Our prime minister is dabbling in voodoo economics again and trying to sell us a bridge that just doesn’t go all the way to the other side.
This time, he wants Canadians to believe that we need more corporate tax cuts because the $60 billion in corporate tax breaks in the past few years just weren’t enough, and cutting government programs and services or borrowing billions from the banks in order to pay for this latest round of corporate giveaways makes for good economics.
As my nine-year-old would say, “that makes no random sense.” And she’d be right.
The problem is for the past five years Stephen Harper has worked very hard at dirtying up taxes. After all this is the prime minister who boldly stated that all taxes — even those that pay for health care, education and clean drinking water — are bad.
And now our emboldened prime minister wants a racket on taxes. He is so emboldened that he is ready to defend another $6 billion in corporate tax cuts to some of the largest corporations on the planet — like Vale and Exxon Mobil, the big banks and insurance companies. Wow, brave indeed.
He’s hoping Canadians will buy the very simple line that lower corporate taxes will result in more jobs — leaving all those who know the difference to explain that it is just not that simple. But hey, the Harper Conservatives have never been too bothered with the facts.
Corporate taxes in Canada have been slashed repeatedly and deeply since the early 1990s and will be again if Mr. Harper gets his way, from a historic low of 18 per cent in 2010 to 15 per cent by 2012 —
costing the federal treasury billions of dollars. It never seems to be enough despite the fact that a bigger share of Canada’s GDP now goes to corporate profits.
How will we — because we will all have to — pay for this latest round of tax cuts to corporate Canada? Will it mean less money for health care? Or will the federal government have to borrow billions from the same banks who will benefit from a smaller corporate tax rate? Either way, working Canadians pay.
Only corporations making profits pay corporate income tax in Canada. Our system is designed
to tax profits, not assets. And as labour economist Andrew Jackson points out, high profits in corporate Canada have not been accompanied by a very impressive investment record.
Indeed, the big beneficiaries of corporate tax cuts are the energy, mining and financial sectors. They are already making money, tons of it, and don’t need any help from the federal government.
Canada’s six big banks, for example, raked in a whopping $14 billion in profits in 2009 after paying out about $8 billion in bonuses. And Stephen Harper wants to give them another tax cut.
There are plenty of ways to deliver effective economic stimulus if that is the federal government’s objective. For example, spending on infrastructure or on a good child care program would be more effective economic stimulus than tax cuts.
There is no guarantee and very little evidence that businesses will actually create jobs with their tax cuts. Indeed, it’s just as likely that those tax cuts will be used to boost corporate executive bonuses or be spent in other jurisdictions in the world since so many of Canada’s biggest and most profitable corporations are now foreign-owed.
Today, about 54 per cent of the country’s biggest companies are foreign owned, swallowed up in a flurry of corporate takeovers.
For example, by 2010 Canada’s mining sector had been completely transformed. Inco and Falconbridge, once the Canadian mining top dogs, and hundreds of other mining companies had been gobbled up by the global mining giants.
According to a recent analysis by Prof. John Peters, in a very
short time companies like BHP and Xstrata grew to more than 10 times their original size and Vale expanded more than twentyfold. They are all raking in the dough.
In just the first nine months of 2010, Vale had made more than
$10 billion in profit — but Harper wants to give them a tax cut.
This is all part of the prime minister’s bigger plan to transform Canada into a more right-wing nation; a nation of tax-haters. A nation where values of caring and sharing are no longer part of our collective social and economic response and psyche, but rather left up to the whims of individuals.
For five years, Harper has been preparing for this battle. And now it appears he is ready to have the mother of all fights on taxes.
It’s a gamble, but clearly one he’s willing to take — likely figuring he has the opposition parties too afraid to engage in an adult conversation on taxes.
An election all about taxes must also be an election about the kind of Canada we want for our kids and our seniors.
Those who still care about a caring and sharing Canada had better be ready, as Harper has just laid down the gauntlet.
Lana Payne is president of the Newfoundland and Labrador Federation of Labour. She can be reached by email at firstname.lastname@example.org. Her column returns Feb. 12.