The Financial Post reports in its Tuesday, Feb. 13, edition that many Canadians are unhappy about the food sector, saying high food prices are squeezing households. The Post's Matthew Lau writes that there are competing views as to how to remedy the situation. One approach is special taxation of grocery stores. The idea is that higher taxes on their profits might persuade grocery stores to earn lower profits by reducing prices. The taxes collected could be redistributed back to households. The greatest target of anti-capitalist vituperation in the past while has been Loblaw. Such punitive taxation would surely cause a decline in investment across the sector. Efficiency would decline, operating costs would rise, and consumers would face less choice and higher prices. A tax on Loblaw would not only hurt Loblaw shoppers. Arguably, the greatest benefit Loblaw gives grocery shoppers is not actually the food it sells them, but the protection it provides all consumers against price gouging by Metro and Empire. The ability to go to an alternative store is the greatest protection shoppers have.
In sum, this idea of redistributing from business to households through special taxes is not a winner.
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