President Ward Explains that We Have a Tax Fairness Problem in Canada

(Posted January 7, 2011)

It’s not surprising that federal Finance Minister Jim Flaherty is putting pressure on the provinces to exercise caution with spending and to work on deficit reduction.  After all, Minister Flaherty is about to take $40 billion of tax revenue from Canadians by cutting taxes for wealthy corporations.  He will then blame not having enough money for health care and education on the recession and the deficit, and we will hear more about the need to cut public services.

But why should families have to accept cuts to services they have been promised and rely on every day?  The answer is - they shouldn’t - because the public service is not the problem. In Canada, one of the main reasons we have a revenue problem is because we have a tax fairness problem.  Minister Flaherty’s upcoming tax cut is the final phase of a series of cuts that will result in $40 billion dollars less for hospitals, schools, child care, the environment, and a host of services that maintain and improve our quality of life. Let’s not be distracted from the real issue – tax fairness - by those who want to cut services everyone depends on and frighten us about the economy.  We have the lowest net debt of the G7 countries and are leading the pack to the lowest corporate tax rate among the G7 by 2012. In 2000 the federal corporate tax rate was 28% - in 2012 it will drop to 15%. There is no need to panic about our ability to compete. Our corporate tax rate is already 15% lower than the US rates … just how low does Minister Flaherty think we need to go?

On the other hand, we do have a public service that is over stressed through a history of cutbacks.  The last thing we should do is threaten Islanders and Canadians with less service.  The truth is that we can afford to invest in our public services, but we can’t afford more irresponsible tax cuts for the super-rich and large corporations.