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What Canada’s economic recovery might look like – Maclean's

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How does Canada come back from its massive pandemic deficit? Depends who you tax.

With its seemingly unending pandemic spending, the federal government is heading toward a major deficit. Finance Minister Chrystia Freeland hasn’t announced any fiscal targets, but estimates put the shortfall as high as $343 billion. Canadians have, understandably, been growing worried. An October poll by Maru/Blue found that while most Canadians don’t think it’s time to rein in spending, over two-thirds still think the government should focus on reducing the deficit.

Like most countries, Canada has also experienced significant economic decline this year. “We expect that the fallout from the pandemic will have some long-lasting effects on future economic growth,” said Governor of the Bank of Canada Tiff Macklem during a press conference in late October. And while the bank doesn’t expect shutdowns as widespread as the spring, they don’t expect recovery to be quick. “When we add it up, the Governing Council projects that the economy will still be operating below its potential into 2023.”

READ: Charts to watch in 2021: The most important Canadian economic graphs for the year ahead

So what does this dire financial predicament mean for Canadians going into 2021? It means governments may have to get creative to raise revenues, though increasing income taxes isn’t necessarily a fait accompli. Many argue that Canada’s current tax system skews toward benefitting society’s wealthiest—and increasing taxes on wealthy individuals and corporations and closing tax loopholes would not only be more politically palatable to an electorate experiencing financial unease, it would also make the tax system more fair.

“During times of crisis, there can be a lot of pandemic profiteering,” says Toby Sanger, executive director of Canadians for Tax Fairness. He notes that Amazon, owned by the world’s wealthiest person, tripled its profit during the pandemic, and Thomson Reuters, owned by the wealthiest family in Canada, was up 20 per cent. Sanger supports an annual wealth tax on assets owned by people whose wealth is above a certain threshold (he proposes $20 million). “Most Canadians . . . that own houses pay close to one per cent tax on the value of their house, so arguably we do have a wealth tax, but it’s focused on the middle class,” Sanger adds. This is because the richest Canadians hold a greater proportion of their wealth in financial assets. There is considerable public support for taxing these assets; an Abacus Data survey commissioned by the Broadbent Institute found that 75 per cent of Canadians say they support a one to two per cent wealth tax on the country’s richest, including almost 70 per cent of Conservative voters. And yet, an NDP motion for just such a wealth tax was voted down in mid-November.

READ: Canada’s economy may never return to what it once was

More than anything else, the pandemic has shown that in times of crisis there are clear winners and losers. But nowhere has the financial future seemed so uncertain as in Canada’s cities. “Municipalities are on the front line when it comes to responding to this virus, and it’s had an impact on their bottom lines,” says Enid Slack, director of the Institute on Municipal Finance and Governance at the University of Toronto. Slack explains that municipalities have been hit by both an increase in expenditures—including public health, shelters, child care and IT costs—and a decrease in revenues from deferred property taxes without penalties and a decline in user fees. Complicating the situation is the fact that municipalities aren’t allowed to budget for operating deficits.

This uncertainty means provinces and cities will have to come up with a new funding agreement that is more sustainable. “In the longer term . . . we have to consider who does what and how we pay for it,” says Slack. A major problem she highlights is that the federal government has the most ability to raise revenue, but provinces and municipalities have the most spending responsibilities. “If we’re delivering . . . social services and social housing, is the property tax the best way to pay for that? Most people would say no,” Slack insists. “They would say, if you’re redistributing income, the income tax is a better way to do that.” To solve this problem, Slack posits two alternatives: maintaining these services at the municipal level and giving municipalities access to income tax revenues, or moving those services up to the provincial level where there are income taxes.

The pandemic has shown just how fragile the Canadian economy is to major shocks—and the cascading impacts on our governments’ revenues. “There are cracks in our fiscal system in Canada,” says Slack. If governments across the country have any hope of being re-elected after a treacherous pandemic second wave, they will have to take bold steps to act on them.


This article appears in print in the January 2021 ‘Year Ahead’ issue of Maclean’s magazine with the headline, “What recovery might look like.” Subscribe to the monthly print magazine here.

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Construction wraps on indoor supervised site for people who inhale drugs in Vancouver

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VANCOUVER – Supervised injection sites are saving the lives of drug users everyday, but the same support is not being offered to people who inhale illicit drugs, the head of the BC Centre for Excellence in HIV/AIDS says.

Dr. Julio Montaner said the construction of Vancouver’s first indoor supervised site for people who inhale drugs comes as the percentage of people who die from smoking drugs continues to climb.

The location in the Downtown Eastside at the Hope to Health Research and Innovation Centre was unveiled Wednesday after construction was complete, and Montaner said people could start using the specialized rooms in a matter of weeks after final approvals from the city and federal government.

“If we don’t create mechanisms for these individuals to be able to use safely and engage with the medical system, and generate points of entry into the medical system, we will never be able to solve the problem,” he said.

“Now, I’m not here to tell you that we will fix it tomorrow, but denying it or ignoring it, or throw it under the bus, or under the carpet is no way to fix it, so we need to take proactive action.”

Nearly two-thirds of overdose deaths in British Columbia in 2023 came after smoking illicit drugs, yet only 40 per cent of supervised consumption sites in the province offer a safe place to smoke, often outdoors, in a tent.

The centre has been running a supervised injection site for years which sees more than a thousand people monthly and last month resuscitated five people who were overdosing.

The new facilities offer indoor, individual, negative-pressure rooms that allow fresh air to circulate and can clear out smoke in 30 to 60 seconds while users are monitored by trained nurses.

