The Commons: All in favour of cutting taxes, say ‘yea’

The annihilation of the tax code finds support in all corners

by Aaron Wherry

The Scene. “I don’t believe,” the Prime Minister once declared, “that any taxes are good taxes.” Most everything Stephen Harper says is sure to be contested by at least a couple people, but on this point all parties now seem mostly to agree. Even if they do make a great show still of objecting to each other.

“Mr. Speaker,” the NDP’s Libby Davies began this afternoon, not bothering to pause for her colleagues’ applause and talking fast, “the Conservatives’ reckless policy of corporate tax cuts has helped gut our country’s manufacturing sector. The Conservatives do not mind helping profitable oil companies and the big banks just love the handouts that they get, but there has been no benefit for the manufacturing sector, and now we have lost hundreds of thousands of good jobs. Nowhere is this more evident than in Ontario, with even Mr. Hudak saying as much. Will the Prime Minister wake up, see the evidence and cancel his next round of pointless corporate tax giveaways?”

The Prime Minister stood to respond, but a rejoinder had already been tabled moments before by Conservative MP Eve Adams. ”The last thing Canada’s families need now,” she had warned the House, “is the NDP’s massive job-killing tax hikes that would cost jobs and hurt our economy.”

Ms. Adams had found excuse to say so in sharing news of Forbes magazine’s recent kind appraisal of Canada’s business environment. It is merely inconvenient that the Forbes ranking is based in part on the harmonized sales tax implemented in Ontario and (though briefly) British Columbia—a policy the Harper government facilitated and promoted, but for which it is loath to take much public credit because of how many Ontarians and British Columbians view it as a tax increase.

In response to Ms. Davies, Mr. Harper did not bother to repeat Ms. Adams sloganeering and instead took the opportunity to enthuse about all of the bad taxes his side was cutting. “Mr. Speaker, of course, the government has been lowering taxes of all kinds, for businesses, families, and individuals,” he reviewed. “There are measures right now before the House of Commons to give specific tax allowances and specific tax breaks to the manufacturing sector. I would call on the NDP to support those and stop opposing good things for Canada’s manufacturers.”

Ms. Davies tried once more to reason with the Prime Minister. “Mr. Speaker, those tax breaks to the big corporations are not working,” she said. “The fact is, two million Canadians are looking for jobs. Why are they not the priority instead of the big banks?”

Mr. Harper made a show of seeming confused. “What I do not understand is when we put job creation measures before the House—the new tax credit for new-hires, incentives for manufacturers—why the NDP, which has apparently no economic ideas at all to propose, just simply stands in the way and votes against these things for Canadian families,” he begged.

This was, it must be said, not entirely fair. Just last week, for instance, the NDP proposed a tax credit for small businesses that create jobs: a credit which would actually reduce the tax burden on small business owners by four and a half times as much as the credit the Conservatives presently propose.

Indeed, while the NDP would set the corporate tax rate at 19.5 per cent, they would seem to eager to do so, in large part, so that they might fund a half dozen tax breaks: a “Caregiver Benefit,” a “Child benefit,” a home heating federal sales tax rebate, an occupational travel and accommodation rebate, an “Inter-generational Home Forgivable Loan Program,” an extension in the Accelerated Capital Cost Allowance and an increase in the education tax credit.

Not to be entirely outdone in this race to the destruction of the tax code, the Liberals have taken lately to asking the government if it will cancel a planned increase in EI premiums—”a killer of jobs, a direct attack on employment,” which would “further hurtle us toward a recession,” Bob Rae cried this week. The Conservatives have so far shown little interest in heeding Mr. Rae’s warnings, but yesterday they did congratulate themselves on eliminating the per-vote subsidy, or rather the “tax on voting” that was presumably driving 40% of eligible voters away from the polls.

