Starving ourselves to dystopia through tax cuts

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For years Stephen Harper was plagued with independent agencies and monitors of government actions to the point where he often seemed at war with his own government. It seems that at least one "independent" body, the Parliamentary Budget Office, is now a little more PMO-friendly. A recent report from the PBO's new chief, Jean-Denis Fréchette, declared that thanks to the incredible generosity of the federal government, "Canadians" have an extra $30 billion in their pockets -- money "saved" due to Conservative tax cuts. The figure includes reductions in personal income tax of $17.1 billion and the federal share of a GST/HST revenue loss of $13.3 billion. That's almost $1,000 per person.

Isn't that nice.

Except that the "average" is meaningless. According to Canadians for Tax Fairness (disclosure: I am on the board):

"… the top 20 per cent of income earners got $10.9 billion, or 36 per cent of the total, while the bottom 20 per cent got $1.9 billion, or only six per cent. ...What this means is that while the lowest 20 per cent of income earners have gained less than $500 in tax reductions, the top 20 per cent have seen their taxes go down by almost $2,000 a year."

There was no suggestion that the $30 billion could also be seen as lost revenue and lost services. No debate about whether the poorest 20 per cent are better off with an extra $500 to spend or whether they might actually be better off with affordable child care, pharmacare, low tuition fees for their kids or affordable housing. 

The PBO report again raises the question: how will we ever get an adult conversation about taxes in this country? There was no critical comment from any of the national political parties. For so many years now, the conversation has been like one-hand clapping. Anti-government voices like the Canadian Taxpayers Federation, the National Post, the Fraser Institute and C.D. Howe Institute and the editorial writers in virtually every newspaper in the country repeat the mantra that tax cuts are good to the point where there is apparently no level of government impoverishment that is unacceptable.

'Savings' vs. lost public revenue

I wonder if Canadians would be so sanguine about the "savings" they receive if they were announced as options forgone. So, instead of announcing the upcoming income-splitting scheme (slated for the 2015 budget) as savings for taxpayers, the government news release would state:

"Today the Harper government announced that it was taking new tax measures that will ensure that Canadians will never get a national child-care program. 'Our government is acutely aware of the fact that we still have too much revenue -- revenue that Canadians would expect us to spend if they knew we had it,' said Finance Minister Joe Oliver. 'So we are going to continue to implement our revenue reduction plan to ensure that no one gets attached to the idea of affordable child care. Our income-splitting measure will eliminate the $3 billion it would cost to start such a program.'"

Or perhaps they could announce it with a somewhat different spin:

"The Conservative government in Ottawa announced today a continuation of its long-term commitment to making rich people richer. 'Our government is not going to stand idly by and watch rich people in other countries get richer than our own wealthy citizens. Not on my watch,' said Finance Minister Joe Oliver. Oliver announced that the Conservatives will be implementing an income-splitting measure in 2015 that will put loads more cash into the pockets of those who can't figure out how to spend the money they already have.

'The spending side of it is their problem,' said Oliver. 'Our job is to give them more money.' He pointed out that 86 per cent of all families would gain no benefit whatsoever from income-splitting. The richest 5 per cent of families would see more benefit than the bottom 60 per cent of families combined. The bottom 60 per cent of families would receive, on average, $50 while the wealthiest 5 per cent would receive an average benefit of $1,100. 'No one should doubt our commitment to taking from everyone else and giving to the rich. It's what we do.'"   

Of course the $30 billion figure doesn't even take account of the enormous cuts that Paul Martin made in 2000 (larger than anything Flaherty implemented) and it also doesn't count cuts to corporate taxes implemented by the Conservatives. The handover of community revenue to the largest corporations in the country means we are nearly $20 billion short every year. That's $50 billion we would have had if taxes had been left the way they were starting in 2005. If you add in Paul Martin's gratuitous gifts to the undeserving rich and their corporate co-conspirators, the number is closer to $80 billion. To put that in perspective, we now have about $230 billion in federal revenue -- rather than $310 billion we should have.

It might be a useful exercise for Canadians to sit down and produce a couple of columns -- one called "taxpayers," listing what we could spend our savings on, and the other called "citizens," what we could collectively accomplish as a national community if we somehow went back to the year 2000 or even 2005 tax levels. For the vast majority of us, the first column would be pretty short. But the other list could get quite long for the simple reason that when we all throw a bit of money into the pot, the pot gets pretty big.

The folks at Press Progress did some of the work on such a list, allocating $43 billion in additional revenue annually.

Balance the budget: $2.9 billion

Pay down debt: $10 billion

Urban infrastructure and public transit: $9.5 billion

National child-care program: $2 billion

National pharmacare program: $3.8 billion

Reduce university tuition to 1992 levels: $3 billion

Invest in affordable housing: $1.5 billion

Invest in First Nations communities, water supply and education: $2.2 billion

Invest in long-term health care for seniors: $5.6 billion

And, say the authors, we would have enough left over to buy a Welsh pony for every child under the age of nine (cost: $2.5 billion).

Of course, the anti-government propagandists frame this in their own special way: taking money out of people's pockets, killing growth, attacking private investment. For them it's all cost, no benefit.

But the facts tell a different story. Having the lowest corporate tax rates in the G7 has done exactly nothing for investment in Canada. Every dollar we give these carpetbaggers is just added to the huge pile of idle capital (some $600 billion) sitting in corporate bank accounts. These folks aren't stupid -- they're not going to invest unless there is a demand for what they produce. You only worry about income tax if you're making an income. Taxes historically rank about number 5 or 6 on the list of factors going into an investment decision.

How might we create demand so that corporations would invest? Well, how about spending $50 billion on things that actually employ people (day-care workers, health-care workers, teachers), spend money in the private sector (housing and infrastructure, transit, and water systems and schools on reserves) and educate more people for high-paying jobs?

Raising revenue for the country we want

Despite how obvious this should be, it appears that no national party has any intention of proposing a return to the days when we actually funded government generously -- when we understood that taxes are the price we pay for a civilized society.

The Liberals and the Conservatives are responsible for destroying our national revenue. The Green Party has a "revenue neutral" pledge that will raise carbon taxes but reduce other taxes by the same amount. That leaves the NDP. But that leaves us nowhere. In the fall of 2013, Thomas Mulcair made it clear enough: "…that is never going to be part of my policies, going after more individual taxes. Period. Full stop." An insider told me Mulcair regretted being so strong in an off-the-cuff remark. But on May 15, he reiterated: "We're saying that personal taxes will not be touched. That's a firm undertaking. That's a contract with the Canadian voting public on our behalf." A contract that includes, apparently, the super-rich, the 1%.

Mulcair is not avoiding tax increases because he is afraid of the media response. He is committed to the status quo because he actually believes that taxes should not be raised. It is the inescapable conclusion a lot of people were hoping to avoid. And if progressives in this country are serious about political change at the federal level, they need to take action to convince the NDP to change its position. No one should give a dime to this party until it indicates it is committed to finding the necessary revenue to fund what Canadians say they want. I received a fundraising letter from the NDP last week and I returned it saying: "Not a dime until you pledge to increase taxes." And I sent the same message to Thomas Mulcair. I suggest you do the same. It may be the only message that gets through.

Murray Dobbin has been a journalist, broadcaster, author and social activist for 40 years. He writes rabble's State of the Nation column, which is also found at The Tyee.

Photo: Sharon Drummond/flickr

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