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MP Report

More than one side to taxation

3/18/2015

5 Comments

 
One of the more commonly used terms in Canadian federal political discussions is the “Ottawa bubble” that can have a variety of different meanings, but typically is used to describe the culture on Parliament Hill that is often very different from what exists in many Canadian communities. 

From my own perspective there are two aspects of the Ottawa bubble that I find most discomforting. One is the frequent trend to suggest that the views of everyday Canadians are irrelevant and only the views from interest groups and other highly partisan organizations are deserving of consideration in debate. As an example, frequently I find issues that are reported as being widely opposed in Ottawa are in fact strongly support by citizens in Okanagan-Coquihalla.  The other ongoing concern I have relative to discussion on Parliament Hill pertains to how your tax dollars are viewed in Ottawa, compared to in Okanagan Coquihalla.

To be clear, as taxpayers it is your money taken or otherwise paid to Ottawa from your wages, combined with various taxes and other user fees you pay that keep Ottawa running. The same applies to Victoria at the provincial level and also with your local municipality or regional district with property taxes. One thing all taxes have in common is that you pay them and the higher the amount of tax the more you will pay, the less money you will have remaining to provide for your own household expenses, savings or enjoyment. Conversely when taxes are cut, you will pay less and some of the money saved from taxes can be spent or saved in whatever manner best meets your personal needs.

I raise this point because in Ottawa, whenever our Government announces tax cuts you will seldom see the paying of less tax is reported as a savings for taxpayers. It is frequently, as was the case recently, reported as being a cost. From the perspective of many in Ottawa who depend upon your tax dollars for operating revenues, less taxes (that create savings to taxpayers) is a cost to them. It could mean fewer staff, less increases in wages or benefits, even the elimination of a program or possibly not the expansion or creation of another.  For this reason the idea of citizens paying less in taxes tends to be looked down upon in Ottawa by those who earn a living from the payment of your taxes. Last year The Parliamentary Budget Officer released a report on Federal tax changes that received little attention however the report contained some interesting information.

Federal income tax cuts announced by our government have resulted in accumulated savings to Canadians of $17 billion over the past decade. Likewise the cut to the GST rate has resulted in accumulated savings of $13 billion over a similar time frame. The same report also found that these tax cuts most benefitted “low-middle income earners (households earning between $12,200 and $23,300), effectively resulting in a 4% increase in after-tax income”. Even the lowest income earners in Canada who do not pay some taxes were found to have realized an after-tax gain of 2.2%. Surprisingly the top 10% of income earners realized a net after-tax gain of just 1.4%. These findings are in stark contrast to the narrative that tax cuts only help the wealthy and penalize the poor. In reality this report concludes that tax cuts over the past decade have resulted in higher after tax net income for all Canadians. This is also consistently why the overwhelming majority of citizens I hear from in Okanagan-Coquihalla support tax cuts and do not favour higher taxes. 

I mention these things because last week another report from the Parliamentary Budget Officer concluded that the recently announced family tax cut by our Government will, and I quote directly “will have a net fiscal impact of $2.2 billion in 2015”. The Ottawa Bubble was quick to report this as a $2.2 billion cost to Ottawa, however for Canadian families that is $2.2 billion in tax savings that stays in your household budget and will not be spent in the Ottawa bureaucracy. While some oppose tax cuts and believe citizens should pay more in taxes- whether it be pension income splitting for seniors or income splitting for families, it is my view that all Governments must continue to strive for efficiencies and keep taxation levels affordable for all of its citizens. If you would like to share your thoughts with me on this or any other issue, I can be reached at Dan.Albas@parl.gc.ca or toll free at 1-800-665-8711.

5 Comments
Dianne Varga
3/20/2015 01:53:17 pm

What has Dan Albas been smoking? In his column dated Mar 10, "Stephen Harper choking Canada's economic recovery," David Bond said that since the Conservatives assumed power nine years ago, total cumulative tax reductions have resulted in the government’s foregoing the collection of $332 billion in revenues. Of that total, personal income tax cuts accounted for $141 billion, or 43 per cent of the total; the two-point GST cut cost $117 billion, or 35 per cent; and corporate income tax cuts added up to $72 billion, or 22 per cent.

http://www.kelownadailycourier.ca/opinion/article_64297b90-c6b9-11e4-b7b7-97265f342c1d.html

I responded to Bond in my letter, "Canadians have to quit magical thinking":

Providing plenty of facts, economist David Bond has described how the Conservatives have exploited taxation and spending policies to shrink the size and influence of the government and promote its re-election instead of encouraging economic stability and growth (Mar 10, “Stephen Harper choking Canada’s economic recovery”).

There’s no doubt that’s true. As Bond pointed out, reductions in personal income tax, corporate income tax and the GST have resulted in $332 billion less revenue since the government came to power nine years ago.

Had the government not combined the tax cuts with drastic cuts in program spending, the national debt obviously would have shot higher than the $160 billion it has since Harper took over.

Tea Party types are happy with the cuts, however, and excuse the skyrocketing debt by blindly insisting that any other political party would have done worse, turning Canada into another debt-crippled Greece.

