C.D. Howe Institute

Set Charities Free to Raise More Business Income

Canadian law should permit charities to raise some funds for their missions through business income from both related and unrelated businesses, according to a report released today by the C.D. Howe Institute. In "At the Crossroads: New Ideas for Charity Finance in Canada," authors Adam Aptowitzer and Benjamin Dachis find that, in the face of financing challenges, charities need the flexibility to finance their non-profit activities through businesses governed by separate, arm's-length Boards.

Why Canada Should Take a Seat at Trans-Pacific Table

Toronto, - Canada needs a seat at negotiations toward a new Trans-Pacific Partnership on trade to reap the full benefits of doing business with the emerging powerhouse economies of East Asia, according to a report released today by the C.D. Howe Institute. In "Can Canada Join the Trans-Pacific Partnership? Why wanting it is not enough," trade expert Dr. Laura Dawson notes the new trade pact could eventually account for half of global output and 40 percent of world trade. "Membership would position Canada to build trade ties with Asia's rising economic powers, whose double-digit growth rates far outshine those in the West," notes Dr. Dawson. "Canada is coming late to the talks. The question now is whether Canada can join the action."

MPs Must Lead by Example on Pension Reform: C.D. Howe Institute

Toronto, Jan. 19 - Fixing rich, underfunded MP pensions is a key step in pension reform, according to a report released today by the C.D. Howe Institute. In "Fixing MP Pensions: Parliamentarians Must Lead Canada's Move to Fairer, and Better-Funded Retirements," author William B.P. Robson argues that the Pension Plan for Members of Parliament (MPs), which covers members of the House of Commons and the Senate, is the most problematic of federal employee pension plans.

How to Make EI Fairer for All Canadians

Toronto, - The federal Employment Insurance (EI) program plays favorites among Canada's regions and sustains costly, long-lasting pockets of high unemployment, say the authors of a new report from the C.D. Howe Institute. In "Mending Canada's Employment Insurance Quilt: The Case for Restoring Equity," Senior Policy Analyst Colin Busby and Professor David Gray say the EI program should be simplified, with nation-wide standards for the number of hours of work needed to qualify for benefits, and for how long benefits should be received.

Tax Rules Prevent Many Canadians from Saving Enough for Retirement

Toronto, Oct. 27 – Federal tax rules are preventing many Canadians – especially in the private sector – from saving enough for retirement, according to a report released today by the C.D. Howe Institute. Workers relying on RRSPs cannot accumulate even half the retirement wealth of career members of defined-benefit (DB) pension plans, says the report, “Legal for Life: Why Canadians Need a Lifetime Retirement Saving Limit,” by James Pierlot with Faisal Siddiqi.

Why Canada Needs a Trade Deal with the European Union: C.D. Howe Institute

Toronto – Canada should set ambitious goals in trade talks with the European Union (EU), which resume next week, since it has much to gain from a comprehensive trade accord, according to a report released today by the C.D. Howe Institute. In “Go Big or Go Home: Priorities for the Canada-EU Economic and Trade Agreement,” Daniel Schwanen, Associate Vice President, International and Trade Policy, says a comprehensive economic and trade agreement (CETA) between Canada and the EU is both desirable and possible.

Core CPI? Don’t Bank On It to Predict Inflation: C.D. Howe Institute

Toronto, – The Bank of Canada should place less emphasis on the “core” Consumer Price Index (CPI) in explaining its policy choices, according to a report released today by the C.D. Howe Institute. In, “Core, What is it Good For? Why the Bank of Canada Should Focus on Headline Inflation,” authors Philippe Bergevin and Colin Busby say that core CPI, an inflation measure which strips out from the consumer price basket some of the most volatile items and which the Bank uses as an operational guide, has diverged from total CPI and may give misleading signals about future inflation.

Why Reforms of the Asset-Backed Securities Market Should Include a Role for Third-Party Investors

Toronto, – Regulators considering reforms to the asset-backed securities (ABS) market should look beyond transparency requirements in their efforts to improve investor comfort in the ABS market, says a report from the C.D. Howe Institute.

Understanding the Links Between Financial Crises and the Rest of the Economy

TORONTO, Aug. 16, 2011 - Our understanding of the links between the financial sector and the rest of the economy needs to improve, concludes a new report from the C.D. Howe Institute. In When Nightmares Become Real: Modelling Linkages between the Financial Sector and the Real Economy in the Aftermath of the Financial Crisis, authors Philippe Bergevin, Pierre Duguay and Paul Jenkins say that the complexity of these linkages have been neglected in the models typically used to guide monetary policy - the question is how to remedy deficiencies in policymakers’ economic models of the world, so that they can be used with confidence in guiding policy.

Defining “Neutral” Level for Interest Rates a Smoke and Mirrors Game: C.D. Howe Institute

TORONTO, While the Bank of Canada expects the Canadian economy to return to full employment by the middle of 2012, its critics have stressed the need to raise interest rates to a "neutral" value by then to keep inflation stable. But defining this neutral level, normally associated with full employment, is a bit of a smoke and mirrors game, according to a report from the C.D. Howe Institute.

