The Hamilton Spectator
The festive season fast approaches, which is perhaps why the Toronto Dominion Bank is sounding an awful lot like the Ghost of Christmas Future.
Just as that ghost from the Charles Dickens classic A Christmas Carol foretold a grim future for poor Ebenezer Scrooge, so too does the bank predict a bleak economic future for Canada.
In fact, in a recent report, the bank forecasts that Canada is headed for a decade of stagnant economic growth.
This stagnation, say the bank's economists chillingly, will be the "new normal."
Unfortunately, what this "new normal" really means is that as a society we will all have to make do with a lower standard of living.
Or will we?
To paraphrase Scrooge, is the TD Bank's gloomy prediction of slow growth the shadow of the things that will be, or the shadow of things that only may be?
Or to put it another way, is there any way we can avoid the predicted stagnation and instead usher in a period of greater prosperity and growth?
Happily the answer to that question is an emphatic yes.
But like Scrooge we will have to change our ways or, more accurately, our governments will have to change their fiscal policies.
We need, in short, policies that will increase economic productivity and encourage innovation, two areas where the TD Bank specifically notes we are falling behind.
What would such policies look like?
One thing our leaders need to do is restructure our tax system. The fact is Canada's relatively high corporate and business tax rates impede growth and stifle innovation. And you don't have to be an economic expert to see why this is so.
High business taxes discourage investment; that in turn means less money is available to purchase new machinery, new equipment and new technology; this results in Canadian workers being less productive.
Workers who are less productive, of course, have a hard time competing in an increasingly competitive international market.
And so to spur growth our governments, both provincial and federal, need to craft tax policies which encourage entrepreneurs to engage in risk taking, to invest in new ideas and to create new jobs and new opportunities.
That's why the Fraser Institute, a respected economic think-tank, has recommended:
- Reducing middle- and upper-personal income tax rates.
- Eliminating the Capital Gains Tax (which the Fraser Institute calls one of the "most damaging taxes in Canada" because of its detrimental impact on entrepreneurship.)
- Cutting the general corporate income tax over the next four years to 11 per cent.
High taxes aren't the only thing hindering economic growth -- so does government regulation on business. Or should I say "overregulation."
Simply put, onerous government red tape is choking our economic engine and slowing us down.
In fact, the Canadian Federation of Independent Business estimates that red tape costs Canadian businesses around $30 billion a year, a "paper burden," by the way, which hits small firms the hardest.
Do we really want businesspeople, who are the real creators of wealth in society, spending a large portion of their valuable time keeping up with a plethora of government rules and regulations?
Surely their time and resources would be better spent generating economic activity.
That's why governments should, at the very least, seek out and eliminate those regulations which are either obsolete or which conflict with other regulations.
Once again, it all boils down to increasing Canada's economic productivity.
So there's no need to despair about the TD Bank report.
Our economy is still capable of producing a wealthier and more productive society, as long as our governments take the obvious steps of cutting taxes and reducing red tape.
Of course, the trick is to convince our politicians to do the right thing.
Maybe what our elected leaders need this Christmas is a visit from the Ghost of Economic Common Sense.
Gerry Nicholls, formerly vice-president of National Citizens Coalition, is president of Libertaspost.com, which describes itself as "a network of Canadians who believe in free enterprise, smaller government and individual freedom."
