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Gas tax break not currently on table as Liberals battle affordability problems

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OTTAWA — The federal government has no immediate plans to cut prices at the pump by offering Canadians a temporary reprieve from the federal gas tax, Natural Resources Minister Jonathan Wilkinson said Tuesday.

Canada is looking to stabilize global oil prices by increasing supply, something Wilkinson said is starting to happen. He said aid for Canadian families in the meantime is focused on areas Finance Minister Chrystia Freeland highlighted in a speech last week.

Those include required annual increases to federal benefit cheques such as the GST rebate and Canada Child Benefit, cuts to child care costs under the new federal-provincial child care agreements and increases coming this summer to both the Old Age Security pension and Canada Workers Benefit that were announced in the 2021 budget.

Freeland says the measures together add up to almost $9 billion.

Conservatives have called on the Liberals for months to cut gas taxes, including lifting the GST from gasoline, temporarily suspending the carbon price, or lifting the 10 cents per litre federal excise tax.

At the moment, Wilkinson said gas tax changes aren’t in the cards.

“We haven’t ruled anything off the table in the future, I think it would be irresponsible to do that at this point,” he said. “But the plan right now is what Minister Freeland said it was.”

Wilkinson’s comments come a day after U.S. President Joe Biden mused about slashing the federal gas tax south of the border. Other measures to curtail rising gas prices, such as releasing oil supply from U.S. reserves, haven’t worked.

If the Biden administration follows through on the gas tax plan, it would make Canada the only remaining G7 country not to have recently cut gas excise taxes or offered a subsidy to help lower pump prices.

Global oil prices are up 70 per cent in the last year, surging mostly since February following Russia’s invasion of Ukraine. In Canada, average pump prices are about 70 cents more per litre than they were a year ago.

In March the United Kingdom and Italy slashed gasoline excise taxes, and Germany followed suit in June. In April, France offered a consumer rebate on gasoline. Japan has implemented a subsidy to fuel wholesalers.

Italy’s economic minister said earlier this month the gas tax cut was expensive, but that the country was collecting more value-added tax because of higher gas prices, and was funnelling that back to consumers rather than general revenues.

Canada’s GST revenue in 2021-22 was more than $14 billion higher than the previous year. That’s in large part because of inflation, including on the price of gas.

Germany found gas prices only lowered temporarily following its gas tax cut. But University of Calgary economist Trevor Tombe said Alberta’s cut to its gas tax seems to be having the desired effect.

Premier Jason Kenney cut the 13 cent provincial excise tax on gasoline on April 1 and said it will stay gone as long as the global benchmark price for oil is above $90 a barrel.

“You’ve had well over two full months of information and looking at what the effect of that policy change was on prices in Alberta, relative to an estimate of what prices would have been otherwise, then it looks like the entire value of the tax reduction was passed through to consumers,” said Tombe.

Alberta has the lowest gasoline price in the country on average right now.

However Tombe said cutting gas taxes is expensive and there are other ways to help ease the financial hit to Canadians that may be more efficient. That could include, he said, temporary boosts to income support programs.

“There’s far cheaper ways to provide support to families who need it, rather than eliminate the tax, which would benefit all drivers, even those who are higher income and may not actually necessarily themselves face affordability challenges,” he said.

The NDP is asking the government to double the GST rebate and increase the Canada Child Benefit by $500 this year to help with affordability.

Both programs are indexed to inflation but that increase is based on inflation one year earlier. So the increase is 2.4 per cent — about $7 more for the GST rebate per adult, and another $114 for the Canada Child Benefit.

Inflation in April was almost seven per cent but the annual inflation rate now won’t be reflected in benefit payments until next summer.

Tombe said the government could catch up earlier by indexing the payments quarterly instead of annually.

This report by The Canadian Press was first published June 21, 2022.

 

Mia Rabson, The Canadian Press

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Returning to the Office

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Unfortunately, the world’s economies are moving into or are in a Recession. A horrid word I know, but every decade or so it appears like an unwanted house guest.
Will a recession bring people back into the office? After 2 years of working from home, if you had that safety privilege-opportunity, many of us will be invited or perhaps forced to return to the office.

