Canada Needs Tax Breaks To Spur Productivity-Panel

<blockquote>"That's not just that Canadian workers aren't working hard, the real issue is that there is not enough capital investment per worker in our economy compared to the United States. That all goes to the question of tax incentives," said Liberal Senator Jerry Grafstein, the committee chairman.</blockquote>On the contrary, Canadians by all reports are working harder than ever, often doing the amount of work that rightly should be done by two people because companies have either downsized too much or refuse to hire the proper amount of people as a means of squeezing yet more profit out of their business for either themselves or their shareholders, or more likely both. <p>That there is not enough capital investment is also true but the the answer this senator gives shows a fundamental lack of understanding of what is happening in the Canadian economy. Capital investment is not occurring here simple because more and more businesses and indeed entire industries are foreign owned and controlled, mostly by Americans by more and more by other foreign companies as well. The end result in either case is that capital investment, especially in the form of research and development, mostly is diverted to the company's country of origin using profits gained from their operations here. It used to be that Canada had enough smarts to require such companies to invest money back into their operations here and maintain head offices here; when did we become so dumb as to allow them to syphon profits off here to enrich their head office back home? <p>Also, when talking about capital investment it should not be assumed that this would automatically be good for Canadians, especially when the capital investment involves buying machinery especially designed to put many people out of work. Even the buying of the machinery can't be seen as a positive for Canadians as such things are always bought from foreign companies and manufactured outside of Canada. <p>If this is the degree of intellect that exists in the senate, then please abolish the senate right now, as it would be a brain drain that would definitely benefit Canada.

This is confusing productivity with investment, which aren't necessarily correlative. Productivity can't be said to decrease simply because more profits are going out of the country because that is irrelevant. If outside investment were increasing, then one would expect that productivity would increase as well, unless it is simply replacing the investment that was previously domestic.

The states, of course, has minimal productivity gains and the only reason that the 3.9 exists is because of the increase in military expenditures. Canada does not invest that heavily in armaments, therefore, like most countries, it is seeing a slowing and reversal of productivity. Obviously this is from an increasing global market, just walk into a department store and try to find something made in Canada.

This organization is the same one which recommended Bush's 'releive the rich' tax break of several years ago, and it knows well that you can't just spout tax reductions for the wealthy in Canada (even though that's where most of them have gone).