As surely as election day approaches, we see the three big parties adopting dangerous economic platforms.
But who can blame them? The candidates are telling the voters what they want to hear.
At risk of oversimplification, the Conservatives want to cut taxes and spending, the NDP promises to increase taxes and spending, and the Liberals will increase spending without increasing taxes. For different reasons I question all of these stances.
Let’s pick apart the new Conservatives first.
I have an affinity for the principles underlying the Conservative economic model. I believe lowering the right taxes can stimulate the economy, at least partially compensating for the lost revenue.
Low business and capital gains taxes, especially, boost payroll tax receipts and GST income as more people are able to come into the workplace and then spend their pay. What’s good for small businesses (i.e. less expense in hiring people) is good for everyone, assuming the country’s laws are just and justly applied. Importantly, with a free-market system (versus a government-managed one), the creative, innovative, forward-looking companies survive and there is a mechanism – survival of the fittest – for the “putting-down” of businesses whose time has come.
But there are some big potholes to avoid on that path. If the proposed Conservative tax cuts are too deep and drastic, then cuts to education become necessary (lower transfers to provinces would likely leave less funding for education, a provincial responsibility) and businesses gradually lose the input of new skilled labour that is a key to the above system. Furthermore, national security, a federal responsibility, is getting expensive in the face of terrorist threats and international nuclear-weapons proliferation.
Conservative Leader Stephen Harper has promised to cut “the fat” in the system. But substantive savings can only come from the multi-billion-dollar line items on the federal balance sheet, especially defence, health care and transfers to provinces, not gun registry elimination and ad agency accountability.
And since Harper has promised to actually increase defence spending, his cuts in other areas may do more harm than good, downloading an extra burden onto already-strapped provinces and municipalities. We’ve seen such downloading before from former prime minister Jean Chretien, and it resulted in no net debt decrease or substantive tax decreases across the country, as provinces had to make up the shortfall.
Unfortunately for Harper, so-called conservatives such as U.S. President George W. Bush and Alberta Premier Ralph Klein are giving tax cutting a bad name.
Klein’s “cuts” were only real decreases for profitable businesses, the poorest and the wealthiest. Many modest-earning working people – like me – saw a net provincial-tax (counting the health-care premium as a tax) and property-tax increase. For me, education taxes (a provincial tax) and municipal taxes have increased dramatically. Albertans have been lucky that oil revenue has been so high, or the tax increase may have been steeper.
Don’t get me wrong, I think Klein did the right thing by flattening the tax and making people see more of the cost of health care. But not in cutting expenses.
And it wasn’t an across-the-board tax cut, as it was advertised. It was deceptive tax downloading.
So, is this the kind of no-relief “tax relief” Harper has in mind? It may be.
Or, he may be like Bush and pass on massive, irresponsible financial liabilities to the next generation by incurring enormous deficits. Bush is not really cutting taxes (long term) unless he also cuts expenses, which he is not doing.
Basically, people who examine the numbers have become cynical, and we fear that “tax cutter” is just a marketing ploy.
The New Democratic Party has problems of its own. Granted, leader Jack Layton doesn’t sugarcoat the inevitability of tax increases in his economic platform. But alarm bells go off when I see him threaten to use the oil card in trade negotiations with the United States.
Like Layton, I see Canada’s oil and gas as preciously limited commodities that need to be guarded from exploitation. But compromising a healthy energy sector in the name of mad cow or softwood would be suicide for Alberta, not to mention the federal treasury. Plus, entrepreneurs would be chased offshore by steep taxes on the wealthy.
I fear Canada would go broke under the NDP because of the business ignorance displayed by Layton and company.
True to form, the Liberals promise to both increase spending and hold the line on tax increases. They will emphatically not go into deficit, even while increasing transfers for health to the provinces, building roads for municipalities, providing child care for families, and the list goes on.
But are the Liberals blind to the fact that the developed world faces the biggest international security threat in at least 60 years?
We need to protect our coasts, our skies and our infrastructure. Where is the money to protect us as we try to peaceably go about our business?
Amid all these promises, we still haven’t heard a major candidate address our national debt, which is a legacy we should be loath to foist upon our children.
A responsible politician would combine the economic stance of all three parties: The NDP’s admission that increasing services means increasing taxes, the Conservatives’ idea of wise spending through a small federal government but with military readiness, and the recent Liberal practice of balancing the budget while keeping big business out of the democratic process.
But that politician would not get elected.
The people, by and large, want to know what their country can do for them, not vice versa. So in the end, we get the government we deserve.
Happy voting.