BC Has it Right on the HST: C.D. Howe Institute

TORONTO, - British Columbia is on the right track with its controversial move to a harmonized sales tax (HST), according to a C.D. Howe Institute report released today. In "The Time is Still Right for BC's HST," authors Finn Poschmann and Alexandre Laurin say the shift to a value-added taxes mirrors patterns in most of the developed world, and helped move the province from being a high tax, investment-unfriendly jurisdiction, to one which is domestically and internationally competitive - a more attractive home for investment and jobs.

Winners, Losers Emerge in Productivity Race among Provinces: C.D. Howe Institute

TORONTO, In the race to improve productivity and household incomes, winners and losers emerge among the Canadian provinces, according to a report from the C.D. Howe Institute. In Lagging Behind: Productivity and the Good Fortune of Canadian Provinces author Serge Coulombe says growing labour productivity is the most important determinant of future economic welfare and, on that measure, Canada is falling behind its major trading partners.

Why Low-Income Families Face High Tax Rates

The marginal effective tax rate on personal income has declined for most Canadians over the past decade, but has risen for many low-to-middle-income families with young children, which reduces their gains from earning more income, according to a report from the C.D. Howe Institute. In “What’s My METR? Marginal Effective Tax Rates Are Down – But Not for Everyone: The Ontario Case,” authors Alexandre Laurin and Finn Poschmann say Ontario is a case in point, with marginal effective tax rates over 50 percent for many low-to-middle-income families with children, and the share has risen in 2011 compared to 2000.

Fix the Faulty CPI

Toronto, March 8 – Fixing measurement errors in the Consumer Price Index is a small idea that offers big payoffs to Canadians and the government, according to an e-brief released today by the C.D. Howe Institute. In “Fixing Canada’s CPI: A Simple and Sensible Policy Change for Minister Flaherty,” economist Christopher Ragan, who is David Dodge Chair in Monetary Policy at the Institute, says if the upcoming federal budget devoted the resources needed to improve Statistics Canada’s measurement of the Consumer Price Index, Canadians would have a truer sense of changes in the cost of living, monetary policy would be guided by a more accurate measure of inflation, and Minister Flaherty would more easily achieve the government’s commitment to balance the federal budget by 2015/16.

Rethink Pervasive Government Role in Mortgage Markets: C.D. Howe Institute

Toronto, – The federal government’s role in mortgage markets is pervasive and should be scaled back, while encouraging more competition in the mortgage insurance business, according to a study released today by the C.D. Howe Institute. In “What Governments Should Do in Mortgage Markets,” author Finn Poschmann, Vice President, Research, at the Institute, notes that the mortgage insurance book of Canada Mortgage and Housing Corporation, CMHC, which is a Crown agency, now backstops mortgage lending equivalent to more than 30 percent of gross domestic product. While the net exposure is less than this, the arrangement subjects Canadian taxpayers to large, ill-defined risks. Poschmann suggests several steps to manage these risks better.

Bank of Canada Should Lower Its Inflation Target

Toronto, Jan. 27 – The Bank of Canada should lower its inflation target as part of a new monetary policy agreement due at the end of 2011, according to a study released today by the C.D. Howe Institute. In Moving Monetary Policy Forward: Why Small Steps – and a Lower Inflation Target – Make Sense for the Bank of Canada, leading economist Angelo Melino explains why the Bank of Canada should keep its current inflation-targeting regime in the new agreement with the Department of Finance, but make several reforms, including a lower inflation target, to achieve some important goals.

Shadow Banking System Needs More Transparency, Not Re-Regulation

The shadow banking system needs more transparency – not re-regulation – to help prevent future financial turmoil, says a study published today by the C.D. Howe Institute. In “Lifting the Veil: Regulation and Shadow Banking,” authors Christian Calmès and Raymond Théoret conclude that the best way to reform the shadow banking system, where the recent subprime mortgage crisis began, is to lift the veil on risk and leverage taken on within banks.

Time to Unclog a Plugged Border

Preclearance of people and goods before they arrive at the Canada-US border is the best way to fix border problems while ensuring public safety, according to a study released today by the C.D. Howe Institute.

Low Risk of US-Style Housing Bust in Canada

Toronto, Aug. 31 – While recent swings in Canadian house prices have raised concerns about the possibility of a U.S.-style housing bust in Canada, the risk of that happening is low, according to a study released today by the C.D. Howe Institute. In “Not Here? Housing Market Policy and the Risk of a Housing Bust,” author Jim MacGee evaluates the likelihood of a US-style housing market crash in Canada by examining what caused the US housing boom and bust from 2000 to 2010 and comparing housing market policies in the two countries.

Toronto’s Bad Fiscal Habits Need Reform

Toronto, August 19 – Toronto has a poor record of fiscal accountability that requires reforms to the city’s financial planning and reporting, according to a study released today by the C.D. Howe Institute. In “Unbalanced Books: How to Improve Toronto’s Fiscal Accountability,” authors Colin Busby, Benjamin Dachis and William B.P. Robson note that as Toronto gears up for a municipal election this fall, the city's poor record on fiscal accountability should be a central issue.