Which brings us, inescapably and inevitably, to the subject of Montreal’s Champlain bridge. The Harper government is now committed to building a new span between Montreal and the mainland. On the need for a new bridge, every party was united during the last election. Except that, with today’s announcement, the Conservatives indicated that those driving across the bridge will have to pay a toll. And on that point the NDP is duly outraged.

“Hundreds of thousands of workers will now have to pay to travel where it is currently free,” Thomas Mulcair moaned this afternoon. “Why?”

Industry Minister Christian Paradis snapped up to defend the toll, not as a reasonable expectation to place on citizens in a functioning democracy, but actually as a measure to reduce the burden on the beleaguered taxpayer. ”We will work this way and proceed with our partners and the private sector so that construction does not result in additional costs to taxpayers,” he said.

For sure the last thing that would ever be suggested in this place is that anyone should have to pay full fare for anything.

The Stats. Trade, seven questions. The environment, six questions. The G8 Legacy Fund, five questions. Infrastructure and military procurement, four questions each. The economy, three questions. The Canadian Wheat Board and aboriginal affairs, two questions each. Foreign aid, science, pensions, crime, young people and shipbuilding, one question each.

John Baird, seven answers. Stephen Harper, six answers. Julian Fantino and Peter Kent, four answers each. Ed Fast, three answers. Christian Paradis, Gerry Ritz, John Duncan and Keith Ashfield, two answers each. Bev Oda, Maxime Bernier, Gary Goodyear, Ted Menzies, Vic Toews, Diane Finley and Rona Ambrose, one answer each.

The Commons: All in favour of cutting taxes, say ‘yea’

  1. NDP are going to have to stop sounding like Ayn Rand villains or they never grow support outside Quebec. Their war on small and medium size businesses sounds like ‘kulaks are enemies of proletariat, comrade’ and that’s not popular with most Canadians outside Que. 

    Free trade has decimated North America’s manufacturing sector, not reduced corporate taxes. 

    Does Davies ever explain exactly how lower business taxes drives away businesses?

    Globe/Mail ~ Doug Saunders ~ Abolish Corporate Tax:

    In fact, the strongest arguments against corporate tax come from the left. They were most eloquently expressed by Robert Reich, the economist who was considered on the far left of Bill Clinton’s cabinet during his tenure as labour secretary.

    Corporate tax, he noted, is fundamentally regressive: It shifts wealth to the rich. And not just because General Electric avoids it and corner shops don’t. Since corporations do not physically exist, corporate tax is ultimately paid by individuals – and, as many studies have shown, those individuals tend to be the company’s workers more often than its shareholders or executives.

    There is another strong argument against corporate tax: It gives businesses far too much power in politics, law and society. As “taxpayers,” corporations are given citizen-like rights in court and legislatures; as financiers of the state, they are given far too much lobbying power and influence over legislation – almost obligatory given their large taxpaying role. The Canadian documentary The Corporation ironically made the strongest argument against corporate taxation. It turns corporations into de facto humans, which is not healthy for democracy.

    A truly fair and healthy tax system would place the burden entirely on personal income tax, which is the most progressive and far harder to avoid.

    • Yes. And I’d like to see a tax on Wealth in excess of – say – a million dollars  - about all anyone needs for a decent retirement account, but not enough to ensure that your grandkids never have to work. Or even your kids. Why do we conscience the idea of an idle, vain, and arrogant overclass? 

      We should all work, right? Except for those who can’t because they’re too addled in mind or frail of body, people that any decent society would care for.

      Isn’t that right?

      • PJ O’Rourke ~ Eat The Rich:

        Economics is not zero sum. There is no fixed amount of wealth. That is, if you have too many slices of pizza, I don’t have to eat the box. Your money does not cause my poverty. Refusal to believe this is at the bottom of most bad economic thinking.

        True, at any given moment, there is only so much wealth to go around. But wealth is based on productivity. Without productivity, there wouldn’t be any economics, or any economic thinking, good or bad, or any pizza, or anything else. We would sit around and stare at rocks, and maybe later have some for dinner.

