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Bloomberg
7 days ago
- Business
- Bloomberg
Retaliatory Tariffs Padding Canada's Finances as Expenses Rise
Canada's retaliatory tariffs on US goods are partially offsetting weaker revenue from corporate and sales taxes as federal government expenditures continue to rise. Revenue from customs import duties rose to C$2.4 billion ($1.8 billion) in April and May, according to data released Friday by Canada's Department of Finance. That's up from C$842 million in the same period a year earlier, capturing revenue from retaliatory tariffs that Prime Minister Mark Carney has levied on imports of some US goods.
BreakingNews.ie
24-07-2025
- Automotive
- BreakingNews.ie
Budget move could raise taxes on high-emissions cars and vans
A 1 per cent increase in the higher rates of Vehicle Registration Tax (VRT) is one of the Budget options outlined by the Department of Finance's Tax Strategy Group (TSG) in its latest papers. It says that if applied across the upper VRT bands – 11 to 20 – covering the price of new and imported used cars, it 'would affect only cars with above-average emissions' and could raise €28 million based on 2024 registrations. Advertisement The group also suggests increasing the NOx surcharge on new and imported cars by €5 per mg/km, potentially generating another €15.5 million. On Benefit-in-Kind tax (BIK), the paper proposes creating a new zero-emissions category, with rates ranging between 6 and 15 per cent, depending on annual business mileage. A higher VRT rate of 15 per cent is also suggested for vans and light commercial vehicles emitting more than 260g/km of CO2. This would sit above the recently introduced two-band emissions-based VRT system, where the top rate currently stands at 13.3 per cent for vehicles over 120g/km. The TSG notes that future reforms could include emissions-based BIK rates for vans, potentially retaining the current 8 per cent rate for low-emission models, with higher rates for those over a certain CO2 threshold. Advertisement The latest TSG paper revises a proposal made last year on an additional VRT surcharge based on a vehicle's weight. Modelled on a system currently operated in France and Norway, an additional charge would be imposed on vehicles above a certain weight threshold, with various potential reliefs for the likes of fully-electric or hybrid models. The TSG states: 'It is well documented that the scale of the proposed electrification of the national fleet will entail significant revenue risk, with the growth in EVs expected to erode Exchequer receipts from motor tax, VRT, VAT and fuel excise, particularly if the current tax structures remain unchanged.' It estimates that revenue from taxes on fossil fuel use and related transport will fall by €1 billion by 2030, down from €5.3 billion in 2022.
Globe and Mail
07-07-2025
- Business
- Globe and Mail
America is sinking, and Canada cannot go down with the ship
Claude Lavoie is a contributing columnist for The Globe and Mail. He was director-general of economic studies and policy analysis at the Department of Finance from 2008 to 2023. Here we are. Wednesday is the deadline for countries to sign new trade deals with the United States, or face punishing tariffs. The European Union seems confident it will reach a deal, though the outlook does not look so rosy for others. U.S. President Donald Trump has threatened 25-per-cent tariffs on Japan and Korea if they don't come to heel. As the clock ticks down, it's worth noting the irony: Mr. Trump is blaming other countries for the large U.S. trade deficits when the U.S. should be looking at itself. This trade war – plus the passing of the 'Big Beautiful Bill' last week and the associated boost in spending – suggests it's unlikely Americans will do the appropriate work to address their issues. And while trade deficits are not inherently good or bad, these continuous large deficits will end up disturbing financial and currency markets, creating challenges and opportunities for Canada. A trade deficit occurs when a country imports more than it exports, or essentially when Americans spend more than they earn. Analysis: The U.S. midterm campaigns will test whether Trump has truly set electoral politics on a new course To make up the difference, the U.S. economy borrows from foreign investors by selling them government or corporate bonds, stocks, real estate and other instruments. The accumulation of trade deficits over the years mean that the U.S. is heavily indebted to other countries. On a net basis (accounting for what is owed by other countries to the U.S.), Americans owe the rest of the world US$26-trillion – 90 per cent of the U.S. GDP. This is the largest net foreign debt of any advanced economy. Normally such a high level of foreign debt would worry financial markets. Investors would start dumping U.S. assets, which would lead to a U.S. dollar depreciation and higher interest rates for American borrowers. However, Americans have increased their foreign debt with impunity because the U.S. dollar is the world's reserve currency. Indeed, some might say the chicken comes before the egg: The U.S. spends more than it produces precisely because it attracts so much foreign money. Needing U.S. dollar-denominated assets to pay for their international transactions, foreign investors are willing to turn a blind eye to the country's