Taxes and tax cuts

Halifax, NS­ The Maritimes experienced an 1800 percent increase in cruise passenger numbers between 1990 and 2008. However, the author of a new Canadian Centre for Policy Alternatives-NS report, entitled Cruising without a Bruising: Cruise Tourism and the Maritimes, warns that this growth is not necessarily good for local ports and communities.

OTTAWA—Tax cuts are the worst possible economic stimulus with Bank of Canada interest rates heading to zero, and may well have a negative effect on the economy, says a report released today by the Canadian Centre for Policy Alternatives (CCPA). The report examines how tax cuts will work with close-to-zero central bank rates and deflationary pressures and finds they may well be contractionary—causing GDP to fall— by reinforcing deflationary pressures and thereby increasing real interest rates.

When the U.S. Treasury last October lavished $700 billion on Wall Street banks with no strings attached, the Obama team gave the bailout a green light. A popular insurgence was soon silenced, with public wrath directed instead at the U.S. auto producers (and unions) who followed with a request for a relatively modest $25 billion. The auto companies ended up with a loan of about 1/50th the amount that went to Wall Street as a gift.