Business
Ottawa’s GST break and rebate cheques amount to bad policy
From the Fraser Institute
By Jake Fuss and Grady Munro
On Thursday, the House of Commons passed legislation (tabled by the Trudeau government) that would temporarily suspend the federal Goods and Services Tax (GST) on select items from December 14 to February 15 at an estimated cost of $1.6 billion, as part of the government’s “more money in your pocket” plan. The legislation now goes to the Senate for approval.
The government has delayed a separate proposal—to give Canadians $250 rebate cheques—in light of NDP demands to expand eligibility to include seniors. The original proposal would have sent cheques to an estimated 18.7 million Canadians (who worked in 2023 and earned $150,000 or less) at a cost of $4.7 billion. While aimed at all Canadians, this proposal is eerily similar to the recent move by Ontario’s Ford government, which plans to send $200 cheques to Ontarians. And again, it’s just bad policy.
Why?
Consider this. During the recent discussion about increasing Old Age Security payments by 10 per cent for seniors aged 65 to 74, former Bank of Canada governor David Dodge said, “The last thing that we need to be spending money on at this point in time is boosting consumption for relatively well-off people.” This critique also applies to the Trudeau government’s $250 rebate cheques, which would go to many well-off Canadians. Indeed, based on the government’s original proposal, a couple earning a combined household income of up to $300,000 could receive these cheques.
Moreover, because onetime payouts and temporary tax breaks don’t incentivize people to work and invest, they don’t help raise living standards. But permanent tax cuts, such as reducing personal income tax rates or lowering capital gains taxes, would provide a stronger incentive for Canadians to work more and make investments because they get to keep more of the money they earn. That would help drive economic growth, create jobs and provide more economic opportunities for workers across the income spectrum.
In fact, the Trudeau government’s plan may actually hurt economic growth in the long run. The government is expected to run budget deficits for the foreseeable future, and will likely borrow the billions needed to pay for the GST break and $250 cheques. In other words, this “relief” package will likely increase the federal deficit in 2024 and potentially 2025. By borrowing more money, the government will increase the tax burden on future generations of Canadians who ultimately must pay off today’s debt. And just as lower taxes improve economic incentives, this higher future tax burden will worsen incentives and likely stifle economic growth and reduce living standards.
Don’t be deceived. While it’s nice to get a cheque in the mail and have a couple months free of the GST for some items, the Trudeau government’s “more money in your pocket” plan is bad policy.
Business
US Expands Biometric Technology in Airports Despite Privacy Concerns
Biometric systems promise efficiency at airports, but concerns over data security and transparency persist.
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Biometric technology is being rolled out at US airports at an unprecedented pace, with plans to extend these systems to hundreds more locations in the coming years. The Transportation Security Administration (TSA) is driving a significant push toward facial recognition and other biometric tools, claiming improved efficiency and security. However, the expansion has sparked growing concerns, with privacy advocates and lawmakers voicing concerns about data security, transparency, and the potential for misuse of such technology.
US Customs and Border Protection (CBP) has already implemented its Biometric Facial Comparison system at 238 airports, including 14 international locations. This includes all CBP Preclearance sites and several major departure hubs. CBP says its Biometric Exit program is rapidly gaining traction, with new airport partners joining monthly and positive feedback reported from passengers.
Meanwhile, the TSA has equipped nearly 84 airports with its next-generation Credential Authentication Technology (CAT-2) scanners, which incorporate facial recognition. This rollout is part of a broader effort to bring biometrics to over 400 airports nationwide. These advancements are detailed in a TSA fact sheet aimed at building public awareness of the initiative.
Opposition and Privacy Concerns
Despite assurances from TSA and CBP, critics remain skeptical. Some lawmakers, led by Senator Jeff Merkley, argue that the TSA has yet to justify the need for biometric systems when previous technologies already authenticated IDs effectively. Privacy advocates warn that the widespread use of facial recognition could set a dangerous precedent, normalizing surveillance and threatening individual freedoms.
The debate is closely tied to the federal REAL ID Act, introduced two decades ago to standardize identification requirements for air travel. As of now, many states have failed to fully implement REAL ID standards, and only a portion of Americans have acquired compliant credentials. Reports indicate that fewer than half of Ohio residents and just 32 percent of Kentuckians have updated their IDs, even as the May 7, 2025, deadline approaches.
