When we elected our current federal government, we thought we had elected one that was slightly left of center. In practice we seem to have elected one that’s experimenting with moving even further to the left. The value of such as a shift is that if you can steal the NDP’s platform and hold on to those at the center, you’ll be guaranteed re-election. The trick is holding on to those at the center.
I would be the first to admit my political credentials are close to zero. Nevertheless, I remain mystified by the government’s illfated attack on the small business community and doctors, amongst others, in their recent attempts to reform income tax regulations. Forgive me for thinking most Canadians want to support physicians for the incredible hard work to which they are subject and the 10 years of education and experience they have to endure before being able to generate any sort of meaningful income. My sense is that the mandarins in Finance had incorrectly identified doctors as being among those who were “abusing” the provisions of the income tax act by deferring income until they retired. Personally, I think it makes more sense for the government to reward doctors who set establish practices in hard-to-recruit-for rural areas with the privilege of paying no tax. But hey, what do I know?
There’s no doubt our government is focused on a double mission: to raise more revenue, and to demonstrate to the community at large that those at the upper end of the income scale need to pay more. Therein lies a real danger. History—not just in Canada but around the world—has taught us that when tax rates go beyond 50 per cent, the total tax receipts by government from those affected actually drops. This is a really important point to grasp. It signifies that there is a level at which people will pay their “fair share” (albeit reluctantly) and a level beyond which they will take such actions so as to minimize their exposure to such an increment. These actions could range from physically moving to a more tax friendly jurisdiction, to simply not attempting to drive their income upwards, to taking aggressive but legal avoidance measures. The better path to increased government income is by way of economic growth and policies designed to encourage that.
I know there are those who would argue that capitalism in its purest form leaves too many behind, is less sympathetic to environmental issues and is uninterested in reconciliation with our indigenous community. Those people are wrong. Wrong on all three points. I know of no capitalist scripture which says we can’t have generous social programs—just that we need a robust economy to be able to pay for them. Nor is it written that the environment must be trampled upon in the pursuit of financial gain. There is a balance and it is in the nature of trying to achieve such balance that society may err too far on one side of that fulcrum. For instance, there is evidence that we may have wittingly (or unwittingly) gone too far in ignoring our impact on the environment and the costs of a plastic-dependent consumer society. But we can fix those oversights with sensible regulations, objective cost benefit analysis and certainty around the regulatory approval processes. And, contrary to popular belief, business would love nothing better than meaningful reconciliation with the indigenous population. Think of the value resident in knowing exactly the role of their communities in mega-projects, the certainty associated with the parameters of consultation.
Progress is doable but it requires both tough decisions and compromises; ultimately, those at either of the extreme ends of the policy spectrum will not get what they want.
Unfortunately, our current government seems to think the re-distribution of wealth is more important than the creation of it. Maybe that’s a bit unfair but I really worry when our political leadership extolls the virtues of the middle class apparently in opposition to those who provide jobs for our economy. I worry that we are adding to the regulatory burden when our neighbours are trying to cut red tape. I worry that political leadership seems to think it can ignore the cost of doing business in competing jurisdictions. And I really worry when business investment in Canada is collapsing at the pace it is.
More than anything this is a signal our economy will pay dearly for straying too far to the left.