A Pew Research Center survey(2020) found that 64% of respondents polled had been working from home due to office closures due to the pandemic. By January 2022 61% were doing it because they wanted to. Employers allowed and even encouraged working from home while studying their employee’s progress and output.

Now we have found that we live in a job seekers marketplace, with companies offering higher wages and better perks to attract and keep potential employees. The “great resignation” of 2020-2021 has become the “great labour slackening” where employers feel emboldened-half of these employers believe in-office workers are more productive.

Many in the market believe employees will return to the office space, fearing the possibility of being laid off by employers requiring a sense of control and management. The same survey found that 14% of those who have returned to the office feared losing work opportunities while at home.

The Canadian National Society of High School Scholars found that 63% of their members wanted to go back to the office, while 23% considered working from home.

A recession places most businesses in a particularly difficult situation, that would not go well for their employees. Recessions traditionally bring with them cost-cutting avenues, repealing benefit packages, various benefits to the employee and staff, layoffs and terminations. Working from home also grants employers added benefits. Employee’s that work half-time at the office and their home office can save an employer $11,000 annually, while a full-time employee working from home would save them more. Negotiations between employers and employees working from home have and will carry on, where a person’s annual wage/salary will decline. The privilege of working at home has a cost, that of lower wages. Working from home can save an individual as much as $4-5,000 annually.

Businesses and employees have to consider what is best for themselves. The cost of hiring and retraining employees is very high, especially in this labour void we work in today.

A possible work-from-home strategy may be on its way, encouraged by governments, environmentalists and Sociologists. The Possible benefits such as less stress, driving to work, health and safety issues, and improved communication systems will certainly increase the likelihood that home-based work is a future trend.

Steven Kaszab
Bradford, Ontario
skaszab@yahoo.ca

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UN: Multiple famines might be declared in 2022

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Berlin, Germany- Antonio Guterres, Secretary-General of the United Nations (UN) has warned of a looming severe global famine if drastic measures are not taken.

Guterres warned that farmers in Asia, Africa and the Americas would be the hardest hit by the rising costs of fertilizer and fuel.

“There is a real risk that multiple famines will be declared in 2022, 2023 could be even worse. This year’s food access issues could become next year’s global food shortage. No country will be immune to the social and economic repercussions of such a catastrophe,” said Guterres.

In addition, the UN Secretary-General said the Russian attack on Ukraine exacerbated pre-existing problems and called for the release of Ukrainian agricultural products onto the world market to ease shortages as well as debt relief for indigent countries.

“The war in Ukraine has compounded problems that have been brewing for years, climate disruption, the COVID-19 pandemic and the deeply unequal recovery,” added Guterres.

However, Russian President, Vladimir Putin, said Western nations are deliberately stirring up tensions regarding Ukrainian grain exports.

Putin said Russia is not impeding exports, and criticized the West for its “cynical attitude” towards the food supply of the developing nations, which have been worst affected by soaring prices. He said rising inflation in the West was “a result of their own irresponsible macroeconomic policies.”

Furthermore, Putin said Russia is ready to provide free passage to international waters for ships carrying grain, adding that Russia had reached an “understanding” on that issue with the UN Secretariat.

Moreso, the Russian President suggested that the Ukrainian military should demine the country’s ports to further facilitate exports, and said “a constructive approach on Kiev’s part” is the only thing that is lacking and cited that Russia itself may be able to export between 37 and 50 tons of grain this year.

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Canada can now seize, sell off Russian assets. What's next? – CBC News

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Selling Russian-owned assets to pay for Ukraine’s reconstruction may sound like a logical approach to restitution, but as the Canadian government gains new powers to begin this process, questions remain about how it will work, and whether some issues are headed to court.

C-19, the budget implementation bill, received Royal Assent last Thursday. Among its many measures are new powers to seize and sell off assets owned by individuals and entities on Canada’s sanctions list. While the new powers could be used in any international conflict, the Liberal government’s current priority is helping victims of the Russian invasion of Ukraine.