Biometric Adoption on the Global Stage
Beyond the US, biometric systems are gaining momentum worldwide. India’s Digi Yatra program has attracted 9 million active users, adding 30,000 new downloads daily. The program processes millions of flights while emphasizing privacy by storing data on users’ mobile devices rather than centralized databases. Plans are underway to expand the program further, including international pilots scheduled for mid-2025.
While biometric technology offers alleged benefits, such as faster boarding and enhanced security, it also poses serious risks. Privacy advocates caution against unchecked implementation, especially since, one day, this form of check-in is likely to be mandatory.
The TSA’s aggressive push for biometrics places the United States at the forefront of this global shift.
Alberta
Albertans still waiting for plan to grow the Heritage Fund
From the Fraser Institute
By Tegan Hill
In February 2024, the Smith government promised to share a plan to grow the Heritage Fund—Alberta’s long-term resource revenue savings fund—with the public before the end of 2024. But 2025 is upon us, and Albertans are still waiting.
The Lougheed government originally created the Heritage Fund in 1976/77 to save a share of the province’s resource wealth, including oil and gas revenues, for the future. But since its creation, Alberta governments have deposited less than 4 per cent of total resource revenue in the fund.
In other words, for decades successive Alberta governments have missed a golden opportunity. When governments make deposits in the Heritage Fund, they transform onetime (and extremely volatile) resource revenue into a financial asset that can generate more stable earnings over time. Eventually, the government could use annual income from the fund to replace volatile resource revenue in the budget.
Historically, however, rules that would have helped ensure the fund’s growth (for example, a requirement to deposit 30 per cent of resource revenue annually) were “statutory” rather than “constitutional,” which meant Alberta governments could easily disregard, change or eliminate these rules once they were no longer convenient.
And they did. The government changed that 30 per cent requirement to 15 per cent by 1982/83, and after an oil price collapse, eliminated it entirely in 1987/88. Due to a lack of consistent deposits, paired with the real value of the fund eroding over time due to inflation, and nearly all fund earnings being spent, the Heritage Fund is expected to be worth less than $25 billion in 2024/25.
Again, while Premier Smith has promised to grow the fund to between $250 billion to $400 billion by 2050, we’ve yet to see how she plans to do that. Whatever plan the government produces, it should heed lessons from other successful resource revenue savings fund such as Alaska’s Permanent Fund.
The Alaska government created its fund the same year Alberta created the Heritage Fund, but Alaska’s fund is worth roughly US$80 billion (or C$113 billion) today. What has the Alaska government done differently?
First, according to Alaska’s constitution, the state government must deposit 25 per cent of all mineral revenues into the fund each year. This type of “constitutional” rule is much stronger than a “statutory” rule that existed in Alberta. (While Canada does not have separate provincial constitutions, it’s possible to change Canada’s Constitution for province-specific measures.) Second, the Alaska government must set aside a share of the fund’s earnings each year to offset the effects of inflation—in other words, “inflation-proof” the principal of the fund to preserve its real value. And finally, the government must pay a portion of fund earnings to Alaskan citizens in annual dividends.
The logic of the first two rules is simple—the Alaskan government promotes growth in the fund by depositing mineral revenue annually, and inflation-proofing maintains the fund’s purchasing power. But consider the third rule regarding dividends.
The Alaska government created the annual dividend, paid out annually to Alaskans, to create political pressure for future governments to responsibly maintain the fund. Because citizens have an ownership share in the fund, they’re more interested in the state maximizing returns from its resource wealth. This has helped maintain and reinforce robust fiscal rules that make the Permanent Fund successful.
Based on this success, if the Smith government began contributing 25 per cent of resource revenue to the Heritage Fund and inflation-proofed the principal, it could pay each Albertan a total dividend between roughly $600 to $1,100 from 2024/25 to 2026/27, or roughly $2,300 to $4,400 per family of four. And as the fund grows, so would the dividends.
Almost one year ago, the Smith government promised a new plan for the Heritage Fund. When the plan is finally released, it should include a constitutional requirement for consistent contributions and inflation-proofing, and annual dividends for Albertans.
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