High Canadian Dollar Inflation

In two years the Canadian Dollar has risen 16%. August 2005 the Canadian Dollar was at 0.82 US. Now August 2006 the Canadian Dollar is at 0.95 US. The rapid inflation of the Canadian Dollar is economically irresponsible. This rapid inflation has resulted in unsaleable inventory and manufactured goods. As a result of the rapid dollar inflation, 16% has been subtracted from already tight gross margins. Left with negative revenue and with only an a increasing dollar in sight many companies have no choice but to move manufacturing out of Canada.

A disproportion amount of Canada's inflation has come from oil exploration. At the same time Canada has one of the lowest oil extraction taxes in the world. This has disproportionally attracted oil exploration money into Canada. At the same time other export centred sectors are facing deflation. Rather than increasing interest rates, while encouraging high oil exploration capital inflow by the disproportionately low oil extraction taxes. Canada should increase its oil extraction taxes to slow the high inflows of capital for oil exploration.

In 2006 Venezuela increased their oil extraction tax from 17% to 33%. At the same time Canada is set to reduce its federal and provincial oil extraction tax by 50%. Tax breaks and subsidies for the oil sands development only increase the capital inflow driving the rapid dollar inflation. Measures need to be taken to correct this economically irresponsible rapid dollar inflation. Please see out dated oil royalty system.
http://www.business.ualberta.ca/cabree/Shell/Check_Paper.pdf
http://alc.whitematter.ca/index.php/alc/content/shadow_energy_minister_hugh_macdonalds_presentation_to_the_royalty_review_p/

Fixing the oil royalty system by simplifying the tax and increasing the oil extraction tax will take pressure off the Canadian dollar. This will allow the dollar to be lowed. And if necessary the dollar can be increased or decreased slowing from the value it was before the rapid dollar inflation.