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(January 9, 2007) Canadian governments are too reliant on personal income and business taxes and need to rebalance the tax system to make it more efficient through additional use of consumption taxes such as the GST, according to a new study released by the Fraser Institute.

The study, which compared Canada’s mix of taxes to 30 other industrialized nations, found that the costs associated with taxes extend beyond the direct amount collected. A tax system that reduces incentives for business and workers can diminish overall economic performance. For example, taxes on capital such as corporate income taxes impose much higher costs on society than consumption taxes such as the GST, the institute claims.

Jason Clemens, one of the study’s authors suggests that Canada, which has one of the highest levels of reliance on profit taxes in industrialized nations, should rethink its tax policies.

“The overall objective for Canadian policy should be to increase prosperity by reducing the use of costly taxes such as taxes on income and profits and replacing the revenues lost through less costly taxes such as consumption taxes. This would not only enhance the incentives for savings and investment, but it would bring our tax system in line with our chief competitors in the industrial world,” Clemens said.

In addition to reducing profit taxes and increasing consumption tax, the study also recommends harmonizing provincial sales taxes with the federal GST and eliminating restrictions on contributions to RRSPs or pensions and creating new prepaid tax savings accounts.

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BetaPro launches new bull and bear ETFs

(January 9, 2007) BetaPro Management, a member of the Jovian group of companies, has announced the launch of two new exchange-traded funds. The Horizons BetaPro bull and bear ETFs offer inverse and magnified exposure to the S&P/TSX 60 Index.

The Horizons BetaPro S&P/TSX 60 Bull Plus ETF attempts to double the daily performance of the S&P/TSX 60 Index, while the Horizons BetaPro S&P/TSX 60 Bear Plus ETF takes the opposite approach. Both ETFs will be listed on the TSX starting Wednesday.

“[these funds] are the next evolution in Canadian exchange-traded funds, allowing investors to profit or protect in bull and bear markets,” said Howard Atkinson, President of Horizons BetaPro’s ETF division.

The funds will be managed by ProShare Advisors.

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CIBC announces management change to pooled fund

(January 9, 2007) CIBC Asset Management has announced the addition of CIBC Global Asset Management as a portfolio sub-advisor to its Imperial Emerging Economies Pool, offered through CIBC’s flagship portfolio solutions program, Personal Portfolio Services, and CIBC Private Investment Counsel.

In an attempt to diversify the pool’s management strategies, 25% will now be managed through CIBC Global Asset Management’s Emerging Markets Enhanced Index strategy. This index mandate strives to add incremental value above the benchmark through various strategies, including active allocations by country and a currency management approach.

The Boston Company Asset Management will continue to manage 75% of the pool utilizing an active “bottom-up” approach.

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Investors Group’s dividend growth funds now available

(January 9, 2007) Investors Group has announced that three new dividend growth funds, focused on helping Canadians address their growing need for income yield diversity and longer-term capital growth, have received regulatory approval and are available for sale.

The new funds are Investors Canadian Dividend Growth Fund, Investors U.S. Dividend Growth Fund, and Investors European Dividend Growth Fund. They will invest primarily in companies that aim to provide income and long-term dividend growth in their respective markets.

Investors Group’s internal money management team will provide day-to-day investment advisory services for these funds. The new funds are equity products and the equity income generated from them will give clients the opportunity to diversify their source of yield. Investor’ Group points out that this is an important feature in today’s low interest rate environment.

“Increases in life expectancy and anticipated length of retirement mean Canadians currently approaching retirement tend to be looking for investments that provide both income and growth opportunities,” said John Wiltshire, IG’s senior vice-president of product and financial planning.

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(01/09/07)