By Stewart Lewis
(February 4 – 17:30 ET) – Will Canada matter in 2020? That’s the question that John McCallum, senior vice president and chief economist of the Royal Bank of Canada put to attendees of the Canadian Tax Foundation Conference on tax reform and competitiveness yesterday in Ottawa.
Canadian economists are “euphoric over the present state of the economy,” McCallum says. But Canadians have faced a significant drop in real disposable income and living standards relative to the U.S., he
cautions.
To prevent the “Americanization” of Canada, McCallum is urging Canadian tax policymakers to rethink the tradition of taxing growth wherever it occurs in order to achieve a “kinder, gentler nation.”
We must forgo some kindness until we achieve growth, McCallum says, although he is only suggesting a “moderate tilt” in the direction of growth-oriented policies.
Otherwise we will experience a “loss of our core values achieving effective Americanization.” For example, he would not advocate that Canada adopt a flat tax, which would be highly beneficial to high-income earners.
“Even the Republicans in the U.S. haven’t gone that far,” he says.