Like Jones, we feel the solution to our current fiscal situation isn’t more job and service cuts; rather, our government needs to be looking at progressive ways to increase revenue while keeping public services public.
One way is to introduce a more progressive tax system. Our current system, as Jones points out, advantages those with higher incomes while punishing those on fixed or low incomes. Why is it that someone earning $35,148 or less annually jumps from paying 8.7 per cent of their income in taxes to 14.5 per cent in the next bracket? That’s a near six per cent increase in taxes. By comparison, someone making $175,700 a year pays less than four per cent more in taxes than a person earning $50,000 a year — despite more than a 300 per cent increase in income.
Those with higher incomes not only pay a significantly smaller portion of their income in taxes, but also disproportionately benefit from tax breaks because they have more disposable income. High-income earners can also take advantage of stock options and capital gains, which are taxed at lower rates but can be a significant source of income. They can take advantage of RRSPs and RESPs at a higher rate than those on fixed and low incomes.
Such options undermine progressive taxation systems and are ultimately only a benefit to those who can afford them — leaving many to continue struggling to make ends meet.
A progressive personal income tax system is just one element of creating a fair tax system. We must do more to ensure that corporations are paying their fair share of taxes and fine those who aren’t. Instead of being proud of excessive corporate tax cuts and loopholes, we should demand government do more to ensure money made off the backs of Newfoundlanders and Labradorians stays in our province.
Attention must also be given to those who take advantage of tax havens, hiding personal income in offshore accounts to avoid paying their fair share. Tax avoidance and tax evasion are huge problems federally, with close to $50 billion in lost revenue annually. To think that our resource-dependent province is exempt from this issue is naïve.
Government’s focus on privatization reveals a dangerous bias of many of our elected officials, including the premier and finance minister, which could have disastrous effects on our public services. It also ignores the lessons of the past (Jones references the failure of cuts during the Wells/Chrétien era to invigorate the economy) and seems to foreshadow further public-private partnerships, which have been proven to cost taxpayers more in the long run.
Newfoundland and Labrador has the highest unemployment rate in Canada (14.2 per cent), one of the lowest minimum wages, and the highest food bank usage in Atlantic Canada. We can’t afford more public sector job cuts. We can’t afford cuts and privatized public services. And we certainly can’t afford to continue with a regressive tax regime that favours the rich and punishes those on fixed and low incomes.
We need to learn from mistakes of the past, not repeat them. We need to look for a different, better way forward.
Social Justice Co-operative NL