What industries should the state never subsidize?

[Machjo]

1 hour ago, Wilber said:

You still don't address the issue of unsubsidized industries having to compete with those that are subsidized as well as protected by tariffs. You have to deal with the world you live in, not the one you would like.  The US may be booming but it is on a combination of tax cuts that aren't paid for and trillion plus dollar deficits. It's being done on a credit card. 

If country X taxes industry A to subsidize industry B, the country Y's A industry will enjoy an advantage over country X's.

 

Now you say OK, but what if country X borrows to subsidize both industry A and industry B. Then what does country Y do? Simple. If country Xenjoys an advantage on all fronts, then that will put an upward pressure on its currency and a downward one on country Y's. The market will naturally regulate itself.

[Machjo]

2 hours ago, Wilber said:

You make no sense. You want to make an industry smaller, then take more money out of it. 

No. Just shift the tax burden to encourage more desirable industries. I just don't see the point of taxing a business only to subsidize it afterwards. In that case, just drop the tax.

[Wilber]

8 minutes ago, Machjo said:

If country X taxes industry A to subsidize industry B, the country Y's A industry will enjoy an advantage over country X's.

 

Now you say OK, but what if country X borrows to subsidize both industry A and industry B. Then what does country Y do? Simple. If country Xenjoys an advantage on all fronts, then that will put an upward pressure on its currency and a downward one on country Y's. The market will naturally regulate itself.

Except country Y's industries all went broke because they couldn't compete with X's subsidized and protected industries. X wins because Y didn't think was worth supporting its own industries so they just disappeared. The market can only regulate itself if everyone plays by the same rules.

[Wilber]

6 minutes ago, Machjo said:

No. Just shift the tax burden to encourage more desirable industries. I just don't see the point of taxing a business only to subsidize it afterwards. In that case, just drop the tax.

What are you talking about, shift the tax burden from who? Shift it to who?

[Machjo]

37 minutes ago, Wilber said:

Except country Y's industries all went broke because they couldn't compete with X's subsidized and protected industries. X wins because Y didn't think was worth supporting its own industries so they just disappeared. The market can only regulate itself if everyone plays by the same rules.

Incorrect. If Y's industries start to disappear, the Y can't even afford to buy from X, Y's currency plumets, and so the remaining industries on Y boom as exports increase. Xcould just increase subsidies to compensate, but how far can it go with that before the value of its currency starts to rise uncontrollably due to its excessively positive balance of trade?

[Machjo]

39 minutes ago, Wilber said:

What are you talking about, shift the tax burden from who? Shift it to who?

Raise taxes on less desirable industries (alcohol, tobacco, resourse extraction, etc.) and lower taxes on more desirable industries.

[Wilber]

14 minutes ago, Machjo said:

Raise taxes on less desirable industries (alcohol, tobacco, resourse extraction, etc.) and lower taxes on more desirable industries.

So you raise taxes on those industries, reducing their revenues making them uncompetitive and reducing your tax revenue.

[Machjo]

2 hours ago, Wilber said:

So you raise taxes on those industries, reducing their revenues making them uncompetitive and reducing your tax revenue.

Of course, but it also means less alcohol or tobacco consumption, less fuel consumption,  healthier people, less air pollution, less traffic, and so reduced need for revenue in the first place. By making taxes more user-pay, revenue more naturally follows expenditure. So if people consume more alcohol or fuel, more revenue for healthcare and roads. If they consume less, less revenue and less need for revenue.

[Wilber]

1 hour ago, Machjo said:

Of course, but it also means less alcohol or tobacco consumption, less fuel consumption,  healthier people, less air pollution, less traffic, and so reduced need for revenue in the first place. By making taxes more user-pay, revenue more naturally follows expenditure. So if people consume more alcohol or fuel, more revenue for healthcare and roads. If they consume less, less revenue and less need for revenue.

So your strategy is to just tax some industries out of business and that will solve everything else.

[cannuck]

On 10/7/2018 at 10:42 AM, Argus said:

Yes, but you failed to address it.

I'm aware of all of this. But I'm also aware Chinese workers make a fraction of what workers make here, that safety regulations are minimal, as are pollution restrictions.

The only way to do that is steep tariffs on imports, which would greatly increase the price of goods Canadians buy.

 

You presume that private enterprises will kick in the tens of billions to construct these refineries. I have not seen the economic case which suggests this.

 

Some apologies needed:  I am in the middle of a very difficult technical project out of country, and the "easy 5 days" has running into the third week from Hell, with me sometimes on site for 36 hours at a time.  Posting time is sometimes stretched pretty tight.

Chinese workers DO make but a fraction of what a unionized Canadian might get, but what you need to realize that Chinese workers, businesses, etc. NEVER report anything vaguely close to their real income, and Cost of Living calculations include basics such as food that are price controlled (it is still a Communist country after all).   All of those BMWs and Audis aren't being bought on two dollars a day.   The other BIG difference is that the average Chinese worker is extremely productive - both because of their work habits and hours, and more than that since most are employed in adding value to resources, thus creating wealth - both of which we are not very good at doing.

