In the National Post, Andrew Coyne makes the case that an urbanized Canada needs to give its municipal governments more power to levy taxes, and points out another they should get rid of:
There’s no doubt that cities, creatures of the provinces that they are in and confined by provincial laws to property tax as their main source of revenue, are in a fiscal bind: if not for lack of funds overall — local government revenues have risen more slowly than provincial governments’ over the last two decades, but faster than Ottawa’s — then for lack of stability from year to year. But that’s an argument for fixing the property tax, not strong-arming other governments.
By fixing the property tax, of course, I mean scrapping it. The property tax conforms to no known principle of sound taxation, being neither fair nor efficient nor simple. It attempts to measure both ability to pay and resource use at the same time, and fails at both: there’s no simple correlation between the value of the house you own and your income, and scarcely more of one with services consumed. On top of which, it discourages density, which is what most North American cities are desperately in need of.
Far better would be to allow cities to raise their own income or sales taxes — as a replacement for property tax, not in addition — for services, like fire and police, that can only be financed through taxes, while financing other services, wherever possible, with user fees. First among these, I need hardly add, is to price roads, which will do far more for congestion than any of the mayors’ grandiose subsidized transit plans.
On the homefront
TSX 60 futures are negative ahead of the open after the price of crude oil drifted lower overnight.
The loonie plummeted against the greenback after the Federal Reserve formally announced an end to its bond-buying program (known as QE3) at 2:00pm on Wednesday. However, this move was wholly due to strength on the U.S. half of the pair. Relative to the aussie, another commodity currency, the loonie rose. The U.S. central bank is inching closer to policy normalization, and this implies that the rising tide south of the border will also lift Canadian boats.
Gold giant says costs will continue to decrease. Barrick Gold (ABX) also published its quarterly results after the market closed on Wednesday. Adjusted earnings per share for the quarter were $0.19, modestly higher than the consensus estimate of $0.17. More importantly, the company indicated that all-in sustaining costs will range from $880 to $920 per ounce this year, cutting the top and bottom ends by $20 apiece. The stock hit its lowest level in more than 20 years yesterday afternoon as the price of the underlying commodity slumped on the end of quantitative easing from the Federal Reserve. Shares moved higher in the after-hours session. Meanwhile, Yamana Gold (YRI) posted an unexpected adjusted loss for the quarter, while Agnico Eagle (AEM) saw adjusted earnings per share come in well below the consensus estimate.
Income-splitting plan to be announced. Prime Minister Stephen Harper will unveil a modified form of income-splitting today, making good on a promise made during the 2011 campaign, writes Bloomberg’s Theophilos Argitis. The measure will reportedly cap the benefit per family at $2,000 each year, which may reduce criticism that this change disproportionately benefits the wealth.
Seven Generations prices IPO. The Globe and Mail’s Jeffrey Jones reports that Seven Generations Energy has raised $932 million in its public offering at a price of $18 per share, and that the stock will begin to trade on a when-issued basis today. Despite the weakness in crude oil prices, the IPO was oversubscribed – proof of healthy demand for the offering and enthusiasm for this company’s prospects. Two major shareholders that own over 25 percent of the company will not be selling their stakes in secondary offerings, as was previously planed. The stock will trade under the ticker VII (the Roman numeral for seven, for the uninitiated).
More earnings. Bombardier (BBD.B) and Catamaran (CCT), two very different firms, both posted top and bottom line beats before the market opened. The plane and train manufacturer took a large one-time charge related to its workforce reorganization, while the pharmacy benefit management and health care info tech firm boosted its outlook for profits as revenues surged.
How’d the American economy do in the third quarter? We’ll get our first look at 8:30am (EDT) when the advance print of Q3 growth is released. Economists are looking for annualized growth of 3.1 percent quarter-over-quarter, a drop-off from 4.6 percent in Q2 but still a solid reading that would suggest the world’s largest economy continues to gain traction. That’s good for the global economy, and especially good for Canada.
The Spanish economy grew 0.5 percent quarter-over-quarter in Q3, in line with expectations.
Unemployment in Germany unexpectedly fell in October, a welcome development for the euro zone’s largest economy, which has been showing many signs of weakness as of late.
Indian stocks are hitting record highs on what Business Insider’s Mike Bird calls “Modi Madness.” The popular prime minister has looked to implement reforms in line with free market principles, moves that have been applauded by investors.
The Russian ruble, which has been getting crushed against the U.S. dollar, began to spike against the greenback at 6:00am, reversing this week’s losses in short order.
The Bank of Japan publishes its latest policy decision late this evening. “This week’s releases out of Japan have actually been ahead of estimates, suggesting the negative impact from the sales tax hike is beginning to wane,” writes IG market strategist Stan Shamu. “[W]e receive CPI data ahead of the results from the BoJ meeting. This will probably place significant weight on the CPI data as last week concerns were rife that the BoJ’s inflation goal is well off target. However, most analysts still expect the BoJ to remain patient and wait until January perhaps before pulling the trigger on further stimulus.”