Friday, May 2, 2014

Two Takes On Taxation

The contrast couldn't be more striking. As announced by federal Fiance Minister Joe Oliver the other day, Ottawa is well on its way to posting a $9 billion surplus, but Canadians shouldn’t expect any massive new spending programs. Instead, he plans to reduce taxes once the deficit is eliminated in the 2015-16 budget, likely next winter.

On the other hand, the Ontario government, under Premier Wynne, proposes a host of new spending and moderate tax increases under the budget it brought down yesterday.

Progressive measures include raising the wages of home care workers, more money for infrastructure, welfare hikes, new health benefits for children and a plan to hire at-risk youth in provincially funded infrastructure projects.

Perhaps the boldest proposal is an Ontario Pension Plan that will, years down the road, alleviate a good deal of the poverty faced by retirees who currently don't have company pension plans, it is the same model that the Harper regime rejected as "too risky for our fragile economy."

Two competing visions of the role of government; the federal one, which appeals to the selfishness that resides in all of us, and a provincial one which, albeit an election budget, appeals to our better natures.

Which one will prevail? Who knows? But now might be a good time to watch the following TVO podcast, taken from Alex's Blog, in which Alex Himelfarb talks with Steve Paikin about why taxes should not be considered a four-letter word:


12 comments:

  1. My money is on the progressive one I firmly believe people are ready

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    1. I hope so, Kev. The other one is the road to oblivion for far too many of us.

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  2. Well, it is not even clear yet (though it will be in about 20 minutes) if the Ontario NDP is willing to support the progressive agenda. Horwath (as hopeless a leader as I have seen) should have been the first to hail this budget as a genuine step forward.

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    1. I just saw the news about her decision to pull the trigger, Kirby. I hope she will be justly punished for her lack of leadership in the upcoming election.

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  3. My generation reaped the benefits of progressive legislation, Lorne. So did Stephen Harper. Unfortunately, he's forgotten what he owes to those who came before him.

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    1. Were it within his power, Owen, I am sure he would gladly rewrite that history too. Ideologues like him are totally without perspective.

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  4. It's already been proven that austerity in a slump is self-defeating. It kills jobs, GPD growth and tax revenues in a vicious cycle. That's why the West has yet to recover from the Great Recession 5 years later.

    This fact is inescapable. Whether we figure it out now or 20 years from now. Japan has been stuck in a very similar rut for 20 years after suffering its own housing collapse.

    Paul Krugman and others talk about this a lot in the US. But like Keynes in the 1930s, governments don't want to listen.

    In the post-war era, we had much more debt but how did we tackle the problem? With big spending cuts? No we spent big on infrastructure and social programs. It allowed us to pay down most of our debt because of the tremendous GDP growth it created.

    Ontario won't be able to go it alone, however. Cuts at the federal level will act as a drag on the economy. The Cons are also downloading more and more costs onto the provinces according to the PBO.

    We need action at the federal level in 2015. Harper cut taxes by $44-billion a year in a 'starve the beast' agenda. We need that money put to better use on infrastructure and social programs to create jobs and economic growth. We need real leadership willing to undo that damage Hurricane Harper has done.

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    1. Unfortunately, Ron, action at the federal level, if it is ever to come, will have to await Harper's defeat. However, I am far from convinced that either the Liberals or the NDP will embrace your prescription since they have been as seduced by the right-wing when it comes to its refusal to consider any substantive tax increases, surely a concomitant requirement for the stimulus spending needed now.

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    2. Actually only Trudeau only vows to not reverse any of Harper's tax cuts. The NDP has only ruled out raising income taxes (which Harper didn't cut.) They have promised to reverse Harper's useless corporate tax cuts and oil subsidies for starters.

      It should also be noted that the pendulum has momentum. It has been swinging further and further right over the last 30 years. But it won't swing back to left to where it was in the 1960s in one election cycle.

      We need to build momentum the other way. Pointing out how free-market reforms have been a colossal failure and how the economy worked wonders back in the centrist Keynesian era (which includes left-leaning social democracy) is the key to building left-ward momentum.

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    3. Thanks for the clarifications and the perspective, Ron. Here in Ontario, even though I know hers was an election budget, it seemed that Kathleen Wynne was trying to move that pendulum a little. Will it wash with the public, now that Horwath has made an election necessary? We shall see.

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  5. Lorne, why show surplus in 2015-2016? Is it possible that it has everything to do with 2015 elections than budget and financial austerity?

    But Harper wants more certainty to win 2015 elections so he is giving us 'Fair' Election Act.

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    1. Harper is indeed stacking the deck, LD.

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