Steep tarrifs on imports is EXACTLY what China has.  Canada, unlike the US, doesn't have the balls to call them on it.   Also, to block imports of things such as lead painted kids toys, products made well outside of any labour, environmental, technical standards,  etc. (oh, we do on paper, we don't in reality).  BUT: my real shot is at Canadian and American consumers who unquestionably will buy the poorest quality crap and eschew the usually much better domestic things (furniture a good example) to the extent we no longer HAVE those businesses here at all.

Finally, to address what you and Michael have asked:  the missing bit of infrastructure is the lack of business investment from Canadians.  The money is here, but it goes into a good copy of the worst part of the US economy and goes directly to large finance, who use the money to speculate in the Casino Capitalist economy.  Direct investment in business is almost non existant other than entrepreneurs themselves and big finance is only interest in big scam...er publicly funded enterprise - not run by entrepreneurs (the genuine engine of the economy).

[cannuck]

On 10/7/2018 at 10:43 AM, Michael Hardner said:

1. Competitive advantage involves infrastructure, yes, but I doubt we LACK the infrastructure.  We are known for cheap power and good transportation and communication systems so I don't know where this comes from.  I believe labour costs and innovation are the usually cited as factors that hold us back.

2. Right ok, I guess this is what you meant by infrastructure ?  But ... you didn't say why refinement doesn't happen here ?

3. Need more info.

see previous post.

While we may THINK we have good infrastructure, try manufacturing something outside of the Golden Horseshoe and you will find we do not.  While we can innovate with the best, when you try to produce you find that things that a US competitor takes for granted (such as a transportation system that actually works and is cost competitive, suppliers that actually HAVE what you need at a price far, far below the ridiculously marked up values of the "official Canadian distributor" and on it goes.  About the only thing we have that absolutely outshines a US business model by light years if an reasonably effective and 100% universal sick care system.

Petroleum refining does not happen here because we simply let the resource be exported with no value added (I am of course referring to bitumen from Athabasca Oil Sands - which DOES get upgraded by Suncor, Syncrude and Shell, but that is only a tiny bit of the current crude capacity).  Refer to what is above and you can see why

[cannuck]

6 hours ago, Machjo said:

Of course, but it also means less alcohol or tobacco consumption, less fuel consumption,  healthier people, less air pollution, less traffic, and so reduced need for revenue in the first place. By making taxes more user-pay, revenue more naturally follows expenditure. So if people consume more alcohol or fuel, more revenue for healthcare and roads. If they consume less, less revenue and less need for revenue.

what you miss is that Canada does not have any dedicated taxes - very unlike the US.  If you allow governments to raise fuel taxes, Trudeau will simply pay a bigger reward to every terrorist who murders an American soldier.   If we had dedicated taxes, you would see me on side for fat tax, ciggy tax and of course marijuana tax.

Where we could revolutionize our economy overnight is to tax the living shit out of speculative gain.   If you flip a house, stock, derivative, etc. in a day, I want to see 99% taxation.  Hold it a year, that drops to 95%, and so on at 5% a year until speculative gain (capital gain) is at nominal tax rate.  Instead of money being given to banksters to play all kinds of games THAT CREATE NOT ONE PENNY OF WEALTH, money would be rewarded for use to make things and pay a tax-free dividend (as the income at corporate level would already have been taxed).

Edited October 9, 2018 by cannuck

[Machjo]

7 hours ago, cannuck said:

what you miss is that Canada does not have any dedicated taxes - very unlike the US.  If you allow governments to raise fuel taxes, Trudeau will simply pay a bigger reward to every terrorist who murders an American soldier.   If we had dedicated taxes, you would see me on side for fat tax, ciggy tax and of course marijuana tax.

Where we could revolutionize our economy overnight is to tax the living shit out of speculative gain.   If you flip a house, stock, derivative, etc. in a day, I want to see 99% taxation.  Hold it a year, that drops to 95%, and so on at 5% a year until speculative gain (capital gain) is at nominal tax rate.  Instead of money being given to banksters to play all kinds of games THAT CREATE NOT ONE PENNY OF WEALTH, money would be rewarded for use to make things and pay a tax-free dividend (as the income at corporate level would already have been taxed).

I do think we can make tax collection more efficient too. I have people where I work who say that when they have to exchange an international or even inter-provincial flight ticket a part of which has already been used, calculating the different international taxes that apply to different parts of the ticket (such as a tax that applies to the airport fee only with the airport fee itself varying from airport to airport and then having to compute currency conversion rate and then the different taxes on the base ticket fare) or even GST, HST, QST, etc. can take some time to calculate since it sometimes needs to be done manually with risk of error and with some taxes amounting to literally less than a dollar (sch as a low tax on an airport tee). That's is a lot of time consumed in the economy to calculate a bunch of taxes. While some of these taxes are high, others can amount to literally a collection of pennies.

It would make more sense to eliminate little penny taxes and concentrate on taxes that can efficiently be collected from one large check. For example, a single wealth tax or business tax at the end of the year would involve just one large check once a year rather than having to collect a few dollars and cents on each transaction over many transactions over the course of a day. If much time is spent just collecting the tax, then that's a drain on our economic resources just to collect the tax before it's even given to the government.

