Coronavirus: The MEI reacts to federal economic measures
MONTREAL, March 18, 2020 /CNW Telbec/ - Canada's federal government announced measures this morning totalling nearly $30 billion in order to stimulate the Canadian economy. While fast, targeted action is required to help Canadians struggling due to the economic slowdown to meet their needs, MEI researchers nonetheless believe that other options should be considered.
"Certain measures seem better suited to a rapid, targeted, temporary response. Among these are a tax holiday for federal and provincial sales taxes, as Japan is considering at the moment," adds Luc Vallée, Chief Operating Officer & Chief Economist at the MEI.
"No one is questioning the urgency of acting to help vulnerable workers and businesses that are suffering. Yet the constant increase in federal spending in recent years casts doubt on the government's ability to readjust down the road. The idea is to stimulate in a way that's fast, targeted, and keeps our economic powder dry for the future," argues Peter St. Onge.
Three targeted solutions
As such, the two MEI researchers propose three concrete public policies:
A tax holiday for payroll taxes (Canada Pension Plan, provincial plans, Employment Insurance, etc.): These taxes represent 15% of the salary of an employee, who pays around half, with the employer paying the rest. A tax holiday would put money back in workers' pockets and, by reducing the cost of labour, make it easier for companies to keep workers on amid falling sales.
An exemption from the property tax for small businesses: This would on the one hand reduce fixed costs, and on the other hand help mitigate the lack of liquidity that could make certain businesses vulnerable.
A tax holiday for federal and provincial sales taxes: Stimulating consumption would be especially beneficial for local businesses. And, contrary to direct payments to taxpayers, which tend to be converted into savings, this measure would encourage customers to spend on goods and services.
"Each of these measures target the workers and businesses most at risk, all while encouraging economic growth, which will mitigate future deficits. This economic slowdown is different from previous slowdowns, and the response deserves to be specifically tailored to this unique situation," concludes Luc Vallée.
The MEI is an independent public policy think tank with offices in Montreal, Calgary, and Paris. Through its publications, media appearances, and advisory services to policy-makers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.
The global feminine hygiene wash market size is estimated to grow by USD 124.8 million from 2024-2028, according to Technavio. The market is estimated to grow at a CAGR of almost 5.17% during the forecast period. Advertising and promotion of...
The global marine loading arms market size is estimated to grow by USD 65.8 million from 2024-2028, according to Technavio. The market is estimated to grow at a CAGR of almost 3.43% during the forecast period. Rise in demand for oil and gas...
The global payment gateways market size is estimated to grow by USD 11.23 billion from 2024-2028, according to Technavio. The market is estimated to grow at a CAGR of almost 13.42% during the forecast period. High adoption of contactless payment...
The global wellness real estate market size is estimated to grow by USD 1.26 billion from 2024-2028, according to Technavio. The market is estimated to grow at a CAGR of 32.14% during the forecast period. Rising demand for wellness real estate from...
Navidea Biopharmaceuticals, Inc. ("Navidea" or the "Company"), a company focused on the development of precision immunodiagnostic agents and immunotherapeutics, today announced disappointing results of an exploratory analysis conducted on the...
The global consumer healthcare market size is estimated to grow by USD 170.2 billion from 2024-2028, according to Technavio. The market is estimated to grow at a CAGR of 6.78% during the forecast period. Awareness about lifestyle diseases is driving...