        • But I make money, Tony, through some product that people are willing and able to pay for. If people have spent all of their money, that is now sitting idle in other people’s vaults, what am I to do? 

          Although by definition productivity creates products,  the transfer of that productivity to wealth requires inputs (wealth) and if that productivity is to generate more wealth, those with wealth must exchange that wealth for my product. 

          At this “given moment” – a very different moment than the moment that O’Rourke, a comedian, made that statement – wealth for exchange is so sparsely distributed that my productivity will probably be for naught. 

          Unfettered capitalism has more flaws than Greenspan was surprised by. The development of a stifling corporatism is killing free enterprise. 

          It is only by putting money into the hands of the people who will spend it – rather than protecting the glacial wealth of those who won’t – that O’Rourke’s statement is anything more than a joke. 

    • The problem with personal income tax is that the really wealthy don’t HAVE a personal income. Instead most of their income is derived from capital gains on their investments.

  2. Cut taxes, cut spending, cut govt….cut, cut, cut.

    Cons are big on cutting….what they don’t know how to do is build.

    • Cons are big on cutting….what they don’t know how to do is build.

      I can show you a $100,000 gazebo that proves you wrong. 

      It’ll take a while to get there though.  It’s in the middle of nowhere.

      • LOL okay…good point!

    • Don’t you ever get tired of being wrong?  With greatly increased program spending and promises of more, massive deficits and “stimulus” (which I disagree with, and don’t work), exactly where have the conservatives been cutting?

      Corporate tax cuts stimulate jobs, and encourage investment, and no more are planned, either.

      This government’s fiscal policy is in no way conservative, unless it is said to be “conserving” previous spending levels, and adding more.

      • That’s a headscratcher…tell you what…first time I’m wrong, I’ll let you know.

        Tax cuts don’t create anything hon….the US has had tax cuts for over ten years….but it’s produced no jobs, and no investment.

        Hey, Harp claims to be a conservative…if you don’t think he is, then complain to him not me.

      • Corporate tax breaks do not stimulate jobs. They just add to the accumulation of glacial inactive wealth. 

        Wealth tax. Use it or lose it.

      • Kindly point out to me any corporation that is not hiring due to the taxes it pays?

        When you’ve failed at that, perhaps you can instead show me any corporation that if it’s taxes go down, will choose to hire more people even though there is no increase in demand?

  3. How is it that the Conservatives manage to think that “taxpayers” are not also commuters.

    Oh wait! The taxpayers the Conservatives are talking about take the flight! In their own spiffy jet. And deduct it from their taxes as a business expense.

  4. “I don’t believe that any taxes are good taxes”

    And thus, 5000 years of collective social responsibility, and perhaps the entire notion of nation states and, well, civilization, is casually dismissed as maybe not such a good idea.

    Thankfully, no taxes being good taxes, I presume the PM will shortly be returning to us most of the money that he’s earned in his life, the majority of which came from taxes.  No? 

    Interesting.

    • What really kills me is that they’ve spent tens upon tens of BILLIONS of dollars on “infrastructure” across the country (according to their economic action plan documents) but don’t have $5 Billion for one of the most critical crossing points in the country?

      Is this some kind of joke?

      Critical infrastructure is one of the few core things a government is supposed to do with taxes for pete’s sake!

      • Well they are building an infrastructure –  a prison infrastructure. And probably more gazebos.

  5. “The Conservatives have so far shown little interest in heeding Mr. Rae’s warnings, but yesterday they did congratulate themselves on eliminating the per-vote subsidy, or rather the “tax on voting” that was presumably driving 40% of eligible voters away from the polls”

    LOL

  6. the Conservatives’ reckless policy of corporate tax cuts has helped gut our country’s manufacturing sector.

    Wait…what?

