Guess Who Is Coming to the Tax Cuts Dinner
Author:
Walter Robinson
1999/09/01
To tell you that tax cuts are the "issue du jour" on the Canadian political menu is nothing new: but some unlikely diners have taken seats at the table. While the Canadian Taxpayers Federation (CTF) and other groups have been offering a steady buffet of tax cut dishes for the government to dine on, it seems that the "political left" in Canada is now poised to join the feast.
Ken Georgetti, the new head of the Canadian Labour Congress (CLC), recently penned a guest column for the Toronto Star in which he argued for tax relief as a key plank in next spring's federal budget. While he continues to play the union leadership's age-old game of class warfare by arguing for targeted relief for middle and low-income earners, his rhetoric can be forgiven because his prescription for such relief would be a positive move.
Mr. Georgetti argues that the government should "significantly raise the threshold at which workers start to pay tax." We agree. Indeed, the current threshold is now $7,131 before taxes are applied. This represents about half a year's wages for someone working in a minimum wage job. The shocking thing is that the federal government collects over $6 billion in income and payroll taxes from Canadians who earn $20,000 a year or less (read: the working poor).
Mr. Georgetti goes on to note that such a move (increasing the thresholds) would "give a tax break to everybody." He's right. Hey Ken pull up a chair beside me - I hope you don't mind that it's to my right.
One can only hope that the CLC will take the next step and call for immediate re-indexation of income tax brackets to put an end to stealth taxation, more commonly known as bracket creep.
Bracket creep has pushed 3.5 million Canadian taxpayers onto the tax rolls or into higher tax brackets. So when the government claims that they've removed 600,000 taxpayers from the tax rolls it's farcical because many of these same taxpayers will be pushed back on to the tax rolls because bracket creep is still with us.
Trailing behind Mr. Georgetti are NDP leader Alexa McDonough and Canadian Auto Workers (CAW) head, Buzz Hargrove. Too bad Ms. McDonough only wishes to sit at the tax cuts table and nibble on her appetizer - a GST reduction salad. But Ms. McDonough has got it backwards.
The priority list for tax reductions includes the re-indexation of tax brackets, across-the-board income tax reductions, elimination of the 5% federal surtax and scaling back capital gains taxes. Consumption tax and sales tax reductions are a much lower priority than the broad-based relief that is sorely needed on the income tax front.
Finally we get to Mr. Hargrove, head of the CAW. While Mr. Georgetti and Ms. McDonough are at least ready to order from the tax cuts menu; Mr. Hargrove doesn't even want to enter the restaurant. Instead of understanding that tax cuts are indeed good social policy, he thinks taxpayers dollars should be spent on an equity stake (read: bailout) in the Canadian airline industry. Sorry Buzz, we've tried this flight path before only to crash and burn.
Hey Buzz, if you want to help your union brothers and sisters, join us at the head table and push for real tax relief which will leave more money in the pockets of hard working women and men "on the line." Nonetheless, to see the political left finally join the mainstream at the tax cuts policy table signals a radical and welcome change in their approach to fiscal policy.
So now that we are all breaking bread together and partaking in the main dish of tax cuts, only one question remains: will our new found dinner guests stick around for the policy desert featuring tasty dishes like privatization, competitive tendering of public services, cutting red tape and reducing the size of government