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Politics : Canadian Political Free-for-All -- Ignore unavailable to you. Want to Upgrade?

To: Lino... who wrote (1319)	10/31/2002 8:30:28 PM
From: Lino...	Respond to of 37350

....now this from Canadian Press Oct 31, 2002: Kyoto could plunge Canadian economy into depression, says business group STEVE MERTL Canadian Press Thursday, October 31, 2002 VANCOUVER (CP) - The federal government's fiscal planning would be thrown into chaos and the economy into a depression if Canada ratifies the Kyoto Agreement on climate change, says one of British Columbia's most influential lobbies. The government likely would have to shelve the remainder of its promised tax cuts as restrictions on greenhouse gas cuts into Canada's economic output, Dave Park, chief economist for the Vancouver Board of Trade, said Thursday. "It's hard to see how we could have a 20 per cent reduction in CO2 emissions in our economy today and virtually have no impact on GDP," said Park. "My view is it would tip us into a depression." Prime Minister Jean Chretien's recent promise to ratify Kyoto by the end of the year has plunged Canadians into a furious debate over its impact. The 1997 accord commits Canada to reducing greenhouse gas emissions by six per cent from 1990 levels by 2012. In fact, Canadian emissions have risen substantially since then and the cuts would have to be deeper. Ottawa's plan calls for programs and subsidies to encourage industries and individual Canadians to reduce energy consumption. But if meeting Kyoto targets hobbles industrial activity, the government may find its projected surpluses evaporating and tax revenues needed to drive the program unavailable, said Park. "I believe the government's estimate of the impact on GDP is grossly understated," he said. And as far as the government's five-year, $100-billion tax reduction plan is concerned, "all bets are off," said Park. The 4,500-member board is scheduled to give its pre-budget presentation Monday to the parliamentary standing committee on finance, which begins two days of hearings here. It's also sent a submission to Finance Minister John Manley as he prepares the February budget. But director Janette Pantry said the board already got some comfort Wednesday from Manley's fiscal update. Manley promised to follow through on the tax-cut plan of predecessor Paul Martin and launch a review of federal programs before embarking on any new spending. "We were happy yesterday to see that some of our recommendations were already being acted on," Pantry said. But the government needs to go further, she said, with more tax cuts - starting with immediate elimination of the "job-killing" corporate capital tax. Ottawa collects about $1 billion a year from the tax but it costs the economy about $7 billion in foregone investment, she said. Overall, Canadian income and profit taxes remain the highest of the G-7 countries, said Pantry. "High taxes discourage working and investing and saving, and leads to a drop in our standard of living," she said. While the budget has been balanced for several years, spending restraint has been a myth, the board asserted. Federal spending is projected to reach $140 billion by next year, up from about $110 billion in 1997. "Our recommendation is that real per capita spending should be held constant, so spending could go up by inflation and by population growth," said Pantry. "That would be about three per cent per year." Based on that, she said spending today should be about $130 billion. The board is skeptical about Manley's projected surpluses, noting they're small in the near term with no guarantee they'll grow as predicted - especially if a Kyoto-driven downturn upsets revenue projections. Manley's promised program review, the first in a decade, will go some way to helping shape spending priorities, said Pantry. Ottawa should boost spending on defence and national infrastructure, but not health unless it can demonstrate its current health dollars are being spent wisely, she said. "Unfortunately we see health care as a bit of a black hole at the moment," said Pantry, noting the government boosted health transfers by $23 billion in 2000. "Increased dollars aren't leading to increased (better) outcomes. We think the system needs to be reviewed and efficiencies found." Ottawa should also renew its focus on debt reduction, said Pantry. The $37 billion spent annually paying interest on $535 billion is the single largest line item in the budget, she said.