Canada’s stepped-up sanctions powers were discussed with U.S. Treasury Secretary Janet Yellen during her visit to Toronto last week.

“We think it’s really important to extend our legal authorities because it’s going to be really, really important to find the money to rebuild Ukraine,” Finance Minister Chrystia Freeland told Canadian and American reporters. “I can think of no more appropriate source of that funding than confiscated Russian assets.”

That sentiment was shared by Ontario Sen. Ratna Omidvar who proposed her own Senate legislation to enable similar asset seizures two years ago. At the time she was motivated to help the displaced Rohingya population by sanctioning corrupt generals in Myanmar.

“Kleptocrats must pay for their crimes, not through simply being sanctioned and their assets being frozen, but by their assets being repurposed and confiscated,” said Omidvar.

Although C-19 will work a bit differently than her bill, Omidvar still calls it a “good start” and supports the government’s move. 

“The question no longer is ‘if we should confiscate,'” the senator said. “The question is: ‘How should we repurpose? … Who’s involved? How do we provide accountability? How do we protect ourselves?'”

Test cases expected

Although some jurisdictions, notably Switzerland, already confiscate and return certain illicit assets, this move by Canada — and potentially other G7 countries meeting in Germany this week — is unprecedented.

Allies agree on the imperative of cranking up more economic pressure on Russian President Vladimir Putin, but it’s still a risky play. Other hostile governments could seize Canadian-owned assets abroad in retaliation. It also may violate customary international law, such as the UN Articles on states responsibility.

The new powers target assets in Canada owned by an individual or entity on the federal government’s sanctions list. Previously, authorities could seize the proceeds of crime. With C-19, they can confiscate the assets of sanctioned individuals whether they’re acquired legally or illegally.

Is that fair? Omidvar anticipates the new powers being challenged in Canadian court. “I keep thinking we need a couple of test cases,” she said.

The senator’s original bill proposed seizing and redistributing assets by court order, with a judge adjudicating concerns.

C-19 puts more power in ministerial hands, something that is “faster and nimbler,” Omidvar acknowledges, but also less transparent.

During debate in the Senate, Omidvar called on the government to take “politics out of the equation” so Canada would not be accused of inappropriate distribution of funds, “or worse, appropriation of funds for its own use.”

When asked about the legality of these new powers earlier this month, Justice Minister David Lametti said “you don’t have an absolute right to own private property in Canada,” and compared it to other processes of government expropriation.

Adrien Blanchard, a spokesperson for Foreign Affairs Minister Melanie Joly, told CBC News that “necessary checks and balances” are provided in C-19, including a formal judicial process to forfeit any asset.

“Procedural fairness was a key consideration in the development of these measures, and forfeiture proceedings before a judge are not automatic,” Joly’s spokesperson said. 

Privacy rules limit disclosure

Omidvar’s bill would have created a registry with the name of any person or entity associated with a seized asset and its value. There’s no such disclosure requirement in C-19, so this could be a difficult process to track once it starts.

One or more court cases could trigger more public disclosure. 

When the RCMP reported earlier this month that Canadian authorities have frozen the equivalent of $124 million in assets so far, it was unable to reveal what these assets are — cash, bonds, cryptocurrency, corporate shares, real estate or other property — because of the Privacy Act.

The minister of foreign affairs may issue permits on a case-by-case basis to authorize activities or transactions that would otherwise be prohibited, but only to people in Canada or Canadians abroad. When asked if any such permits have been issued related to Canada’s sanctions against Russia, Global Affairs Canada would not comment, again citing privacy concerns.

One of the prominent Russian oligarchs on Canada’s sanctions list, Roman Abramovich, holds around 30 per cent of the shares of Evraz, a global steel manufacturer that employs over 1,800 people at its facilities in Western Canada. 

CBC News asked Evraz North America whether any of its shares or business properties were among assets frozen by Canada so far, but the company did not respond. 

