Column

It's high time to cut the fat—and taxes

Bilingualism and multiculturalism are wasteful, as are subsidies for have-not provinces from Quebec eastward

Diane Francis May 3 1999
Column

It's high time to cut the fat—and taxes

Bilingualism and multiculturalism are wasteful, as are subsidies for have-not provinces from Quebec eastward

Diane Francis May 3 1999

It's high time to cut the fat—and taxes

Column

Bilingualism and multiculturalism are wasteful, as are subsidies for have-not provinces from Quebec eastward

Diane Francis

The big lie from the left these days is that dramatic tax cuts will result in the gutting of our precious social safety net. But a report on health care costs by the Organization for Economic Co-operation and Development reveals the facts. In 1996, U.S. taxpayers, who pay less in taxes than we do, forked out more on a per capita basis for health care: in fact, American governments at all levels spent $2,482 per person on health care services that year, while Canadian governments forked out 29 per cent less, or $1,767 per person. In terms of gross domestic product, governments in the two countries spend a similar amount on health care—6.3 per cent in the United States, 6.4 per cent in Canada.

But if the governments spend almost the same proportion of their economies on health care, why are Canadian taxes so much higher?

It’s not due to education expenditures because both countries also spend similar percentages of their GDP in providing this service.

So, again, why are Canadian taxes higher?

It can’t be military expenditures. After all, the Americans spend 3.2 per cent of their GDP on the biggest military force the world has ever known. Canada spends only 0.6 per cent on defence. The fact remains that despite similar or higher U.S. spending for these big-ticket items, American taxes are far lower. In Canada, they amount to 36.8 per cent of our GDP. In the United States, the equivalent number is 28.5 per cent. Indeed, the average Canadian family forks out more in taxes of all kinds than it does on food, housing and clothing combined. That’s not the case in the United States.

The reason for our higher taxes is that Canada simply has too many layers of government, too many overpaid public sector workers and too much duplication between the federal and provincial governments. It also has excessive and wasteful expenditures on programs such as bilingualism and multiculturalism, needless overregulation of the economy and unneeded and massive subsidies for have-not provinces from Quebec eastward.

Perhaps the biggest problem is that Canadian governments have been able to get away with this, with few exceptions. The Americans control spending through hundreds of state and local referendums annually plus other curbs on political power such as term limits (allowing politicians to serve two terms only), voter recall (the ability to fire incompetents) and, most importantly, tax and expenditure legislation, so-called TELs, which forces politicians to balance budgets, but never by increasing taxes.

Such tax and expenditure curbs generally do not exist in Canada. Federal revenues have increased by $37 billion since the Chrétien Liberals were first elected in 1993. Under a TEL, Ottawa would have had to rebate that $37 billion to taxpayers and hold the line on

expenditures or get referendum permission to spend more. Instead, they spent that $37 billion plus another $100 billion since 1993, and added it to the national debt before balancing the books last year.

In Canada, Manitoba and Alberta have legislation to keep politicians from taxing and spending and running deficits. Manitoba even has financial penalties for individual cabinet ministers if the government as a whole records a deficit. Their ministerial stipend of $25,000 is reduced by 20 per cent the first year they run a deficit and by 40 per cent in subsequent years. Ontario is also getting its act together and budgets are now balanced in most provinces.

Ottawa fuels the fire. It could cut taxes dramatically because of a revenue windfall in the past two years, but is spending it all instead. Finance Minister Paul Martin and Prime Minister Jean Chrétien are totally out of touch with the Canadian taxpaying public. Martin’s Ottawa neighbors tell him taxes aren’t too high. His mandarins do the same. Why? It’s simple. All these folks, their spouses, children, neighbours, squash buddies and fellow denizens of the nation’s capital get their taxes back and much, much more in the form of salaries, generous benefits or business from those in government.

It may make a whole lot of sense to relocate the nation’s capital to Toronto or Calgary or anywhere that marketplace realities rule. The Germans are moving most of their federal government to their former capital of Berlin from Bonn. The business of Canada is business; the business of any nation, for that matter, is business. And that doesn’t mean allowing a bunch of fat-cat Bay Streeters, bankers or big shots dictate to society. It means governments not grabbing all the wealth and spending it inefficiently—but providing essential services at reasonable tax rates.

Ottawa must be forced to re-engineer itself and shrink in size. It must impose discipline on spendthrift, havenot provinces by reducing equalization payments. Instead, Ottawa is slowly strangling the country. The brain drain is real. The tax base is leaving. Billionaire Paul Desmarais Sr. says young persons “have no choice” but to head south because Canadian taxes are “exorbitant.” Economic growth is sandbagged by high taxes. Unemployment is higher in Canada than in the United States because taxes are higher, and higher unemployment pushes up taxes because support payments increase—a vicious and costly cycle that afflicts our country.

All of which means that Canadians must protest in whatever way they can to tell the Liberals, and the left, to get with the program. Get costs in line. Cut the fat. Save the good stuff. Alberta has. Why can’t all the others? Canadian taxpayers have been overgoverned, overtaxed and lied to by the left for decades. Our governments are delivering us overpriced services. It’s time to face the facts.