I believe wealth taxes (really, wealth restitution) should go into sovereign wealth funds - not least as then the public can see how that money is working for them, and so support the continuance and expansion of such taxes.
Canada's first sovereign wealth fund
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Re: Canada's first sovereign wealth fund
#12Usually a sovereign wealth fund is funded by excess profits, like Norway for example. In this case, it's being seeded by $25 billion dollars of debt. Can anyone more financially gifted explain how this is any different from, well, regular government spending and money printing?
Only in that it's in a private equity fund, not one-time spending.
Re: Canada's first sovereign wealth fund
#13Re: Canada's first sovereign wealth fund
#14Re: Canada's first sovereign wealth fund
#15One of the biggest challenges is finding investable projects these days. If they put this money in as a hold to time projects well than could be a good future asset for Canada. If it ends up actually being more of a jobs production vehicle for political gain then probably less successful.
Re: Canada's first sovereign wealth fund
#16This is a great way to sidestep the political process to fund popular projects. The political constraints will ensure returns are middling, so unless they subsidize with tax breaks on dividend income I think it would be a poor commercial investment.
Whether its perfect or not, it almost has to be better than the current status quo.
Re: Canada's first sovereign wealth fund
#17Doesn't that has the problem of over exposing canadians to canada economics from an enormous an investment perspective? I guess it benefits my kids though
There are multiple types of sovereign wealth fund associated with taxes on resource extraction. The type you see in Norway is used to shelter the economic diversity, currency, and labor force from the steamrolling impact of the extractive industry. The type you see in Saudi Arabia, which has no such diversity and where basically all employment is tied to oil through few degrees of separation, is basically a slush fund for long-term infrastructure projects that would not otherwise be approved because of their size in relation to the secular economy, whether those are profit-generating enterprises like harbors or not-for-profit ones like roads.
Both aim to take today's windfall and spend it on something other than hookers and blow.
Norway still does have some totally unjustifiable passion projects, like the coastal highway it's building, but it's doing this from general funds to keep the wealth fund separately managed as a giant pile of investment money that just happens to belong to an investor called 'Norway', while in Saudi Arabia it is an instrument of policy.
Re: Canada's first sovereign wealth fund
#18Usually a sovereign wealth fund is funded by excess profits, like Norway for example. In this case, it's being seeded by $25 billion dollars of debt. Can anyone more financially gifted explain how this is any different from, well, regular government spending and money printing?
Yea really. Feels like a bit of a communications exercise and effort to create arms length distance from the Federal government and spending on major projects.
Now it's not the Federal government and taxpayers propping up the oil industry by buying yet another oil pipeline, but rather a "sovereign wealth fund" (funded by Canadian taxpayers).
Re: Canada's first sovereign wealth fund
#19If this is run anything like the CPP, it will underperform both the market and their own benchmarks yet lead to executives awarding themselves huge bonuses.
That seems fine as long as they can show lower volatility than market while still being close in return? Did they?
Re: Canada's first sovereign wealth fund
#20I believe wealth taxes (really, wealth restitution) should go into sovereign wealth funds - not least as then the public can see how that money is working for them, and so support the continuance and expansion of such taxes.
Agreed, we should also nationalise resource extraction and put the funds in there. Canadian resources should be for Canadians.