excessive spending. This is America's so-called 'exorbitant privilege' that provides the U.S. with lower costs of borrowing, cheaper import prices and power over the global financial system. This privilege certainly incentivizes Americans to become more indebted, but just because you have a line of credit with a very low interest rate doesn't mean you should max it out. Through years of abusing its privilege, the United States has eroded confidence in its dollar. According to a CFA Institute survey, close to two-thirds of global financial professionals expect that the greenback will lose its leading reserve-currency status in the next five to 15 years. The global selloff of American bonds last month suggests the U.S. administration's chaotic actions may have accelerated this timeline. Marcus Gee: How Trump could make Canada better One might expect that a combination of tariffs, drastic public spending cuts, and a potential Mar-a-Lago accord (designed to devalue the dollar) will correct this problem. Drastic public spending cuts, such as those announced by DOGE, might help but are unlikely to be large enough. Any significant fiscal deficit reduction will require cuts in social programs because, as in Canada, most government outlays are transfers to individuals. Such cuts will increase poverty and inequality rates, which are already among the highest in the industrialized world, and risk leading to social unrest. The debate around last week's 'Big Beautiful Bill' shows how difficult it will be to bring spending to a level compatible with a reasonable deficit. Tariffs increase consumer prices and reduce spending, reducing borrowing needs. However, tariffs also increase the costs of inputs and production and make other countries retaliate. These lead production and income to fall, increasing borrowing needs. Raising individual taxes is one potential effective solution. But Mr. Trump is doing the opposite to satiate the rich oligarchy supporting his administration. This means the amount of debt the U.S. owes will continue to pile up. This and political dysfunction are significantly threatening the position of the greenback as the world's reserve currency and raising the risk of a global currency realignment. We can expect the U.S. to gradually lose its financial power and the U.S. dollar to weaken. When foreign investors sell their U.S. assets, will they invest the proceeds in Canada or somewhere else? This will depend on how financial markets perceive our country, particularly our ability to decouple from the U.S. economy. The fact that the Canadian dollar has remained relatively weak suggests the market is not too optimistic about our ability to do so. The new federal government has a marketing job to do. Canada is well positioned. Our fiscal situation is relatively sound, at least for now. Canadians are net lenders to the rest of the world. Our inequality and poverty rates are relatively low. Even if we're cut off from the U.S. market, Canadian businesses still benefit from 15 free-trade agreements and preferential access to 50 markets representing a third of the global economy. A company setting up in Canada has access to all these markets and will likely have better access to the U.S. market than if it goes somewhere else. The current trade war presents challenges and opportunities for Canada. Further improving our investments and economic framework would make Canada more attractive for human and physical capital losing faith in the U.S. We need to show we can be economically independent and able to withstand what is looking like the gradual fall of the American empire.
Yahoo
03-07-2025
- Business
- Yahoo
Colby Cosh: Carney's surrender to Trump was inevitable
One funny thing about the 'elbows up!' slogan of the New Canadian Nationalism is that in real life it's pretty hard to hit yourself with your own elbow. But in the actual policy sphere, most of what we might do to put our elbows up against the United States involves self-harm or, at a minimum, self-denial. On Sunday the Department of Finance issued a terse circular announcing that the Digital Services Tax announced in 2021 would not, as originally planned, begin to be collected on Monday. The DST (R.I.P.) was designed to exclusively target Canadian revenues of American 'web giants' that provide online services, advertising, or streaming content. As the Finance memo observes, it is being dropped at the last minute in the hope of restarting negotiations with the U.S. on an updated version of continental free trade. The idea of a DST was framed by the Trudeau government as a moral necessity of the 21st century: something had to be done about foreign vampires like Netflix and Google which had built businesses with millions of Canadian customers out of digital ether, but paid no tax in Canada. Everybody recognized, however, that much of the cost of the tax was bound to come out of the pockets of the customers rather than the vampires. It's inherently difficult to know how the tax incidence would have worked out, because the process of digital price discovery isn't especially mature: some of these companies are still figuring out their own optimum, revenue-maximizing price points in plain sight. But from a selfish point of view, Canadian consumers, considered strictly as such, can only feel relief at the sudden abandonment of the DST. Is this a craven surrender on