- The Washington Times - Tuesday, January 31, 2006

Canada has just held a national election. A minority Conservative government has come to power. Prime Minister-designate, Stephen Harper, to be sworn in Feb. 6, will confront serious problems if he tries to fulfill campaign promises.

Before him lies an imposing task: coalition-building. However he is fortunate in that one problem will not weigh heavily on the new Canadian government: good relations with the U.S. Unlike his defeated anti-American Liberal Party predecessor, Paul Martin, who went out of his way to antagonize the White House, relations between the two countries will stabilize. However, Mr. Harper 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:

• Canada ranks 18th among 24 industrialized countries for average labor productivity growth over the last decade.

• Gross domestic product (GDP) per person has declined from 87.9 percent of that in the U.S. in 1985 to 84.7 in 2004.

• Average after-tax income per person has decreased from 80.4 percent of that in the U.S. to 66.9 percent in 2004.

But Canada has another problem the new government must address. It is little realized in the U.S. that, far from being a peaceful utopia, Canada has an extraordinary crime problem, according to the Second Amendment Foundation’s Alan Gottlieb in the Fort Worth Star-Telegram:

• Canada’s overall crime rate is now 50 percent higher than that of the United States.

• In 2003, the violent crime rate in the U.S. was 475 per 100,000 people, in Canada 963 violent crimes per 100,000.

• Sexual assault in Canada per 100,000 people was more than double that of the U.S., 74 for Canada as opposed to 32.1 for the United States.

• The assault rate in Canada was more than twice that of the U.S.: 746 to America’s 295.

“Moreover, this shift in crime rates,” says Mr. Gottlieb, “between the two countries has occurred while dozens of U.S. states have adopted ‘right-to-carry’ and ‘shall-issue’ 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 and perhaps Mr. Harper should consult New York Mayor Michael Bloomberg. But about the economy all the prime minister need do is to adopt the Fraser Institute recommendations:

• Reduce federal corporate income tax rate to 12 percent from 21 percent.

• Reduce provincial corporate income tax rate by 30 percent. (What we call “states” Canada calls “provinces.”)

• Eliminate corporate capital taxes entirely at both levels of government.

The question then is this: Will Mr. Harper have the courage to press forward on such a program?

Arnold Beichman, a Hoover Institution research fellow, is a columnist for The Washington Times.

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