Separate from its powers to seize assets, the budget implementation bill also implements a publicly accessible beneficial ownership registry to make it easier to trace the ownership of anonymous shell companies. That could reveal more about Russian assets in Canada.

However, a business that’s registered provincially instead of incorporated federally would only appear in the national registry if provinces and territories agree to participate — if they don’t agree, there is a potential loophole, Omidvar warned her Senate colleagues during debate.

Who gets the proceeds?

Omidvar’s original bill would have required the recipient of redistributed funds to report back to a court on its use.

C-19 puts the minister of foreign affairs in charge of who gets the money and what happens to it.

“Operationalizing this is going to be a little bit of a challenge,” said fellow senator and former G7 sherpa Peter Boehm. “This is all very, very new.”

The former senior Global Affairs official suggests the government needs to get safeguards in place.

“What is the mechanism? To whom should these assets go? Do they go to individuals? Do they go to state actors?” Boehm said, noting that Canada may want to coordinate with other like-minded countries and UN agencies, like the World Food Program. “There are a lot of questions there… we need to know and the Canadian people would want to know where this money is going and if it’s being properly spent.”

The yacht Amore Vero shown here docked in the Mediterranean resort of La Ciotat, in March, was seized by French authorities after being linked to Igor Sechin, a Putin ally who runs Russian oil giant Rosnef. (Bishr Eltoni/The Associated Press)

The G7 considered asset seizures previously, Boehm said. He expects they could feature in at least behind-the-scenes conversations this week, if not the final communiqué.

“The leaders meetings internationally are timed, I think, very well,” he said.

“Ukraine, historically… has struggled with corruption issues,” said Rachel Ziemba, an adjunct senior fellow with the Centre for a New American Security who advises companies and countries on sanctions policy.  “There have been a lot of strides made… but it’s still not at the level of a developed economy.”

Working through the International Monetary Fund, or setting up a trust fund that would vet recipients and add more reporting to the process could add more certainty, she suggested.

Russian central bank has reserves in Canada

Taxpayers in Canada, the U.S. or other countries don’t want to bear the full cost of this war, Ziemba said, but as governments embark on asset seizures they also have to be concerned about the message it sends on what jurisdictions are safe for foreign investment.

“There are a lot of legal questions ahead,” she said.

According to recent reporting on Russian Central Bank reserves, about $20 billion might be held in Canada — a far more significant sum in the context of Ukrainian reconstruction than the $124 million in frozen assets disclosed so far.

“The Russian Central Bank and some of its investment funds over the last decade [were] really focused on trying to reduce its exposure to U.S. dollars,” Ziemba explains. Canadian reserve assets and government bonds were attractive because they were both stable and got more yield than comparable investments in Japan or the European Union.

In other words: a small slice of Canada’s debt is held by Russia. “The only saving grace is that the amount they have is not so much they can hold much leverage,” Ziemba said.

Russia’s central bank is on Canada’s sanctions list. Should these reserves be seized and handed over to Ukraine too?

Yellen’s argued against doing this in the U.S., even though it could provide more funds to rebuild Ukraine.

“That might send a message to other countries that are investing in [international currency and bond] markets,” Ziemba said — think of China’s buying power, for example. “That, I think, is why the [U.S.] treasury department and even the [U.S. federal reserve] are wary of these moves.”

Are asset sales imminent?

Earlier this month, CBC News asked Prime Minister Justin Trudeau whether Canada intended to sell the full amount of assets frozen so far. He declined to answer, saying “there are lots of conversations going on” and Canada was “a long way” from deciding how proceeds would be spent.

But when the Senate foreign affairs committee pre-studied C-19 in May, officials said the government will move quickly.

“The intent is definitely to start identifying assets to pursue and to freeze and forfeit them shortly after Royal Assent is received for Bill C-19,” said Alexandre Lévêque, the assistant deputy minister for strategic policy at Global Affairs Canada.

In its report, that Senate committee said the government needs “to monitor on an ongoing basis the ways in which repurposed funds are used and to learn from the early examples of the new powers being implemented.”

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