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A friend used to say, “The only good thing about hitting your head against the wall is how good it feels when you stop.”
It’s time for the Ontario government to stop hitting its head against the wall.
For years, the provincial government has cried poor – we can’t afford public child care, we can’t take real measures to eliminate poverty, we have to close hospital beds. Year after year, vital programs and public services are cut. Why? Because there isn’t enough money.
Premier Kathleen Wynne and many members of her cabinet sound truly frustrated that they keep running into this problem, instead of being a progressive government leading a prosperous and egalitarian province. But it’s a problem of their own making, and one they can stop any time they want to.
The Liberals dramatically slashed corporate tax rates. Rates that are now the lowest since the Great Depression. That is what has caused the constraints we face today. That is why the Liberals are talking about cutting programs and services further; this week admitting they are planning to close schools and cut education further.
They did it claiming the cuts were necessary to stimulate growth, but that theory doesn’t hold water. The former governor of the Bank of Canada pointed out that corporations are still sitting on half a trillion dollars in uninvested cash. All the corporate tax cuts did was to take more money out of the economy.
By the finance minister’s own account, Ontario spends less per capita on public services than any other province.
The problem obviously isn’t with spending; it’s with revenue.
And this week, Charles Sousa admitted as much in his fall economic update. But tinkering with tobacco smuggling isn’t going to solve Ontario’s fiscal woes. We need a more comprehensive plan to restore revenue.
Don’t get me wrong, smokers need to pay their fair share. There are other tax loopholes that should be closed, too. For example, eliminate corporate tax writeoffs for meals and entertainment expenses. We don’t need to be subsidizing a CEO’s private Leafs box. Remove the Employer Health Tax payroll exemption and let all employers pay their fair share of health care. There are also HST input tax credits for large corporations that could be suspended. These are just a few changes that would generate revenue.
But the biggest change that needs to happen is a restoration of corporate tax rates. The cuts didn’t work. Arguably, they’ve slowed our recovery and kept unemployment rates higher. If this is the wall we’re hitting our heads against, let’s just stop. We need to invest in growth, good jobs, healthy communities, and the strong public services that are the backbone of growth.
It’s not just about transportation infrastructure, although that is badly needed. We need schools with support staff to keep them clean and safe, and who can help all students achieve their full potential. We need hospitals where all the beds are available for use. We need long-term care facilities with enough staff to provide a good quality of life for residents. The list of needs in this province is long, and it’s one we’ve done much better with in the past.
If bumping corporate tax rates back up a few points will take us out of this downward spiral, then so be it. I’m in favour.
Smart people in the business community know this, too. The path of cuts and privatization our governments continue to pursue are actually hurting businesses.
I was at the Ontario Economic Summit a few weeks ago, and corporate Ontario was complaining bitterly about the exorbitant price of electricity. Electricity is expensive here because the province deregulated and privatized the sector. Today, a handful of private corporations are now raking in billions of dollars in profit, all of which comes at a cost of higher hydro rates for residents and businesses alike. Want to stimulate the economy? Stop privatizing hydro.
The Liberals have decided that privatizing electrical transmission and distribution will be the first step on their renewed agenda to sell off our province’s future. It’s a fool’s game that will provide a one-time cash infusion at a tremendous long-term cost.
Now is the time for an adult conversation about revenue in this province.
Ontario is, collectively, very wealthy. We have incredible natural resources, people with great knowledge and heart, and a strong history of education, research and innovation.
We should be doing better. We can be doing better. We can do it without leaving millions of Ontarians in poverty.
But it will take political backbone. It will take the Liberals deciding to do the right thing and reverse their revenue cuts and privatization plans.
It will be worth it. Trust me, it will feel much, much better.
By: Fred Hahn
Published on Friday, November 21, 2014 in The Star: http://www.thestar.com/opinion/commentary/2014/11/21/ontario_should_stop_hitting_its_head_against_a_fiscal_wall.html