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B.C. forecasts surplus of $5.7 billion, but ‘shock rebound’ may not last: minister

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VICTORIA — British Columbia’s budget forecast shows a surplus of $5.7 billion, dwarfing the previous estimate and giving the government room to help people facing the ongoing cost-of-living crunch, says Finance Minister Selina Robinson.

The projected surplus is $5 billion higher than the $706 million forecast last September, Robinson said Friday.

The latest fiscal update, covering the government’s financial results from last April to September, puts the province in a “significant surplus position” to continue using its resources to deliver results on housing, public safety, health care and climate change, she said.

“Many British Columbians are feeling squeezed, feeling squeezed to put food on the table and cover costs,” she said at a news conference. “Our strong fiscal position means we can continue to put people first.”

Much of the added surplus comes from higher personal and corporate income tax revenues, at $3.7 billion, while sales taxes and natural gas royalties were also higher, Robinson said.

But the minister cautioned that such hefty surplus forecasts are not guaranteed to continue.

Robinson said B.C. is showing strong growth despite the ongoing pandemic, but the current numbers could be attributed to a “rebound.”

“We also need to remember these numbers that we’re seeing here, this is a shock rebound number,” she said. “Whether they’re going to hold over the long term remains to be seen. We don’t know if these numbers are going to hold year over year.”

Robinson said $2 billion of the added revenue has already been earmarked for cost-of-living measures announced since the summer.

Those include $1 billion for the Climate Action Tax Credit and BC Affordability Credit increases, $395 million for car insurance rebates and $320 million for a one-time electricity bill credit.

Since being sworn in on Nov. 18, Premier David Eby has made several spending announcements, including pledging $230 million in police funding to hire hundreds more officers.

Eby has said the B.C. economy is doing well and the province’s budget can cover the cost of his latest plans.

“We will use these dollars we have to invest in things people need,” Robinson said. “We’re in a strong position to continue making thoughtful decisions.”

But opposition parties say the New Democrat government has been holding back money while people are struggling to make ends meet during times of rising inflation and interest rates.

BC Liberal finance critic Peter Milobar said it appears the government withheld some relief initiatives until Eby took over from former premier John Horgan.

“Everyday people are now paying the price for his delays, despite the province having the money to provide relief,” he said in a statement. “As these numbers make clear, the NDP have no excuse to avoid making much-needed investments in areas like health care, affordability, and mental health and addictions.”

Green Leader Sonia Furstenau said the fiscal update shows the government has been failing to meet the needs of the citizens of B.C.

“For those who are struggling to pay their bills, cover the cost of groceries, find affordable housing, and access reliable health care, this budget surplus is an indication that the B.C. NDP government could have been doing more,” she said in a statement.

Furstenau said the government had the money to raise social assistance and disability rates, build community health centres and invest in education, transit and housing, but didn’t.

The fiscal update says the most recent private sector economic growth forecast now projects the B.C. economy to grow 2.8 per cent this year and 0.5 per cent in 2023.

Robinson said she will meet with economic forecasters next month to discuss the province’s growth projections.

This report by The Canadian Press was first published Nov. 25, 2022.

 

Dirk Meissner, The Canadian Press

Economy

Removing domestic trade barriers could boost productivity, add $200 billion to economy annually: CFIB – Financial Post

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Removing domestic trade barriers could boost productivity, add $200 billion to economy annually: CFIB  Financial Post

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Economy

Here is Trump economy: Slower growth, higher prices and a bigger national debt

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If Donald Trump is re-elected president of the United States in November, Americans can expect higher inflation, slower economic growth and a larger national debt, according to economists.

Trump’s economic agenda for a second term in office includes raising tariffs on imports, cutting taxes and deporting millions of undocumented migrants.

“Inflation will be the main impact” of a second Trump presidency, Bernard Yaros, lead US economist at Oxford Economics, told Al Jazeera.

“That’s ultimately the biggest risk. If Trump is president, tariffs are going up for sure. The question is how high do they go and how widespread are they,” Yaros said.