    • Yeah, I’m no huge fan of corporate tax cuts, but I’ve read that bit about ten times now and it STILL doesn’t make a lick of sense.

      • its called dutch disease.

        • Still not buying it, but fair enough.  It’s an explanation of what she probably meant I guess.  Kinda makes her statement an oversimplification of an oversimplification though, imho.

  7. Economist Stephen Gordon tweeted his displeasure with the latest NDP nonsense.

    1. Did Libby Davies really say “CPC reckless policy of corporate tax cuts has helped gut our country’s manufacturing sector”? B/c that’s stupid

    2. Seriously: saying that corp tax cuts hurts mfg sector is irredeemably boneheaded. No excuse for it.

    3. The NDP is failing hard at the whole “credible alternative govt” thing. You’d think that being Official Oppo would have changed them, but no.

      • Yes, I’m well aware of Gordon’s views on the GST cut.  I think he makes some good pro-consumption tax arguments.

        • Uh huh.   ;-)

  8. can someone tell me why we have to have tolls now on new construction? We seemed to be able to pay for infrastructure before. I believe this is why I pay taxes.

    • We went through this in Ontario. We (the public/taxpayer) will pay to have the bridge built. n Steve and Jimbo will then sell it to one of their Spanish friends at a fire sale discount. The Spanish friends will then insist that you get a transponder so that they they can efficiently bill you. Not having a transponder will result in huge surcharges. Just google “Highway 407.” 

      • At the very though, you could still take the 401. This new bridge however will be the ONLY way into Montreal.

        So it’s even WORSE than the 407 debacle.

    • Exactly. In fact it’s one of the CORE responsibilities of a government and one of the KEY reasons we pay taxes in the first place, ie BASIC INFRASTRUCTURE.

      It’s like they’ve forgotten why they exist.

      • I think that’s Steve’s intention —  to trivialize the existence of government by focusing on his core priorities – the military-industrial complex, Big Oil and prisons for the rest of us suckers.

  9. Frankly, if you’ve got tens of billions to needlessly ramp up crime bills and the need for prisons during a time period in which crime has been dropping continuously for 25 years, then you’ve got the five billion for a bridge without tolls.

    I mean for pete’s sake, over $20 Billion dollars worth of goods and more than 20 million people use that bridge every year, thus it is clearly a critical piece of infrastructure for everyone in the area.

    It’s one thing to have tolls where people have different options for routes, such as the 407 in Ontario. You could take the crowded 401 if you wanted after all. It’s another thing entirely when that’s the only way people can access one of the largest cities in the country.

    And does it really need to be a P3? Haven’t we seen enough of the disaster that has been in Europe to know better by now?

    The second you inject a profit motive into a key piece of public infrastructure, you end up distorting the costs as the firms will put the margin ahead of many other considerations.

    Depending on the final ownership details, who knows what those tolls will be and for how long?

    Sorry, but the whole reason we have taxes IS for basic infrastructure. Along with the military and policing it’s one the CORE things a government is supposed to do with taxes.

    Meanwhile they’ll happily spend $50 million on gazebo’s and god knows what else… in bloody Muskoka?

    Jesus murphy mary and joseph!

    • They could do something similar as the bridge to P.E.I. – haven’t heard any horror stories.
       
      “In 1987, the Government of Canada issued a proposal call challenging the private sector to devise an environmentally, technically and financially sound alternative to the ferry system that existed at the time between Prince Edward Island and New Brunswick.After an extensive process, Strait Crossing Development Inc. was named as the developer charged with designing, building, financing and operating the Confederation Bridge. The 12.9 kilometre-long structure was completed in May 1997 and carries two lanes of traffic.Its subsidiary company, Strait Crossing Bridge Limited (SCBL) privately manages, maintains and operates the bridge until 2032, after which time such operations will be transferred to the Government of Canada.”
      Confederation Bridge FAQs:
       
      http://www.confederationbridge.com/en/faq.php

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