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Quebec Backs Vaccine Passport to Keep Economy Open Despite Variants – Bloomberg

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Quebec, which had some of the toughest restrictions in North America during the pandemic, says it won’t close its economy again if there’s another outbreak.

Instead, Canada’s second-most populated province will only allow fully vaccinated people to access non-essential places like bars and gyms. The passport-based approach, which is still rare in Canada, will take effect on Sept. 1, leaving Quebeckers enough time to get a second jab, Health Minister Christian Dube said.

The approach “will enable us, in case things deteriorate, to have a much more targeted approach that deploys specific measures, but most of all to keep some economic sectors open” Dube said at a news conference Thursday. “The vaccine passport becomes one more instrument in our case management.”

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Quebec was hit particularly hard by the pandemic, which caused 131 deaths per 100,000 people in the province, nearly double the overall Canadian average. The government has been relaxing constraints in recent weeks, including dropping a curfew that lasted almost five months, as vaccination rates climb and hospitalizations drop.

Canada, despite stringent entry rules, is seeing the more contagious delta variant become more prevalent and is racing to vaccinate the entire population before it triggers a fourth wave.

Dube said the spread of variants “is what worries us right now” as he called on people in the 18-30 age group to hurry to get their shots. About 40% of Quebec residents age 12 and over are fully vaccinated, versus 81% who have received one jab.

“We have millions of doses, we’ve never had such extraordinary availability,” Dube said. “Make an appointment, or even better, move up your appointment.”

In contrast to the U.S., Canada has, with few exceptions, avoided offering rewards or incentives for vaccination since most residents rushed to get their first dose. Nor has there been much debate on screening access to large events, the way some countries including France do, because few large gatherings have been allowed yet.

An exception is Alberta’s Calgary Stampede, a yearly rodeo festival that usually draws thousands of visitors to the western province and is back after being canceled last year. Organizers have said one of the venues, which hosts country music concerts, will require proof of vaccination or a rapid test to get in.

— With assistance by Robert Tuttle

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    Economy

    Biden's Hot Economy Stokes Currency Fears for the Rest of World – Bloomberg

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    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.

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    Economy

    Opinion: Higher capital gains taxes won't work as claimed, but will harm the economy – The Globe and Mail

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    Open this photo in gallery:

    Canada’s Prime Minister Justin Trudeau and Finance Minister Chrystia Freeland hold the 2024-25 budget, on Parliament Hill in Ottawa, on April 16.Patrick Doyle/Reuters

    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.

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    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.

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    Economy

    Nigeria's Economy, Once Africa's Biggest, Slips to Fourth Place – Bloomberg

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    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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