An amazing thing happened last spring. Fearing it was about to be toppled, the minority Liberal government of Paul Martin gave in to NDP leader Jack Layton’s demand that almost $5 billion in corporate tax cuts be cancelled and the money spent instead on things Canadians desperately want — including housing, public transit and the environment. And the country didn’t collapse.

Economist Mike McCracken notes that the $5 billion in corporate tax cuts would have mainly ended up in the coffers of the big banks and the oil and gas companies, the ones reaping huge windfall profits these days as world energy prices soar.

Somehow these companies have managed to struggle by without those extra billions from Canadian taxpayers.

That’s an important lesson for us; it suggests we could go further down this path.

Since the federal government started generating surpluses in 1998, it has been absolutely awash in cash — a fact played down by government and business commentators, lest ordinary Canadians get a glimmer of what could be achieved if the money were put to some real national purpose, like rebuilding the social and physical infrastructure of the country.

Instead, between 1998 and 2003, about $152 billion of the surplus went to tax cuts, and $61 billion went to debt reduction, for a total of $213 billion.

That utterly dwarfs the roughly $40 billion of the surplus that went to increased social spending, notes Armine Yalnizyan, an economist with the Canadian Centre for Policy Alternatives in Ottawa.

This amounts to a lot of squandered opportunities.

Here’s just one example. As part of its tax-cutting, Ottawa plans to raise the threshold at which income tax applies, from $8,000 to $10,000.

Most tax cuts benefit the well-to-do, but this measure was touted as benefiting the 5 million Canadians earning less than $10,000 a year.

Yet almost none of these people pay any income tax, so they will receive no benefit from the measure.

The measure will, however, cost the government about $7 billion, because it means all taxpayers will pay slightly less tax. Next year, for instance, each taxpayer will save $16 — enough for a large pizza, notes Yalnizyan.

There’s nothing wrong with a large pizza. I’d like one myself. But I’d happily forgo it, if Ottawa would instead put some of that $7 billion into, say, a national housing program, so that the 250,000 Canadians currently homeless or almost homeless would have a secure place to raise their children.

That, in the long run, would make a bigger difference to all of our lives than even a large pizza.

Meanwhile, the Liberal government plans to reintroduce those $5 billion corporate tax cuts.

The NDP should serve notice that if the Liberals do this, they better prepare to head out on the hustings soon with a good explanation for why there’s a pressing need to hand over such a large chunk of our hard-earned surplus to the banks and the big oil companies.

Linda McQuaig

Journalist and best-selling author Linda McQuaig has developed a reputation for challenging the establishment. As a reporter for The Globe and Mail, she won a National Newspaper Award in 1989...