Just get out of the way
The Ottawa Citizen
By The Ottawa Citizen
Making decisions about what to do with our money is hard enough without our own governments getting in the way.
This is the theme of a 60-page collection of ideas from Ontario’s Institute for Competitiveness and Prosperity, a think tank sponsored by the Ontario government and headed by Roger Martin, the dean of the University of Toronto’s business school. It’s full of serious proposals for getting governments out of the way of smart investments by the better-off and the working class’s efforts to climb the ladder.
It’s not anti-tax or pro-plutocrat, just anti-stupidity, anti-ideas-that-everybody-else-has-tried-and-got-rid-of-but-us, and it hinges on this critical fact: 25 years ago, U.S. gross production per person was $3,300 more than ours in constant dollars; now, the gap is $9,200 and still growing. We’re richer than we used to be but falling behind everyone else.
The institute calls for more government spending on education, noting that just as governments around the world were flooding their education systems with money in the 1990s, ours started slashing. The result: more Americans have advanced degrees, and make dramatically more money than their Canadian counterparts. Hence the brain drain.
It notes the perverse interactions of taxes and social programs that conspire against Canadians trying to work their way out of poverty. A single-earner family of four loses so many welfare-related benefits when the one worker’s income climbs much above $30,000 that the government essentially claws back 90 per cent of the extra money he or she makes. A tax system that penalizes people for working harder and investing in themselves is a prosperity-killer.
Reforming the provincial sales tax ought to be a priority, the institute proposes: take the PST off productive purchases, such as when a factory buys a load of steel, and focus it on consumer goods and services. Why do we keep taxing investment while protecting consumption?
Some ideas are more provocative. The institute’s most extreme suggestion is to slash corporate taxes, including eliminating corporate income taxes completely. Mr. Martin comments that looking at other countries, he expects this is inevitable over the next 20 years or so, but for now it’s only presented as an interesting idea: tax the money in the hands of shareholders (who’d get it in the form of dividends or more valuable stock) and staff (who’d get higher wages), let customers have it in the form of lower prices, or let the corporation improve operations.
The institute’s report projects a bleak future if we don’t do something to reverse Canada’s slide. In an election year, maintaining Ontario’s and Canada’s prosperity needs to be a priority. Scrapping policies that make everybody poorer is an obvious first step.
