Here’s an awkward question for Yukon politicians: Would you support a good policy, even if President Trump was in favour of his version of it?
I’m talking about Trump’s new opportunity zones policy. Announced recently with much tweeting and breathless cable-news coverage, it aims to attract private capital to revitalize urban and rural areas which are suffering economically.
Investors who put money into one of 8,761 opportunity zones identified around the country will get skookum tax breaks on their profits. If you invest your money for more than 10 years, you earn a total exemption from capital gains tax.
There have been plenty of place-based economic development schemes in other countries over the years, but the Trump administration’s plan is both one of the biggest and least tangled in red tape. There is no application process. Compared to previous American programs of this type, and schemes in other countries, there are relatively few restrictions on what kind of investments qualify (although golf courses, massage parlors and liquor off-sales are not allowed).
Another variation on place-based economic development is the telecommuter subsidy. There is a growing trend for US communities to offer cash for telecommuters who move to take up local residence while serving clients elsewhere in the world. I wrote about Vermont a few months ago. McAdam, New Brunswick, offers serviced lots for just $1 to encourage people to move there.
Now Tulsa, Oklahoma is getting in on the action.
Tulsa is about a two-hour drive northeast of Yukon, Oklahoma; a community you may be familiar with from internet searches gone awry (try Googling “Yukon plumbers”).
Tulsa boosters are offering a crisp US$10,000 to people who move to Tulsa and work remotely. You also get desk space at 36 Degrees North, which is “Tulsa’s top coworking community.” They also offer a free housing stipend of US$300 per month, even though they claim “housing in Tulsa is likely cheaper than where you currently live.”
They have a slick digital campaign including a website and LinkedIn posts highlighting Tulsa’s community and quality of life, as well as its low cost and minimal traffic.
Economists have mixed views on these policies. There are some examples of zones that did seem to spark rises in employment and incomes, but also others where it’s unclear whether the policy did anything more than boost the profits of investors who would have invested anyway.
Nonetheless, I think it’s time for the Yukon to consider such a scheme with the aim of attracting high-wage private sector firms and workers.
We already have a great lifestyle, a dynamic community, good healthcare, low taxes by Canadian standards and reasonably priced air connections thanks to Air North.
Now we also have a redundant fibre-optic link to the global internet, although not a cheap one, as well as a small but growing community of tech firms and innovators. The government has spent big bucks on the backup internet link and fixing up the old Food Fair building as an innovation and co-working hub.
Another thing in our favour is that housing and office space in Vancouver is increasingly driving people out of that city to places like Squamish, Kelowna and Whitehorse.
Our main drawback is housing, where once again we seem to have engineered a shortage in a place that anyone looking at a satellite photo would assume was full of vacant lots.
So what would a Yukon version of such a scheme look like? First of all, we couldn’t call it an opportunity zone since Trump has taken that name.
Let’s call it a YES zone for now, with YES short for Yukon enterprise success zone.
A YES zone would include a combination of incentives, both fundamentally valuable and with a few gimmicks to provoke viral chatter on the web:
Yukon income tax breaks for employees who move to the Yukon and serve Outside clients, perhaps vested over a number of years to make sure the workers stay longer than a season or two;
Benefits for their employers too, perhaps with the Yukon government offering incentives on corporate income tax or covering employee costs such as Workers Comp, EI or CPP payments;
A cash bounty of a few thousand dollars to help with moving expenses;
Membership in (co)space plus a monthly subsidy for the first year or two, to take the edge of the cost of internet and housing; and
A gimmick, like a choice of a free snowbike, kayak or backcountry skis.
It will be important to do a rigorous business case on such a scheme, to make sure the cost of the incentives makes sense compared to the incremental tax revenues and local economic impact.
But my guess is that such a scheme would be cheaper and more effective than the kind of economic development programs that focus on writing big cheques to companies in the hope they invent the next big thing and build it locally.
Reminder: The Yukonomist contest is still open to brainstorm a Yukon word to beat Denmark’s “Hygge” and Japan’s “Shinrin-yoku.” Email your suggestions to
evenbetterthanhygge@gmail.com
Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon series of historical children’s adventure novels. He is a Ma Murray award-winner for best columnist.