Canadians' Joy of Giving Shouldn't Extend to Pro Sports
Author:
Mark Milke
1999/12/21
Around this time of year, Canadians are rightfully generous as they hope to spread some Christmas cheer to friends, families, and the less fortunate. While that impulse is positive, taxpayers should remind politicians that professional sports teams do not fall into category of the severely disadvantaged. That Canada's sports teams are in trouble is due both to their own negligence and also to Canada's high-tax environment that has whittled away at our capacity to produce wealth. As such, the difficulty of Canada's sports teams is symbolic of where Canada is vis-à-vis other countries. Instead of dreaming up taxpayer Christmas gifts for hockey though, Canada's politicians should instead make up a New Year's resolution list on how to reduce and restructure our absurdly high taxes. In the long-term, that would benefit every Canadian from hockey baron to hi-tech employee. Here then are some suggestions for that list.
Resolution One: Insofar as pro-sports is concerned, negotiate an end to pro-sports subsidies in Canada and the U.S., despite the inevitable political claim that that can't happen. Countries that negotiated two international free trade agreements can certainly end subsidies to 22-year-old millionaires on skates. Getting rid of the obscene subsidies that Americans give their teams would eliminate one of the two major problems Canadian sports teams face. (The other is skyrocketing salaries, which would stop skyrocketing if taxpayers in both countries were not so generous to sports teams to begin with.)
Resolution Two: Cut taxes across the board, not just for specific individuals, businesses or industries. Our political class should resist caving in the way Ontario's government did recently. There, the province allowed an Ottawa suburb to practically exempt the Ottawa Senators from paying municipal property tax. It is not for politicians to pick winners and losers through either direct subsidies or through manipulating the tax system. 7,300 BC businesses went bankrupt last year and would undoubtedly have liked lottery subsidies or an exemption from certain taxes, but they didn't have lobbyists in Canada's capital cities to argue their case. Cut taxes to be sure, but make sure the reductions apply to all that pay a particular tax, not just those who have political connections.
Resolution Three: Reform the tax system to make it more competitive internationally. Last year, some of Canada's top economists headed by University of Toronto business professor Jack Mintz submitted a government-requested report to federal Finance Minister Paul Martin on how to improve Canada's business tax environment. Despite the report's revenue-neutral proposals, its recommendations for increasing Canada's competitiveness gather dust.
Resolution Four: Cut out the tax-and-spend political games and anti-wealth-creation rhetoric of the last three decades. (Hockey teams do not deserve taxpayer subsidies, not because they earn large amounts of money, but because it is not up to taxpayers to bail out any specific business or industry.) This New Year's resolution is crucial for Canada's economic prospects in the twenty-first century. Canada should imitate Hong Kong and Switzerland who actually create wealth despite tremendous natural disadvantages, not the basketcase, high-tax, slow-growth, high-unemployment countries prevalent in much of Europe. This is crucial to the long-term viability of not only Canada's pro-sports teams but to all Canadian businesses and their employees' job security and future wage growth. Money for investment, higher wages, new jobs - and for tickets to sporting events - does not grow on trees, even in British Columbia. It comes from businesses that turn a healthy profit.
Along that vein, the current anger at the dismantling (Eaton's) or shipping of Canada's companies south (pick a sports team or a hi-tech company) should be re-directed at the very people who allowed, chose, and pushed Canada to become a second-rate, can't-compete collection of threadbare citizens who think the definition of "Canadian" means overtaxed, over-regulated, over-pampered sots. Photo-ops, political spinning, and short-term Band-Aid solutions will not change the fact that per capita, Americans already earn $6,000 (U.S.) more than do Canadians. Imagine if this country were as wealthy per capita as the United States, or better yet, Switzerland. It is entirely plausible under that scenario Canadians would buy up American forestry companies, pro-sports teams, and search America for bargains instead of the opposite.
The sad truth is that many other countries, including our nearest competitor have a lot of lead-time when it comes to wealth creation, and that disadvantage will not be overcome overnight. We may even lose a few more sports teams south before we catch up. But should that transpire, Canadians should blame politicians who attempt shortcuts on the road to prosperity. Short-term ‘gifts' will not work for professional sports teams or anyone else. Canada needs long-term resolutions that include moderate levels of taxation, and policies based on an optimistic view of Canada's potential to create wealth for every Canadian in the next century.