Bond points out the prospect of a balanced budget in April also lends to the perception of Conservatives being excellent financial managers.

What he doesn’t mention is the probability that any such announcement will be short-lived. The parliamentary budget officer warned at the end of January that oil prices have put Ottawa on a path towards an $8.2 billion revenue shortfall, and a budget deficit even after the Conservatives’ contingency fund is exhausted.

To remain dazzled with such economic performance, the party faithful will have to recite again their baseless mantra about “other political parties” while also ignoring the elephant in the room – the Conservatives’ reckless over-reliance on a boom-and-bust resource economy.

Bond points out that had the government not slashed taxes, it could instead have stimulated the “anemic” economy without increased borrowing. Pointing to just two areas – procurement of military hardware and investment in urban infrastructure – job creation would have followed. Despite Harper’s fact-free hype about strong growth of well-paying jobs, last year only 32,000 permanent jobs were created, not even keeping up with population growth. The employment rate is as low today as it was at the worst point of the recession, and workers in two of Canada’s largest provinces, Ontario and B.C., have seen their wages go down.

As for other markers of economic well-being, Canada ranked 13th out of all G20 countries in average GDP growth from 2008 to 2013. The growth rate under Harper’s leadership has been the lowest recorded by any government since the 1930s. “Most of important of all,” says Bond, is the deliberate choice of the Conservatives to keep interest rates low, leading to rising housing prices and skyrocketing household debt.

Hardly a month goes by without the IMF, the OECD, Canadian bank CEOs, or global capital markets warning that the housing bubble may or will burst.

If or when it does, it will be disastrous, not least for the government, which backs billions of dollars in mortgage loans through the Canada Mortgage and Housing Corporation.

Ultimately, the taxpayer will be liable for the losses. Canadians need to cut the magical thinking. It’s childish and careless to believe that the economy’s all right, that Tea Party theory will get us through, and that the government is looking out for us. As Bond rightly pointed out, the government is looking out only for itself.

http://www.kelownadailycourier.ca/opinion/letters_to_editor/article_4aad75a8-c84a-11e4-9184-bb09b8b6e027.html

Reply
Dianne Varga
3/21/2015 03:32:08 am

As for the family tax cut Albas talks about at the end of his MP Report, yesterday former Harper speech writer Michael Taube spoke out loudly against the scheme:

"When you really think about income splitting, it’s the equivalent of state-run socialism for the wealthy. A few of us will shift income to get a tax credit directly from the government, paid for by taxpayers." Taube added that the criticism is "coming a from a right-wing conservative, folks. Think about that."

http://www.torontosun.com/2015/03/19/tories-wrong-about-income-splitting

Reply
Dianne Varga
3/21/2015 05:57:51 am

SENT TO THE PENTICTON WESTERN NEWS, PENTICTON HERALD, AND KELOWNA DAILY COURIER

"Conservatives bail out of party faithful"

In his latest MP Report, Ottawa blowhard Dan Albas has divvied up Canada into those who understand the true meaning of taxation, the good folks of Okanagan-Coquihalla, and the scoundrels in Ottawa (himself excluded) who want tax dollars merely to keep programs running and pay their staff.

Treating the good folks like idiots, he thinks we understand tax dollars as the pile of money we’d have for household expenses, savings or enjoyment if it wasn’t taken away from us. He dramatically underplays the amount of tax cuts the Conservatives have made since taking office as he simultaneously celebrates them. We’ve had $30 billion more to spend at the movies because of wise Conservative economic policy.

Turning to facts, cuts to personal income tax, corporate income tax and the GST have resulted in $332 billion less revenue since the government came to power. The government combined the drastic tax cuts with equally drastic cuts in spending. Health and education transfers, infrastructure, defence, veterans affairs, food safety, libraries, the environment, and scientific research are among the many areas of oversight that have been badly affected.

Had the government not demolished the programs Canadians know and love, the national debt surely would have increased more than the $160 billion it has since Harper took over.

Tax dollars, if collected, might also have been poured into economic stimulation and job creation. The government blows hard when it talks about jobs, but in fact only 32,000 permanent jobs were created last year, not even keeping up with population growth. Fewer people are employed today than before the financial crash. Our economic performance has slid to the 13th spot in G20 rankings.

Albas ends his report by honking his horn over the $2.2 billion we all get to keep due to the income-splitting plan called the Family Tax Cut. Should we line up for tickets to Barbados? Former Harper speech writer Michael Taube doesn’t think so. He explains, "When you really think about income splitting, it’s the equivalent of state-run socialism for the wealthy. A few of us will shift income to get a tax credit directly from the government, paid for by taxpayers.”

He adds that this criticism is “coming a from a right-wing conservative, folks. Think about that."

Dianne Varga
Okanagan-Coquihalla

Kevin Lister
3/21/2015 02:45:13 pm

I feel truly sorry for people like Diane Varga and anyone who cannot express themselves without name calling and insults.

Reply
Dianne Varga
3/22/2015 04:41:35 am

Kevin, if you ever form a Compassion Club for Misguided (l)iberals, please invite me to your inaugural meeting!

Reply



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    Dan Albas is the Member of Parliament  for the riding of Central Okanagan-Similkameen-Nicola.
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