Trump has proposed imposing a 10 percent across-the-board tariff on all imported goods and levies of 60 percent or higher on Chinese imports.

During Trump’s first term in office from 2017 to 2021, his administration introduced tariff increases that at their peak affected about 10 percent of imports, mostly goods from China, Moody’s Analytics said in a report released in June.

Those levies nonetheless inflicted “measurable economic damage”, particularly to the agriculture, manufacturing and transportation sectors, according to the report.

“A tariff increase covering nearly all goods imports, as Trump recently proposed, goes far beyond any previous action,” Moody’s Analytics said in its report.

Businesses typically pass higher tariffs on to their customers, raising prices for consumers. They could also affect businesses’ decisions about how and where to invest.

“There are three main tenets of Trump’s campaign, and they all point in the same inflationary direction,” Matt Colyar, assistant director at Moody’s Analytics, told Al Jazeera.

“We didn’t even think of including retaliatory tariffs in our modelling because who knows how widespread and what form the tit-for-tat model could involve,” Colyar added.

‘Recession becomes a serious threat’

When the US opened its borders after the COVID-19 pandemic, the inflow of immigrants helped to ease labour shortages in a range of industries such as construction, manufacturing, leisure and hospitality.

The recovery of the labour market in turn helped to bring down inflation from its mid-2022 peak of 9.1 percent.

Trump has not only proposed the mass deportation of 15 million to 20 million undocumented migrants but also restricting the inflow of visa-holding migrant workers too.

That, along with a wave of retiring Baby Boomers – an estimated 10,000 of whom are exiting the workforce every day – would put pressure on wages as it did during the pandemic, a trend that only recently started to ease.

“We can assume he will throw enough sand into the gears of the immigration process so you have meaningfully less immigration, which is inflationary,” Yaros said.

Since labour costs and inflation are two important measures that the US Federal Reserve weighs when setting its benchmark interest rate, the central bank could announce further rate hikes, or at least wait longer to cut rates.

That would make recession a “serious threat once again”, according to Moody’s.

Adding to those inflationary concerns are Trump’s proposals to extend his 2017 tax cuts and further lower the corporate tax rate from 21 percent to 20 percent.

While Trump’s proposed tariff hikes would offset some lost revenue, they would not make up the shortfall entirely.

According to Moody’s, the US government would generate $1.7 trillion in revenue from Trump’s tariffs while his tax cuts would cost $3.4 trillion.

Yaros said government spending is also likely to rise as Republicans seek bigger defence budgets and Democrats push for greater social expenditures, further stoking inflation.

If President Joe Biden is re-elected, economists expect no philosophical change in his approach to import taxes. They think he will continue to use targeted tariff increases, much like the recently announced 100 percent tariffs on Chinese electric vehicles and solar panels, to help US companies compete with government-supported Chinese firms.

With Trump’s tax cuts set to expire in 2025, a second Biden term would see some of those cuts extended, but not all, Colyar said. Primarily, the tax cuts to higher earners like those making more than $400,000 a year would expire.

Although Biden has said he would hike corporate taxes from 21 percent to 28 percent, given the divided Congress, it is unlikely he would be able to push that through.

The contrasting economic visions of the two presidential candidates have created unwelcome uncertainty for businesses, Colyar said.

“Firms and investors are having a hard time staying on top of [their plans] given the two different ways the US elections could go,” Colyar said.

“In my entire tenure, geopolitical risk has never been such an important consideration as it is today,” he added.

 

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China Stainless Steel Mogul Fights to Avoid a Second Collapse

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Chinese metal tycoon Dai Guofang’s first steel empire was brought down by a government campaign to rein in market exuberance, tax evasion accusations and a spell behind bars. Two decades on, he’s once again fighting for survival.

A one-time scrap-metal collector, he built and rebuilt a fortune as China boomed. Now with the economy cooling, Dai faces a debt crisis that threatens the future of one of the world’s top stainless steel producers, Jiangsu Delong Nickel Industry Co., along with plants held by his wife and son. Its demise would send ripples through the country’s vast manufacturing sector and the embattled global nickel market.

 

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