the part of the post-Trudeau Liberals? Well, this is the problem with interpreting everything in brute terms of animalistic personal combat, isn't it? The governments of the developed nations largely agree (perhaps against the interests of their own citizens) that there ought to be an international framework for digital-services taxation, and the OECD reached an agreement that nobody would run wild and introduce their own digital taxes until the issue could be sorted out collectively. From that neoliberal-nerd point of view, Canada went rogue when it announced a homebrewed DST — one that would have had a nasty retroactive effect, that was designed specifically only to collect from large American companies with recognizable names, and that didn't address double-taxation issues. And let's recall that Joe Biden was still president when this happened. It's worth noting that this isn't just a question of playing chess against Donald Trump. Canada was really forced to withdraw the DST by the terms of the Trump-designed One Big Beautiful Bill passed by the U.S. House of Representatives in May, and now before the Senate. The OBBB reflects the fact that there's genuine bipartisan distaste in the U.S. toward the digital taxes hypothecated by Canada and already in effect in some other countries; it allows for tax-withholding countermeasures against countries that impose 'unfair' taxes on U.S. digital companies, countermeasures whose size could easily have dwarfed the relatively meagre revenues from the DST. In other words, if the government hadn't pulled the plug on the DST, we might have quickly found out how a one-armed man does in a battle of elbows. National Post Kelly McParland: New York swoons over an American Justin Trudeau Joel Kotkin: The West's immigration reckoning is here
National Post
03-07-2025
- Business
- National Post
Colby Cosh: Carney's surrender to Trump was inevitable
One funny thing about the 'elbows up!' slogan of the New Canadian Nationalism is that in real life it's pretty hard to hit yourself with your own elbow. But in the actual policy sphere, most of what we might do to put our elbows up against the United States involves self-harm or, at a minimum, self-denial. Article content On Sunday the Department of Finance issued a terse circular announcing that the Digital Services Tax announced in 2021 would not, as originally planned, begin to be collected on Monday. The DST (R.I.P.) was designed to exclusively target Canadian revenues of American 'web giants' that provide online services, advertising, or streaming content. As the Finance memo observes, it is being dropped at the last minute in the hope of restarting negotiations with the U.S. on an updated version of continental free trade. Article content The idea of a DST was framed by the Trudeau government as a moral necessity of the 21st century: something had to be done about foreign vampires like Netflix and Google which had built businesses with millions of Canadian customers out of digital ether, but paid no tax in Canada. Everybody recognized, however, that much of the cost of the tax was bound to come out of the pockets of the customers rather than the vampires. Article content Article content It's inherently difficult to know how the tax incidence would have worked out, because the process of digital price discovery isn't especially mature: some of these companies are still figuring out their own optimum, revenue-maximizing price points in plain sight. But from a selfish point of view, Canadian consumers, considered strictly as such, can only feel relief at the sudden abandonment of the DST. Article content Is this a craven surrender on the part of the post-Trudeau Liberals? Well, this is the problem with interpreting everything in brute terms of animalistic personal combat, isn't it? The governments of the developed nations largely agree (perhaps against the interests of their own citizens) that there ought to be an international framework for digital-services taxation, and the OECD reached an agreement that nobody would run wild and introduce their own digital taxes until the issue could be sorted out collectively. Article content From that neoliberal-nerd point of view, Canada went rogue when it announced a homebrewed DST — one that would have had a nasty retroactive effect, that was designed specifically only to collect from large American companies with recognizable names, and that didn't address double-taxation issues. And let's recall that Joe Biden was still president when this happened. Article content Article content It's worth noting that this isn't just a question of playing chess against Donald Trump. Canada was really forced to withdraw the DST by the terms of the Trump-designed One Big Beautiful Bill passed by the U.S. House of Representatives in May, and now before the Senate. The OBBB reflects the fact that there's genuine bipartisan distaste in the U.S. toward the digital taxes hypothecated by Canada and already in effect in some other countries; it allows for tax-withholding countermeasures against countries that impose 'unfair' taxes on U.S. digital companies, countermeasures whose size could easily have dwarfed the relatively meagre revenues from the DST. In other words, if the government hadn't pulled the plug on the DST, we might have quickly found out how a one-armed man does in a battle of elbows. Article content
