Something has to be done with
the financial and politicial
irresponsibility. Heads should roll . .
. as would happen in the private sector.

[cottonpicken]

The debt service cost is the reason they cant
raise,as we borrow more and roll over more at a
lower rate our service cost will actually decrease
for a time,but then bam....our service cost starts to
gobble up huge chunks of government
revenues,then you get end game.

Thanfully we get to see what will happen to us by
watching what is about to happen in japan.

[bucket]

errol

Too bad you are not sending the crude west.

Shutting the valves off maybe a little painful for awhile, but relying on middle east oil and the military costs associated, it still seems canada is in good shape.

[SASKFARMER3]

Oil patch in Canada will slow down, it is, USA is having a hay day with the fracking and its working. Years ago some one told me they will use up all oil every where then start using theirs.
Hm maybe that is true.
Canada is not sitting real healthy.
How is a house in Saskatoon or Regina or SHit hole Saskatchewan worth million dollars.
On our Cres the latest three are $750, 675 and 825.
WHen a house in my home town is $375, Explain.
Canada or Saskatchewan is in a housing boom that's whats creating the employment numbers where their at.
Once we start to slow down wow it could get ugly.
Farm land that's another story.
Ill still go with Property in Florida or Arizona as a better bet than Saskatchwan.
Also house hold debt is insane.

[Burbert]

F man, the NHL is playin games agin.
Comedia is set to cum roarin back. We
love hookey, ferget the economie,
environment, politicos sales taxis, build
that f'n arena, gooo, oilers gooo! Doom
and gloom is fer chumps not champs like us
Comedian framers, don'tya think????????

[liberty]

Holding interest rates at these absurdly low levels is only going to encourage more and more people and governments to take on debt loads that they cannot sustain in the longer term. Interest rates must start creeping upwards at some point in time, and when they do the results will be catastrophic. There will be no "soft landing".

[errolanderson]

liberty . . . you are right that rates
can't stay down for the long-haul, but
they will stay down for the long-haul
(IMO)

What if we go into a period of
deflation? Interest rates could even
drop further.

Japan went negative rates and basically
the U.S. is now negative after bank fees
are deducted.

No one agrees with this, but personally
see deflation on our doorstep that could
even affect farm input prices.

[Rareearth]

Is Canada willing or able to compete in a currency
war? If not our dollar will be high, and exports of
commodities will suffer, more than we can
imagine. This being said the high dollar will allow
for cheaper imported ag inputs, fert, chem, and
equipment. Lower cost getaways to warm places
as well.