Nobody likes to talk taxes, but it's time we
did
The Record (Kitchener, Cambridge and
Waterloo)
Sat 15 Oct 2005
Page: F1
Section: BUSINESS
Byline: AL
COATES
Source: RECORD STAFF

"After all is said and done, more is said than done.''

-- Aesop, 620 BC to 560 BC

That doggone Aesop. Trust him -- even from Greece, even from his perch in the
years BC (Before Chretien, I assume) -- to point a telling finger at Ottawa, and
Paulie Martin, and Ralphie Goodale. These are folks who just love to talk; they
are less adept at the actual doing.

So, since we're talking, let's talk about taxes -- and let's begin with a
broad observation: Canadians, at every level of government, at every level of
personal and corporate income, are woefully, savagely over-taxed.

How do we know this to be true? Because Ottawa said as much this month when
it offered to return a portion of its annual, long-running $5-billion to $10-
billion budget surpluses to us. Had we not been over-taxed in the first place,
there would be no surplus to return.

Now, let's cut through the class and income argument because this is an issue
that affects every one of us: It is not only Big Oil and Big Money and Big Daddy
Warbucks that feel the squeeze of Big Taxes, it is also the low- income family
next door. Believe it.

Last month, the C.D. Howe Institute -- that bastion of big-business, right- wing
thought -- called for a full overhaul of Canada's tax system. Current tax
policy, C.D.
Howe said, is not only oppressive and unfair in
the extreme, but it is also counter-productive to boot. It kills investment on
one hand, and kills incentive on the other.

Low-income individuals and families, Howe said, take a huge, disproportionate
hit. Their effective marginal tax rate -- including income tax, GST, PST,
municipal taxes and various other fees and levies -- can often exceed 60 per
cent.

Don Drummond, TD Bank's chief economist, went further. He concluded that,
once some recent benefits "clawbacks'' are taken into account -- hello, Mr.
McGuinty -- the effective marginal tax rate (that's the rate paid on your last
dollar of earnings) can be as high as 80 per cent, even for folks earning as
little as $25,000 annually.

It does not speak well of yours truly that these kinds of numbers, for low-
income folk, came as such a shock. It speaks even less well for the people who
put such regressive policies into place -- the people we elect to offices in
Ottawa, Queen's Park and, yes, Waterloo.

Let's give TD's Drummond the floor for a moment: He notes that an Ontario
worker earning $35,000 a year will pay $5,650 in income taxes, a not-
unreasonable 16 per cent. Then, tack on the rest -- the GST, PST, the civic
taxes, the booze taxes, the cigarette taxes, the taxes on gas -- and, according
to Drummond, you can wind up with a tax bill of $17,000. Surprised? I certainly
was.

Now, let's move along to the other end of the scale -- the Big Guys, the
corporations, the powers-that-be. And let's hear from Bill Holland, the CEO of
CI Fund Management Inc., which recently yanked its plans to convert into an
income trust after Goodale opened his cakehole and started musing about a lousy
$300 million in so-called tax leakage from these trusts and Ottawa's seeming
need to plug the dike. (Goodale is wildly and contemptuously wrong about all of
this, of course, but that's another story for another day.)

Anyway, here's Holland's predicament: CI is being taxed at a marginal
corporate rate of 57 per cent.

Holland's first responsibility -- his legal fiduciary duty, actually -- is to
CI's many and varied owner/shareholders. He said, rightly, that he should be
fired if he can't get CI's tax rate down. And, if push comes to shove, he said,
he'll have to think about relocation -- perhaps to Bermuda, perhaps to Alberta
-- to make it happen.

Now, how's that for extremes? On one hand, young parents, trying their best
to raise their kids, busting their behinds on behalf of an annual 50 per cent
tax tithe. You probably already know that Canada's personal tax rates are among
the highest on Earth.

On the other, the head of a giant Canadian investment company stuck with a 57
per cent tax rate paid to a government that admits it taxes too much and now
seeks to return some of it, as though it is doing us a favour. Canada's total
corporate tax rates are second-highest on Earth, behind only China.

On behalf of Canadians everywhere -- young and old, rich and poor, cab
drivers and corporations -- here's a message for Ottawa:

Stop trying to bribe Canadians with their own money. Cut the tax rates, don't
just refund the taxes.

[email-masked]

Edition: Final
Story Type: COLUMN
Length: 788
words