Advocates calling for more supervised inhalation sites have previously said the rules for setting up sites are overly complicated at a time when the province is facing an overdose crisis.

More than 15,000 people have died of overdoses since the public health emergency was declared in B.C. in April 2016.

Kate Salters, a senior researcher at the centre, said they worked with mechanical and chemical engineers to make sure the site is up to code and abidies by the highest standard of occupational health and safety.

“This is just another tool in our tool box to make sure that we’re offering life-saving services to those who are using drugs,” she said.

Montaner acknowledged the process to get the site up and running took “an inordinate amount of time,” but said the centre worked hard to follow all regulations.

“We feel that doing this right, with appropriate scientific background, in a medically supervised environment, etc, etc, allows us to derive the data that ultimately will be sufficiently convincing for not just our leaders, but also the leaders across the country and across the world, to embrace the strategies that we are trying to develop.” he said.

Montaner said building the facility was possible thanks to a single $4-million donation from a longtime supporter.

Construction finished with less than a week before the launch of the next provincial election campaign and within a year of the next federal election.

Montaner said he is concerned about “some of the things that have been said publicly by some of the political leaders in the province and in the country.”

“We want to bring awareness to the people that this is a serious undertaking. This is a very massive investment, and we need to protect it for the benefit of people who are unfortunately drug dependent.” he said.

This report by The Canadian Press was first published Sept. 18, 2024.

The Canadian Press. All rights reserved.

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N.B. election: Parties’ answers on treaty rights, taxes, Indigenous participation

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FREDERICTON – The six chiefs of the Wolastoqey Nation in New Brunswick distributed a survey on Indigenous issues to political parties ahead of the provincial election, which is scheduled to kick off Thursday. Here are some of the answers from the Progressive Conservative, Liberal and Green parties.

Q: How does your party plan to demonstrate a renewed commitment to recognizing our joint treaty responsibilities and acknowledging that the lands and waters of this territory remain unceded?

Progressive Conservative: The party respectfully disagrees with the assertion that land title has been unceded. This is a legal question that has not been determined by the courts.

Liberal: When we form government, the first conversations the premier-designate will have is with First Nations leaders. We will publicly and explicitly acknowledge your treaty rights, and our joint responsibility as treaty people.

Green: The Green Party acknowledges that New Brunswick is situated on the unceded and unsurrendered territories of the Wolastoqiyik, Mi’kmaq and Peskotomuhkati peoples, covered by the Treaties of Peace and Friendship. Our party is committed to establishing true nation-to-nation relationships with First Nations, grounded in mutual respect and co-operation as the treaties intended.

Q: How does your party propose to approach the issue of provincial tax agreements with First Nations?

Progressive Conservative: The government of New Brunswick operates in a balanced and fair manner with all organizations, institutions and local governments that represent the citizens of this province, including First Nations. Therefore, we cannot offer tax agreements that do not demonstrate a benefit to all citizens.

Liberal: Recent discussions with First Nations chiefs shed light on the gaps that existed in the previous provincial tax agreements with First Nations. Our party is committed to negotiating and establishing new tax agreements with First Nations that address the local needs and priorities and ensure all parties have a fair deal.

Green: The Green Party is committed to fostering a respectful relationship with First Nations in New Brunswick and strongly opposes Premier Blaine Higgs’s decision to end tax-sharing agreements. We believe reinstating these agreements is crucial for supporting the economic development and job creation in First Nation communities.

Q: How will your party ensure more meaningful participation of Indigenous communities in provincial land use and resource management decision-making?

Progressive Conservative: The government of New Brunswick has invested significant resources in developing a robust duty to consult and engagement process. We are interested in fully involving First Nations in the development of natural resources, including natural gas development. We believe that the development of natural gas is better for the environment — because it allows for the shutdown of coal-fired power plants all over the globe — and it allows for a meaningful step along the path to reconciliation.

Liberal: Our party is focused on building strong relations with First Nations and their representatives based on mutual respect and a nation-to-nation relationship, with a shared understanding of treaty obligations and a recognition of your rights. This includes having First Nations at the table and engaged on all files, including land-use and resource management.

Green: We will develop a new Crown lands management framework with First Nations, focusing on shared management that respects the Peace and Friendship Treaties. We will enhance consultation by developing parameters for meaningful consultation with First Nations that will include a dispute resolution mechanism, so the courts become the last resort, not the default in the face of disagreements.

This report by The Canadian Press was first published Sept. 18, 2024.

The Canadian Press. All rights reserved.

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Canadian Coast Guard crew member lost at sea off Newfoundland

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ST. JOHN’S, N.L. – A crew member of a Canadian Coast Guard ship has been lost at sea off southern Newfoundland.

The agency said in a release Wednesday that an extensive search and rescue effort for the man was ended Tuesday evening.

He was reported missing on Monday morning when the CCGS Vincent Massey arrived in St. John’s, N.L.

The coast guard says there was an “immediate” search on the vessel for the crew member and when he wasn’t located the sea and air search began.

Wednesday’s announcement said the agency was “devastated to confirm” the crew member had been lost at sea, adding that decisions to end searches are “never taken lightly.”

The coast guard says the employee was last seen on board Sunday evening as the vessel sailed along the northeast coast of Newfoundland.

Spokeswoman Kariane Charron says no other details are being provided at this time and that the RCMP will be investigating the matter as a missing person case.

This report by The Canadian Press was first published Sept. 18, 2024.

The Canadian Press. All rights reserved.

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