Although I haven't had a great deal of time lately to write, I always have time to think about things that affect our country. One of those things is the immense amount of money the Carney government is committing to, and spending on, defence and nation-building projects.
Given the obvious threat posed by an increasingly belligerent and imperialistic America, a compelling argument can certainly be made that such expenditures are necessary. I fall into that category, but the question that bedevils me is who will wind up paying the bill? The obvious answer is the taxpayer, but that answer is perhaps too simplistic. Yes, the bill will always come due, but it would seem with Mr. Carney's latest inducements to investors means the corporate sector will be exempt in sharing that bill.
"Our goal is simple — to make Canada the most attractive place in the G7 to invest," Prime Minister Mark Carney said at the summit.
The program is an expansion of the government's earlier productivity super-deduction outlined in last year's budget, which initially extended to a limited selection of investments in things like equipment, machinery and technology. That meant only about 15 per cent of possible investments were covered initially, but the prime minister said the expansion means two-thirds of assets will now be eligible.
That now brings Canada's business marginal effective tax rate down to 6.4%. The G7 average rate, excluding our country, is 26%. This change rate reflects a huge loss in government revenue, one that cannot be replaced unless the government intends to raise tax rates for the rest of us. And that doesn't seem likely, given politicians' aversion to overtly antagonizing the people. One remembers the abandonment of changes to the Capital Gains Inclusion Rate as a useful example.
No, the much more likely scenario is a cutback in various federal supports and programs. Please check this link to look at some of the things being 'deprioritized'. For additional information, please click here. Clearly, the cuts described will be substantial, all in the service of the government's announced priorities: defence and nation building, as discussed above. And, of course, what is on the cutting block disproportionately affects our most vulnerable. A quick overview of measures relating just to health render a vivid portrait:
The current Liberal government is in the process of making deep cuts to a long series of other federal health initiatives.
Among the health programs on Carney’s chopping block are:
- the Public Health Agency of Canada (PHAC);
- the National Strategy for Drugs for Rare Diseases;
- the Emergency Treatment Fund, which provides assistance to Indigenous communities and municipalities to deal with the opioid crisis;
- a 10-year $6 billion federal contribution to home and community care;
- and the Canadian Drugs and Substances Strategy.
There is, of course, much more involved, as you will see with the above links, but the inevitable conclusion to be drawn is that Mr. Carney's nation-building program leaves little room for the development and maintenance of non-tangibles; concrete, steel and pipelines are the only tings that seem to matter here.
So what is the answer to declining government revenues that will mean the gutting of much-needed programs? Unlike The Globe and Mail, which advocates for more income tax cuts and an elevation of the GST to 18%, a move that would, again, disproportionately affect the most vulnerable, there is an elegant and simple solution to increase government revenues. It would modestly affect those most able to afford it: a 0.25% charge on stock and bond trading. Such financial transaction fees are hardly rare in the world, as this link illustrates.
How much revenue would this raise? Given the Canadian volume of trade in stocks and bonds, in theory it could be as high as $70 billion, but likely less for those who would perhaps move to other jurisdictions to avoid the fee. Nonetheless, it would be a substantial source of revenue for a government spending well beyond its means and also provide cash for people's programs that are being reduced or ended. And the beauty of the measure is that it would apply to those most able to pay it. For example, someone buying $100,000 in stocks would pay a mere $250 for the transaction,.
Sadly, I doubt such a move would be considered by our government, which seems to have mega-project stars in its eyes while being blind to the needs of the people who elected it.
