Economy
Experts: Quebec's Plan for a Green Economy | Newsroom – McGill Newsroom
Premier François Legault announced his government’s long-awaited plan to tackle climate change on Monday, November 16, after one of the main elements was revealed over the weekend: a ban on the sale of new gas-powered vehicles, starting in 2035. The government is devoting $6.7 billion over the next five years to deal with climate change. The bulk of that money will go to subsidies for the purchase of electric vehicles. (CBC News)
Here are some experts from McGill University that can provide comment on this issue:
Christopher Barrington-Leigh, Associate Professor, Institute for Health and Social Policy and Bieler School of Environment
“Anyone with an intermediate understanding of sustainability could tell you there are notable problems with this policy. Flashy targets and subsidies are the way Canada has effectively ignored climate for decades. In contrast, Quebec has the opportunity to put into place equitable, effective, and positively-oriented alternatives.”
Chris Barrington-Leigh is an Associate Professor cross-appointed to the Institute for Health and Social Policy and the Bieler School of Environment and an Associate Member in the Department of Economics. His research makes use of subjective well-being reports to address the relative importance of social and community-oriented aspects of life as compared with material consumption.
chris.barrington-leigh [at] mcgill.ca (English, French)
Dror Etzion, Associate Professor, Desautels Faculty of Management
“Quebec’s green economy plan is both narrow and uninspiring. It is narrow because it focuses primarily on transportation, virtually ignoring other greenhouse gas emitting sectors such as buildings, agriculture and manufacturing. It is uninspiring because it imagines a transportation future that is no better than our current one. A car-centric province with endless traffic jams, agonizing road-rage and sprawling development is dismal, and experiencing it through the windshield of an electric car is nowhere near enough to make it pleasant. It’s time to integrate efforts to reduce greenhouse gas emissions with comprehensive, inspiring policy choices that will promote innovation and improve the quality of Quebecers’ lives.”
Dror Etzion is an Associate Professor of Strategy and Organizations at the Desautels Faculty of Management and an Associate Member of the Bieler School of the Environment. His work suggests that managing for sustainability through local, open, emergent initiatives increases the recruitment of diverse stakeholders, fosters creativity, and yields impactful outcomes.
dror.etzion [at] mcgill.ca (English, Hebrew)
Sébastien Jodoin, Assistant Professor, Faculty of Law
“The latest plan for a green economy is a missed opportunity for Quebec. To do its part in the fight against climate change and respect the human rights of its citizens, Quebec must adopt more ambitious measures to initiate a faster transition to carbon-neutrality.”
Sébastien Jodoin is an Assistant Professor in the Faculty of Law and an associate member of the Bieler School of Environment. He holds the Canada Research Chair (Tier 2) in Human Rights and the Environment. His research focuses on legal and policy solutions to complex environmental and social problems that cut across multiple fields and levels of governance.
sebastien.jodoin-pilon [at] mcgill.ca (English, French)
Audrey Moores, Associate Professor, Department of Chemistry
“The Quebec government’s green plan is an undeniable step forward that builds on a strength of the province: its large hydroelectric park. However, sustainable development is much broader than just the issue of CO2 emissions and transportation. In particular, the issues of waste, pollution, and the intelligent use of biomass are the major forgotten issues of the November 16th announcement.”
Audrey Moores is an Associate Professor in the Department of Chemistry. A leading expert in the field of catalysis using metal, metal oxide and biomass-based nanomaterials, with a special emphasis on sustainable processes and use of earth abundant starting materials, she held the Tier II Canada Research Chair in Green Chemistry from 2007 to 2017.
audrey.moores [at] mcgill.ca (English, French)
Economy
Biden's Hot Economy Stokes Currency Fears for the Rest of World – Bloomberg
As Joe Biden this week hailed America’s booming economy as the strongest in the world during a reelection campaign tour of battleground-state Pennsylvania, global finance chiefs convening in Washington had a different message: cool it.