[Wilber]

Not all the taxes go to the same place, you would need one agency to collect the taxes, do the calculations and distribute the taxes to the proper recipients. Revenue Canada does that now with provincial income tax but it would be pretty complicated to do it for all the different jurisdictions.

As for your last paragraph, we already do that with income and capital gains taxes.

[Michael Hardner]

7 hours ago, cannuck said:

 

Petroleum refining does not happen here because we simply let the resource be exported with no value added (I am of course referring to bitumen from Athabasca Oil Sands - which DOES get upgraded by Suncor, Syncrude and Shell, but that is only a tiny bit of the current crude capacity).  Refer to what is above and you can see why

We 'let' the owners export their own product??

[Machjo]

18 minutes ago, Michael Hardner said:

We 'let' the owners export their own product??

isn't the point of royalties to sell the resource to the extraction company? As far as I'm concerned, once they've paid the royalty and business tax, it rightly should be theirs to sell. That's how free markets work The government decides the royalty and tax rate but should leave it to the market beyond that..

[cannuck]

1 hour ago, Michael Hardner said:

We 'let' the owners export their own product??

Yes, producers sell their own product.  The morons in government haven't been around to screw that up since the did the Petrocan thing.  Problem is: owners can't sell their product since there is no way to get it to market.  Here, I have to agree with the tree huggers - do NOT let dilbit get shipped because it is far greater hazard in event of spills anywhere along the way.  By regulating the quality of what can be shipped, you bring a huge value added component into the picture by adding upgraders

[Argus]

23 hours ago, Machjo said:

No. Just shift the tax burden to encourage more desirable industries. I just don't see the point of taxing a business only to subsidize it afterwards. In that case, just drop the tax.

If you shift the tax burden to encourage more desirable industries than you ARE, in fact, subsidizing them. This is how we encourage the growth of unsuitable industries which will always have to be subsidized to protect them from world competition.

[Machjo]

5 minutes ago, Argus said:

If you shift the tax burden to encourage more desirable industries than you ARE, in fact, subsidizing them. This is how we encourage the growth of unsuitable industries which will always have to be subsidized to protect them from world competition.

I think of it more as shifting towards a more user-pay system than actual subsidization. Obviously a business that sells tobacco for example is imposing a greater social cost than one that sells apples and so that ought to be reflected in the taxes. I don't see user-pay as the same thing as subsidies.

[Wilber]

What's the difference between reducing taxes for an industry and taxing then reimbursing them? Supply management is user pay and the industry has the same tax rate as any other, so why do you have a problem with that?

[taxme]

On ‎10‎/‎8‎/‎2018 at 1:13 PM, Wilber said:

Go back to your cave then and don't expect utilities, roads, police, firefighters, a military or any other service government provides.

Try and get with the drift now and than. Of course we need government for some things but we do not need the government to run car insurance or liquor stores or whatever other business that they have butted their noses into. That is what I am talking about. Hello?

[Machjo]

On 10/9/2018 at 6:32 PM, Wilber said:

What's the difference between reducing taxes for an industry and taxing then reimbursing them? Supply management is user pay and the industry has the same tax rate as any other, so why do you have a problem with that?

My problem is less with supply management than with subsidies. With animal husbandry raising the cholesterol we consume, it does make sense for at least an animal-husbandry business to pay a tax on its net profits. That said, yes, I would prefer supply-management and even tariffs over government subsidies to it. While this might increase the cost of milk, animal products and byproducts are not a required part of a healthy diet anyway and not essential.

[Wilber]

3 hours ago, Machjo said:

My problem is less with supply management than with subsidies. With animal husbandry raising the cholesterol we consume, it does make sense for at least an animal-husbandry business to pay a tax on its net profits. That said, yes, I would prefer supply-management and even tariffs over government subsidies to it. While this might increase the cost of milk, animal products and byproducts are not a required part of a healthy diet anyway and not essential.

My guess is there are a few things you use that aren't required or essential either.

[Machjo]

1 hour ago, Wilber said:

My guess is there are a few things you use that aren't required or essential either.

I buy fuel. That's a non-renewable resource and so I think it should be taxed. That said, I also think we should tax it efficiently. For example, imposing a tax on the net profits of a resource-extraction business allows it at the end of the year to write one big check to the state after having calculated its total net profits for the year. Compare that to each gas station needing to invest in programming their systems to calculate this tax and that tax with each transaction often collecting no more than a few dollars. Sometimes governments overlook inefficiencies even in the tax-collection process itself.

[Zeitgeist]

3 hours ago, Machjo said:

I buy fuel. That's a non-renewable resource and so I think it should be taxed. That said, I also think we should tax it efficiently. For example, imposing a tax on the net profits of a resource-extraction business allows it at the end of the year to write one big check to the state after having calculated its total net profits for the year. Compare that to each gas station needing to invest in programming their systems to calculate this tax and that tax with each transaction often collecting no more than a few dollars. Sometimes governments overlook inefficiencies even in the tax-collection process itself.

Calculating tax at gas pumps is a simple computed algorithm.  The cost is nominal.