Canada’s economy could suffer because of the political situation in Ottawa when U.S. president-elect Donald Trump is inaugurated later this month.
That’s according to veteran Canadian investor John Ruffolo who, in an interview with BNN Bloomberg on Tuesday, said the government of Justin Trudeau has reached “lame duck” status, adding that it clearly misjudged the possibility of Trump being elected in the United States and was “caught flat-footed.”
Ruffolo, the founder and managing partner at Maverix Private Equity, said Canada’s future is at stake and the country needs an election and a clear leader who will be able to negotiate with America. “We have no one in charge,” he said, adding that it is a serious risk to the country’s economy.
On the subject of proposed capital gains tax changes, the government “caused a massive furor,” Ruffolo said, adding that he has never seen a comparable backlash against a policy from the technology community.
He called the situation a “clown show” because the business community has to deal with the disruption of tax planning without having certainty over capital gains taxes for 2024 or beyond. Ruffolo added that the Canada Revenue Agency (CRA) is now in a bind, we now have a situation where “changes to the capital gains rate is not necessarily dead.”
Solutions
Ruffolo proposed a three-pronged plan for Ottawa built around cutting government spending, reforming the tax system and developing a prosperity agenda.
Ruffolo said Canada has a “spending problem” and suggests the next government eliminate wasteful spending where there isn’t a good return on investment.
Once spending has been addressed, Ruffolo proposes to reform our tax system. Ruffolo argued that Canada’s personal income tax rates are uncompetitive, noting that Canada has the fifth highest marginal tax rates among the (Organisation for Economic Co-operation and Development) OECD countries. “That’s not competitive,” he said.
Reining in costs and fixing the tax system would “eliminate barriers” to increasing Canada’s prosperity, so everyone benefits, he said.