"The upcoming Federal Budget Needs immediate, permanent tax cuts to Stimulate The Canadian economy, to Be Offset by Tightening The kidneys were pro Spending in Future Years, SEVERAL of Canada's top private-sector economists recommended Wednesday." Report on Business
Still without gene economists argue the major Canadian banks in economic crisis for a combination of tax cuts and reduced government spending as a centerpiece of any stimulus package. Echoing Flaherty, they recognize the need to invest in infrastructure projects, the emphasis they believe should be on tax cuts permanent .
Obviously, they note, such a measure would create a structural shortfall in the state coffers and therefore the right solution? Cut in program spending, which according to our bankers rise, for 10 years, because excessive speed slightly higher than the growth rate of GDP.
No mention of the fact that spending growth for ten years (1998 - 2008) is really just catching up and beyond the minimum state intervention after disastrous cuts of the 90s as part of the deficit. Our public expenditure / GDP is still well below the average level of OECD and well below the basic needs of a decent society. Why should we invest massively in infrastructure now? Because we did not have the budgets to maintain them during the neoliberal growth.
And tax cuts staff want? I have no details, but there are not many options. Either we lower taxes on consumption is significant to say the GST, the reduction must be significant impact economic, that is to say, make a psychological impression on households to engage in another round of overconsumption. I doubt that Flaherty is considering lowering the GST to the symbolic figure of 3, 2 or even 1%. And, as many have pointed out, lower sales taxes as much if not more stimulates the purchase of imported goods that North American products. So the effect of recovery is mixed.
Decline in tax revenues, certainly, but which ones?
We will certainly take the opportunity to broaden the tax shelters related to capital gains and other financial gain, claiming to lighten the burden of households on the cusp of retirement or retired. We will certainly take the opportunity to lighten the tax burden on the richest 10% contribute nearly 50% of the income tax, separate the rich from this category a little more about the fate of the rest of society .. .
For the lucky who is among the richest 1% (in terms of revenue) will come out the winners of such a "recovery", it is they who hold the largest share of financial assets and they are the ones who benefits most from a general decline in tax rates.
short, the political economy of overclass this crisis seems increasingly clear, on the one hand ordinary households must clean up their balance sheets and restore their savings rate, dixit Jacques Ménard Group BMO In The News, 28 November, and significant tax cuts permanent for the wealthiest to consolidate the neoliberal agenda of tax cuts paid by the year overclass North America began 20 years ago and finally reduced government spending on programs to further limit the influence of the public on the economy and further limit services for ordinary working families .
Sum we have a case of "Shock Therapy"?
A return to the prohibition of usury ?
In response to our bankers, I propose the following measure: recovery of Canada's law on "usury". The maximum rate that a financial institution can charge a borrower should be set as a deviation from the rate of the central bank, and this gap should be, given the crisis set for physical persons 10%. A higher rate would be set for legal persons, that is to say the companies. And why not, a range of rates may be set according to different types of loans, still based on a political objective. Such a "law wear "could actually become a policy of" directed credit "(popular measures in the years 60 to 70 in developing countries and reviled by the IMF) and an important lever of political economy.
Why that?
1. because I forgot to say earlier, banks also require that the Bank of Canada lowers its key rate more drastically, as you know gold declines this fall does are not translated into better credit conditions for consumers and businesses, and cuts will not want either. So the state to link its policy rate on the credit conditions through a ceiling imposed on banks.
2. because if the problem is the excessive level of debt in ordinary households the only way to reduce this rate without causing a depressive effect on demand is to reduce the burden of financing. Besides salary increases, it can be done through good old inflationary surge, two scenarios unlikely now, or through lower interest rates, allowing more rapid repayment of principal and So a rising savings rate.
3. economists overclass replied that this will encourage ordinary households to engage again in a race unsustainable debt burdens. Obviously when wages stagnated and it has promised some new objects of consumption in order to ensure a profit rate the temptation is there. One day we will have to decide! But by then I think we can count on the banks to continue, as the crisis continues to ration credit and thus limit the supply of credit.
4. They add that such a policy of directed credit would flee to banks and financial institutions étrangèrent and extend credit rationing as well as having a disastrous impact on their profits.
To that one little answer quickly, because a true response would require further elaboration:
a) the flight of Citigroup, HSBC and other MBNA credit market and mortgage consumer credit is well entammée, also will allow domestic banks can increase their share lost market;
b) the standard rate of credit secured by a usury law would seek to minimize the possibility of worsening credit rationing;
c) less than 50% of bank revenues come from interest on loans, the usury law may simply turn their "excess profits" into profits.
By cons, a Such action may significantly affect the market for the securitization of these loans by lowering the rate of return on these assets and especially lucrative activities related to securitization, but given the role of the market crisis, is so much trouble to see it disappear and banks forced to play their full role as creditor?
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