Turning Over a New Maple Leaf

A minority Conservative government has come to power in Canada. New Prime Minister Stephen Harper will confront serious problems if he tries to fulfill his campaign promises.

Before him lies an imposing task: coalition-building. He is, however, fortunate in that one problem will not weigh heavily on the new Canadian government: good relations with the United States. Unlike his defeated anti-American Liberal Party predecessor Paul Martin, who went out of his way to antagonize the White House, Harper hopes to stabilize relations between the two countries. Harper, however, faces one big problem: the stagnant economy. Why?

Canada has “one of the highest tax rates on incremental investment in the world, which discourages the investment critical to improving productivity,” according to the Fraser Institute, a leading Canadian policy institute. Its findings are as follows:

• Canada ranks 18th among 24 industrialized countries for average labor productivity growth over the last decade.
• Gross domestic product per person has declined from 87.9 percent of that in the United States in 1985 to 84.7 percent in 2004.
• Average after-tax income per person has decreased from 80.4 percent of that in the United States to 66.9 percent in 2004.

But Canada has another problem that the new government must address. It is little realized in the United States that, far from being a peaceful utopia, Canada has an extraordinary crime problem. According to the Second Amendment Foundation’s Alan Gottlieb, Canada’s overall crime rate is now 50 percent higher than that of the United States. Rates of violent crime, sexual assault, and assault are also significantly higher than U.S. rates. “Moreover, this shift in crime rates,” says Gottlieb, “between the two countries has occurred while dozens of U.S. states have adopted ‘right-to-carry’ and ‘shallissue’ handgun laws. During the same period, Canada’s gun laws have gotten more restrictive, with the national gun registry being implemented.”

Crime will be a top item on the new government’s agenda; perhaps Prime Minister Harper should consult New York mayor Michael Bloomberg, who has been working on the same problems.

Concerning the economy, all the prime minister need do is to adopt the Fraser Institute recommendations:

• Reduce the federal corporate income tax rate to 12 percent from 21 percent
• Reduce provincial corporate income tax rates by 30 percent
• Eliminate corporate capital taxes entirely at both levels of government

The question then is, will Prime Minister Harper have the courage to press forward on such a program?