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Economy

G7 to back minimum global corporate tax and support economy – draft

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Finance ministers from the group of seven rich nations (G7) will vow this week to support their economies as they emerge from the pandemic and reach an “ambitious” deal on a minimum global corporate tax in July, a draft communique showed.

G7 officials, set to meet in London on June 4-5, will also say that once the recovery is well established, they will need to “ensure long-term sustainability of public finances”, which is understood to be code for a gradual withdrawal of stimulus.

The G7 comprises the United States, Japan, Britain, Germany, France, Italy and Canada.

“We commit to not withdrawing policy support too soon and investing to promote growth, create high-quality jobs and address climate change and inequalities,” the draft communique, seen by Reuters, said.

“Once the recovery is firmly established, we need to ensure the long-term sustainability of public finances to enable us to respond to future crises,” the draft said, without specifying how the G7 would deem the recovery to be considered firm.

G7 governments have been pumping trillions of dollars into their economies to keep them alive since the start of the pandemic in March 2020 as repeated lockdowns pushed the world into a deep recession.

To help alleviate the strain on public finances, the draft said the G7 strongly supported the efforts of the Organisation for Economic Cooperation and Development (OECD) to set a global minimum corporate tax level that would ensure large multinationals paid their fair share of taxes.

Such a tax would aim to solve the problem of large companies that generate huge revenues but pay very little tax because they set up offices for tax purposes in low-tax jurisdictions.

The solution the OECD is working on would force a minimum global level of tax on all corporate revenues, no matter where a company chooses to set up its headquarters for tax purposes.

“We commit to reaching an equitable solution on the allocation of taxing rights and to a high level of ambition on the rate for a global minimum tax,” the draft said, without mentioning any numbers.

The United States proposed earlier in May to set the minimum tax at 15%, down from the 21% it proposed in April, and the lower level seemed to quickly receive broad backing in Europe.

“We … look forward to reaching an agreement at the July meeting of G20 finance ministers and central bank governors,” the G7 draft said.

It said there was an overwhelming moral, scientific and economic case for ensuring wide access to COVID-19 vaccines, as the global economy would not be safe until the virus is under control everywhere.

The G7 will therefore call on the International Monetary Fund to use its funds for buying vaccines and on the private sector to step up its contribution too.

The draft said the G7 would also support mandatory climate-related financial disclosures by companies that provide “consistent and decision-useful” information for markets.

“We commit to properly embed climate change and biodiversity loss considerations into economic and financial policymaking, including addressing the macroeconomic impacts and the optimal use of policy levers such as carbon pricing,” the draft said.

The G7 would also seek to coordinate globally on what constitutes sustainable, green investment to avoid confusion among investors.

(Reporting by Jan Strupczewski; Editing by Andrew Cawthorne and David Clarke)

Economy

Statistics Canada reports wholesale sales higher in July

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OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.

The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.

The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.

The personal and household goods subsector fell 2.5 per cent to $12.1 billion.

In volume terms, overall wholesale sales rose 0.5 per cent in July.

Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.

This report by The Canadian Press was first published Sept. 13, 2024.

The Canadian Press. All rights reserved.

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Economy

B.C.’s debt and deficit forecast to rise as the provincial election nears

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VICTORIA – British Columbia is forecasting a record budget deficit and a rising debt of almost $129 billion less than two weeks before the start of a provincial election campaign where economic stability and future progress are expected to be major issues.

Finance Minister Katrine Conroy, who has announced her retirement and will not seek re-election in the Oct. 19 vote, said Tuesday her final budget update as minister predicts a deficit of $8.9 billion, up $1.1 billion from a forecast she made earlier this year.

Conroy said she acknowledges “challenges” facing B.C., including three consecutive deficit budgets, but expected improved economic growth where the province will start to “turn a corner.”

The $8.9 billion deficit forecast for 2024-2025 is followed by annual deficit projections of $6.7 billion and $6.1 billion in 2026-2027, Conroy said at a news conference outlining the government’s first quarterly financial update.

Conroy said lower corporate income tax and natural resource revenues and the increased cost of fighting wildfires have had some of the largest impacts on the budget.

“I want to acknowledge the economic uncertainties,” she said. “While global inflation is showing signs of easing and we’ve seen cuts to the Bank of Canada interest rates, we know that the challenges are not over.”

Conroy said wildfire response costs are expected to total $886 million this year, more than $650 million higher than originally forecast.

Corporate income tax revenue is forecast to be $638 million lower as a result of federal government updates and natural resource revenues are down $299 million due to lower prices for natural gas, lumber and electricity, she said.

Debt-servicing costs are also forecast to be $344 million higher due to the larger debt balance, the current interest rate and accelerated borrowing to ensure services and capital projects are maintained through the province’s election period, said Conroy.

B.C.’s economic growth is expected to strengthen over the next three years, but the timing of a return to a balanced budget will fall to another minister, said Conroy, who was addressing what likely would be her last news conference as Minister of Finance.

The election is expected to be called on Sept. 21, with the vote set for Oct. 19.

“While we are a strong province, people are facing challenges,” she said. “We have never shied away from taking those challenges head on, because we want to keep British Columbians secure and help them build good lives now and for the long term. With the investments we’re making and the actions we’re taking to support people and build a stronger economy, we’ve started to turn a corner.”

Premier David Eby said before the fiscal forecast was released Tuesday that the New Democrat government remains committed to providing services and supports for people in British Columbia and cuts are not on his agenda.

Eby said people have been hurt by high interest costs and the province is facing budget pressures connected to low resource prices, high wildfire costs and struggling global economies.

The premier said that now is not the time to reduce supports and services for people.

Last month’s year-end report for the 2023-2024 budget saw the province post a budget deficit of $5.035 billion, down from the previous forecast of $5.9 billion.

Eby said he expects government financial priorities to become a major issue during the upcoming election, with the NDP pledging to continue to fund services and the B.C. Conservatives looking to make cuts.

This report by The Canadian Press was first published Sept. 10, 2024.

Note to readers: This is a corrected story. A previous version said the debt would be going up to more than $129 billion. In fact, it will be almost $129 billion.

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Economy

Mark Carney mum on carbon-tax advice, future in politics at Liberal retreat

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NANAIMO, B.C. – Former Bank of Canada governor Mark Carney says he’ll be advising the Liberal party to flip some the challenges posed by an increasingly divided and dangerous world into an economic opportunity for Canada.

But he won’t say what his specific advice will be on economic issues that are politically divisive in Canada, like the carbon tax.

He presented his vision for the Liberals’ economic policy at the party’s caucus retreat in Nanaimo, B.C. today, after he agreed to help the party prepare for the next election as chair of a Liberal task force on economic growth.

Carney has been touted as a possible leadership contender to replace Justin Trudeau, who has said he has tried to coax Carney into politics for years.

Carney says if the prime minister asks him to do something he will do it to the best of his ability, but won’t elaborate on whether the new adviser role could lead to him adding his name to a ballot in the next election.

Finance Minister Chrystia Freeland says she has been taking advice from Carney for years, and that his new position won’t infringe on her role.

This report by The Canadian Press was first published Sept. 10, 2024.

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