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August 10, 2015 | Perfection

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

 

Before we return to this pathetic blog’s regular program of bikes, babes and balanced portfolios, it’s time for a few words about Utopia. That, of course, is where we’ll be after the coming election if all the Dippers who’ve targeted this site in the last few days have their way. It will be delivered by their leader – a man who remortgaged his house on 11 occasions, increasing the debt each time, and now lives in a free mansion provided by the taxpayers.  If only, Mr. Mulcair says, we could be like Norway.

The N-argument loomed large during the recent election in Alberta, wherein the Tory government was handed its collective ass. The successful NDP told folks that Alberta – now staggering as global commodity prices have collapsed and oil has halved – the province had squandered its resources, succumbed to cronyism and profiteering, and should have been like run that Scandinavian country which gave us Vikings and pillage. But not Abba.

The Norwegians, people here keep saying, are happy little fjord-jumpers with cradle-to-grave social services, free education and a giant heritage fund because their nation has embraced socialism and rejected private enterprise. In short, it’s perfecton. Therefore it’s absolutely cool for the new Alberta premier to increase corporate taxation by 20% (from ten points to twelve), and ratchet in higher personal tax rates on those making over $150,000.

In fairness, it’s not just the NDP spreading this meme. The Trudeau Libs are at it, too. “The first thing we will do is raise taxation on the wealthy,” their young leader says, “so we can drop taxes for the middle class.” This stuff sells. Everybody hates 1%ers and corporations. Beating on them – those who usually start companies or create employment – is how to get elected these days.

But, back to Norway, where it’s true there is a big, fat sovereign wealth fund built through a nationalization of the oil industry. In fact, Norway turns out to be pretty much a one-trick pony. Its economy is dominated by a single industry – energy extraction – which is currently making paradise nervous. The commodity rout which shows no sign of ending is taking a serious toll on troll-land, just like Alberta.

NORWAY CRUDE

No wonder. Norway’s social spending is so extreme that taxes alone – even withering ones – are unable to sustain it. Oil has tanked in price while new investment in the industry (as in Alberta) has fallen sharply. Meanwhile, spending on the five million people who live there is so high the government is on the verge of dipping into its wealth fund (intended for when the black stuff runs out) in order to make ends meet. If it does not, some of those storied social programs will be kaput. Spending is now outstripping oil income – something that was not supposed to happen for a generation.

NORWAY FUNDS

Now this would all be mildly interesting – that the deities running Norway are hitting into the same wall as the cowboys in Alberta  – if the two treated their citizens similarly. But they don’t. Norway is one of the most heavily-taxed countries in the world, with the total burden equal to 45% of the economy. Personal income taxes are in the 55% range, even higher than the wealthiest Ontarians now fork over. Corporate profits range from 28% to more than 70%.

Worse, Norway has a 25% HST, which includes a 15% value-added tax on groceries. There are also local taxes and social security levies. Plus, Norway has a 1.1% wealth tax – which clicks in at the $130,000 mark – on top of income and sales taxes. In total, the average middle-class Norwegian family (there are no other kinds, of course) pays about $70,000 a year to the state. For that they get Canadian-style health care, free education and subsidized child care.

Norwegians also surrender privacy. The state publishes everyone’s tax return online in a searchable database, complete with birth dates and place of residence. This database also includes the net worth of all citizens, which must be real handy if you are into fraud.

So, here’s a place where the work week has dwindled to just 31 hours because, after all, why would you want to knock yourself out? To be taxed more and gain little reward? This is a country where eight of ten companies are state-owned, yet the current oil woes have pushed unemployment to an 11-year high.

The government says this: “The Norwegian tax system is based on the principle that everybody should pay tax according to their means, and receive services according to their needs.” So much for talent, or guts.

There are those who laud this. A bunch of them have come to visit us in the last few days. This is the world they seek, now quietly being constructed in Alberta. Maybe soon in Canada. If you want it, you know how.

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August 10th, 2015

Posted In: The Greater Fool

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