Deficit crisis a chance for change

The province’s poor fiscal standing presents us with a real opportunity to discuss and debate some important policy issues, such as fair taxation, a new health accord, a guaranteed national income, and more.

Cathy Bennett couldn’t be more emphatic: Newfoundland & Labrador is in crisis. In animated fashion the finance minister has told us we have no money and that we’ve maxed out the province’s credit card.

The rhetoric is intense. If Bennett is to be believed, if things get any worse we might need to revisit our history, call in the Commission and forego democracy yet again.

The truth is, the provincial Liberals are using this crisis as an opportunity to introduce an austerity agenda. And with Minister Bennett’s background in retail management, who better to sell us a full meal McAusterity deal? She has been warming us up to 30 percent budget cuts. Expect serious cuts to public service programs and jobs and an open invitation to privatization and public-private partnerships (P3s).

Of course, politics has a higher calling: leadership. Yes, we live in a time of uncertainty — just look at the price of oil and commodities; but should our crisis mean we don’t have choices?

Another view

Let’s turn the telescope around and check out what’s happening in the real world. 

Personal insolvency rates are up significantly. Unemployment is on the rise. As health care demands increase, so too will costs. And governments have yet to figure out how to deal with increased pharmaceutical costs. Food bank visits are on the rise. More kids are going to need school lunch programs.

These are serious issues that need addressing now. Why are we not talking about how we must improve the province’s anti-poverty strategy? In a powerful speech at the 2016 International Women’s Day brunch, Jenny Wright, Executive Director of the St. John’s Status of Women Council, reminded the audience that when governments cut it is the poor and vulnerable, mostly women, who bleed. 

Maybe it’s time we take a page from Bernie Sanders, a democratic socialist running for the presidency of the United States. We could start by demanding a new progressive agenda that creates jobs, raises wages, lowers drug prices, and improves pensions and social security. Let’s talk about the need for free tuition. 

A human rights perspective

Adopted in 1948, the Universal Declaration of Human Rights recognized that it was through the provision of human rights that each and every human being should be able to live a life of dignity, decency, and opportunity.  

Article 25 begins: “Everyone has the right to a standard of living adequate for the health and well-being of one’s family, including food, clothing, housing and medical care and necessary social services and the right to security in the event of unemployment, sickness, disability, widowhood, old age and other lack of circumstance beyond one’s control.”

This is a human right. Let’s own it. No austerity budget can take away our rights.   

Let’s view our crisis as opportunity. Let’s demand a serious Canada-wide conversation about introducing a guaranteed annual income that would ensure Article 25 is honoured. 

Sunny ways or rainy days

Too bad the provincial Liberals are not singing from the same hymn book as their federal counterparts. ‘Sunny Ways’ has been the Trudeau anthem. The federal Liberals have said they are ready to spend money. Deficit spending and investing in infrastructure have been the key messages that got them elected, including all seven MPs from this province. 

On March 22, federal budget day, Canadians will finally see what plans, programs, proposals the federal Liberals are ready to deliver to get Canada’s economy growing again. The key word here is ‘growing’.

A priority area has to be a new Health Accord. From 2004 to 2014 a Health Accord negotiated by the first ministers, federal and provincial, topped up existing transfers from Ottawa to the provinces by 6 percent each year.

As a consequence the federal government’s cash share of provincial health spending increased to 20 percent. While this was an improvement from the 10 percent it provided in 1988, it paled in comparison to the 50 percent the federal government once covered at the start of Medicare in 1966. 

As per his usual bullying practice, Stephen Harper unilaterally decided to end the Accord. It was estimated that Harper’s decisions would mean a $36 billion dollar cut to Canada’s public health care over 10 years. For Newfoundland and Labrador this translated into a cut of roughly $491 million.

It was only last year at the premiers’ meeting here in St. John’s a strong message was sent that the federal government needs to increase funding to adequately cover rising health care costs.  

A serious injection of federal funds would go a long way to helping our province deal with its biggest ticket item. Currently 40 percent of the province’s revenue is spent on health care, and these costs are not going down.  

Tax fairness

The federal government has also committed to raising personal income taxes for the top 1 percent of Canadian taxpayers. Those earning over $200,000 a year will be taxed at a new, higher rate of 33 percent, up from 29 percent.

Of course there are other revenue generating options available to the federal government. It has an opportunity to take significant steps to improve the tax base both federally and provincially. 

In its submission to the Parliamentary Finance Committee, Canadians for Tax Fairness (CTF) proposed seven major tax revenue options totalling $50 billion:

  1. Eliminate regressive and ineffective tax loopholes and simplify the tax system
  2. Increase corporate taxes
  3. Increase tax on banks and finance
  4. Introduce inheritance taxes
  5. Make income taxes more progressive
  6. Tackle tax havens and cheats
  7. Introduce Green Taxes

We need to make sure everyone, including multinational corporations and wealthy individuals, pay their fair share of taxes. Do we need to remind ourselves that wealth inequality is widening provincially, nationally and globally.

For those who are concerned about economic prudence, CTF reminded the finance committee that to run deficits while ignoring smart revenue options is not economically wise.   

CTF is also demanding a review of tax loopholes that end up in tax havens. Currently there is $199 Billion of Canadian money, untaxed, in tax havens. This depletes tax revenues by approximately $8 billion annually. A CBC report recently uncovered that wealthy KPMG clients who used tax havens to avoid paying their taxes are not being prosecuted.

 Raising taxes across the board might be inevitable, but it’s pretty clear that we should be demanding those on the top end pay their fair share.

Provincially we all recognize that our health care and other important public services, from highway snow clearing to cleaning our schools, are going to cost more, given our geography and widely dispersed population. We also know we don’t live here because of the weather, but instead for certain intangibles such as the quality of life, friendship, fresh air, our culture. We need to accept that costs will be higher, so let’s focus our attention on how we pay for our public services.  

This will require that we also talk about wealth and privilege here in Newfoundland and Labrador. We need a new, progressive tax regime.  

Even after the addition of two new tax brackets in last year’s budget, we still have the lowest personal income tax rates in all of Atlantic Canada. Who are the chief beneficiaries? Well, if you earn $150,001 here in Newfoundland and Labrador you are taxed at 14.3 percent. In Nova Scotia you are taxed at 21 percent. Anyone earning in excess of $250,000 in New Brunswick is taxed at 25.75 percent, while in N.L. you are taxed at 15.3 percent.

Raising taxes across the board might be inevitable, but it’s pretty clear that we should be demanding those on the top end pay their fair share. As the Canadian Centre of Policy Alternatives (CCPA) reminds us, “Canada’s overall tax system has become so regressive that the top 1% pays a lower share of income in taxes than the poorest 10%.”

This crisis we collectively face is real. The response, however, needs to address how we improve matters for all Canadians. A beacon of hope can be found in the CCPA 2016 Alternative Federal Budget, which proposes policies that include “increased access to employment insurance for the jobless, more help for children and seniors living in poverty, and clean water and safe housing for First Nations communities that have been living without these basic human rights for far too long.”

Let’s use this crisis to open up discussions on wealth inequality, basic needs and human rights, a guaranteed annual income, a new health accord, fair taxation, and more. 

Bill Hynd worked for Oxfam Canada as an educator and campaigner for 30 years. He is currently the co-chair of the NL Social Justice Cooperative.

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