The push-back from central bank governors and finance ministers gathering for the International Monetary Fund-World Bank spring meetings highlight how the sting from a surging US economy — manifested through high interest rates and a strong dollar — is ricocheting around the world by forcing other currencies lower and complicating plans to bring down borrowing costs.
Economy
Opinion: Higher capital gains taxes won't work as claimed, but will harm the economy – The Globe and Mail
Alex Whalen and Jake Fuss are analysts at the Fraser Institute.
Amid a federal budget riddled with red ink and tax hikes, the Trudeau government has increased capital gains taxes. The move will be disastrous for Canada’s growth prospects and its already-lagging investment climate, and to make matters worse, research suggests it won’t work as planned.
Currently, individuals and businesses who sell a capital asset in Canada incur capital gains taxes at a 50-per-cent inclusion rate, which means that 50 per cent of the gain in the asset’s value is subject to taxation at the individual or business’s marginal tax rate. The Trudeau government is raising this inclusion rate to 66.6 per cent for all businesses, trusts and individuals with capital gains over $250,000.
The problems with hiking capital gains taxes are numerous.
First, capital gains are taxed on a “realization” basis, which means the investor does not incur capital gains taxes until the asset is sold. According to empirical evidence, this creates a “lock-in” effect where investors have an incentive to keep their capital invested in a particular asset when they might otherwise sell.
For example, investors may delay selling capital assets because they anticipate a change in government and a reversal back to the previous inclusion rate. This means the Trudeau government is likely overestimating the potential revenue gains from its capital gains tax hike, given that individual investors will adjust the timing of their asset sales in response to the tax hike.
Second, the lock-in effect creates a drag on economic growth as it incentivizes investors to hold off selling their assets when they otherwise might, preventing capital from being deployed to its most productive use and therefore reducing growth.
Budget’s capital gains tax changes divide the small business community
And Canada’s growth prospects and investment climate have both been in decline. Canada currently faces the lowest growth prospects among all OECD countries in terms of GDP per person. Further, between 2014 and 2021, business investment (adjusted for inflation) in Canada declined by $43.7-billion. Hiking taxes on capital will make both pressing issues worse.
Contrary to the government’s framing – that this move only affects the wealthy – lagging business investment and slow growth affect all Canadians through lower incomes and living standards. Capital taxes are among the most economically damaging forms of taxation precisely because they reduce the incentive to innovate and invest. And while taxes on capital gains do raise revenue, the economic costs exceed the amount of tax collected.
Previous governments in Canada understood these facts. In the 2000 federal budget, then-finance minister Paul Martin said a “key factor contributing to the difficulty of raising capital by new startups is the fact that individuals who sell existing investments and reinvest in others must pay tax on any realized capital gains,” an explicit acknowledgment of the lock-in effect and costs of capital gains taxes. Further, that Liberal government reduced the capital gains inclusion rate, acknowledging the importance of a strong investment climate.
At a time when Canada badly needs to improve the incentives to invest, the Trudeau government’s 2024 budget has introduced a damaging tax hike. In delivering the budget, Finance Minister Chrystia Freeland said “Canada, a growing country, needs to make investments in our country and in Canadians right now.” Individuals and businesses across the country likely agree on the importance of investment. Hiking capital gains taxes will achieve the exact opposite effect.
Economy
Nigeria's Economy, Once Africa's Biggest, Slips to Fourth Place – Bloomberg
Nigeria’s economy, which ranked as Africa’s largest in 2022, is set to slip to fourth place this year and Egypt, which held the top position in 2023, is projected to fall to second behind South Africa after a series of currency devaluations, International Monetary Fund forecasts show.
The IMF’s World Economic Outlook estimates Nigeria’s gross domestic product at $253 billion based on current prices this year, lagging energy-rich Algeria at $267 billion, Egypt at $348 billion and South Africa at $373 billion.
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