THE NATION’S BUSINESS

Can people tame the great tax monster?

Never before have taxpayers taken on Ottawa before the budget. They are sending tax spenders a message: ‘We’ve had enough!’

Peter C. Newman February 20 1995
THE NATION’S BUSINESS

Can people tame the great tax monster?

Never before have taxpayers taken on Ottawa before the budget. They are sending tax spenders a message: ‘We’ve had enough!’

Peter C. Newman February 20 1995

Can people tame the great tax monster?

THE NATION’S BUSINESS

Never before have taxpayers taken on Ottawa before the budget. They are sending tax spenders a message: ‘We’ve had enough!’

PETER C. NEWMAN

Lobbying politicians is a bit like making love to a gorilla. You don’t stop when you’re tired; you stop when it’s tired. Even though Ottawa’s ruling liberal party may have exhausted itself listening to the thousands of complaints by harried citizens who scream in protest—by fax or in person— whenever a tax increase is mentioned, Western Canadians haven’t stopped feeling resentful and are now banding together to lead a national tax revolt. Nobody has dumped tea into Victoria harbor yet but the local chapter of the Raging Grannies is fixing to get ready for such a caper any day now.

Although Ottawa’s accounting to the nation later this month is referred to as Paul Martin’s budget, it isn’t really under his, or anybody else’s control. Our national debt (now at $550 billion) and annual deficit (expected to top $35 billion for the current fiscal year) has become a monster with a life of its own.

Consider four unexpected developments that may make the taming of the deficit (never mind the debt) even more difficult. Since Martin tabled his first budget a year ago, interest rates have nearly doubled. And every time interest rates increase by one percentage point, it adds $1.7 billion to the deficit. On top of that was the $1.2 billion supplied as an emergency credit line by the Bank of Canada to help shore up the Mexican peso. Funny, but nobody mentioned that would be one of our responsibilities under the North American Free Trade Agreement, and it’s impossible to tell how much money will have to be shovelled into the Mexican economy. One of President Ernesto Zedillo’s main promises to restore the value of his country’s currency is that workers won’t be granted higher wages. Since most of Mexico’s labor force is already being paid 10 per cent below 1980 wage levels, it’s doubtful if this pledge can—or should—be kept.

Then, last month, the federal court ruled that Ottawa had to pay out $1.2 billion in rebates to more than 100 resource companies

on previous taxes they paid in the 1970s. And, while the accelerating economy will produce more tax revenues this year, the unemployment rate crept back up last month to 9.7 per cent, from 9.6 per cent the previous month. If the trend to higher unemployment rates continues, there may be a lot more unemployment insurance payouts to be made.

In order to meet his modest target of a $25 billion deficit by 1997 (which may or may not be the desired three per cent of our future gross domestic product, but at any rate will still mean that we will be spending $2 billion more per month than we take in) Martin has to make cuts over the next two years of between $8 billion and $12 billion, depending on what happens to interest rates and whether or not we slip into another recession. (By 1997, the economy will have been growing for five years, the usual gap between recessions.) Martin’s is a daunting assignment because to remove that much money out of federal spending might cause a real revolution, instead of merely a threatened tax revolt

Signs of that revolt were apparent recently at a Vancouver rally sponsored by the B.C. branch of the Canadian Taxpayers

Federation, headed by a charismatic young Calgarian named Jason Kenney. He gave a rousing speech, as did his B.C. director, Troy Lanigan, and it very quickly became obvious that this meeting, like most of the other 18 being held across the country this month, had a hidden agenda. This was easy to judge by how the crowd, which numbered about 1,200, responded to the speakers’ appeals. “We’ve been robbed by Ottawa for 30 years, and we’re about to fight back!” Kenney would shout, and everybody clapped, as they did when he continued: “Never before have Canadian taxpayers taken on a federal government before the budget, never before has Ottawa heard anything except the voice of the tax spenders and the special-interest groups. Now, taxpayers are sending tax spenders a message: ‘We’ve had enough!’ ”

Speaker after speaker ranted on in a similar manner, but the biggest cheers were for any attack on parliamentarians’ pensions. The fact that 44-year-old Perrin Beatty, the former Clark/Mulroney cabinet minister (who became an MP at the tender age of 22), now collects an annual lifetime pension of $70,000 raises a loud raspberry at any tax meeting in the country. Barbara Yaffe, the Vancouver Sun columnist, has so far received 15,000 letters of support following her devastating critique of the ludicrously generous parliamentary pension plan.

Other issues that brought people to their feet were any mention of gun registration or gun control, closing up the Senate, spending any federal money on multior bi-culturalism, funding special-interest groups—and the big one, maintaining the CBC. That was the real agenda here, and even though the meeting had no official connection with the Reform party, its proceedings echoed Preston Manning’s current line. But the crowd’s concerns were real, not just ideological quirks of a bunch of strung out Lotuslanders.

Canadian taxpayers really do deserve a break. On average, they now spend more in taxes than for food or lodging, and nobody seems quite sure what we get for it. Taxes keep going up, government services keep being cut, and the debt doubles every decade. It doesn’t add up, and ordinary Canadians are poised to take the law into their own hands.

Every revolution needs a Fulgencio Batista—the Cuban dictator before Fidel Castro’s 1959 revolution—to inspire a people’s movement with a sense of outrage. The Batista of the current revolution is Dennis Mills, the Liberal MP from downtown Toronto who, when asked recently what the reaction of Canadians would be to higher taxes, shrugged and replied: “Oh, they’ll complain for a few days. Then they’ll roll over and pay up.” Challenged later on whether he really meant to dismiss Canadians’ temperaments quite that cavalierly, he shot back: “I’m just telling it like it is. Canadians may complain about taxes, but they’re much too passive to roll up their sleeves and take to the streets.”

See you on the barricades, Dennis.