Stop coddling the big banks!
The Harper government continues to call for "shared sacrifice" to reduce the deficit. They've made it clear there will be deep cuts to public services in the budget this week. But why are they sparing the big banks?
Did you know that Canada’s big banks will have $40 billion in excess cash by the end of 2012? Did you know that corporations in the financial sector have enjoyed an average 23% profit margin over the past decade?
The big banks are making big profits thanks to special tax breaks from the federal government, including: corporate income tax cuts, an exemption from the GST, and preferential tax rates for capital gains and stock options.
Government spending on these tax breaks for the financial sector now adds up to $11 billion a year and is projected to reach $15 billion a year in 2014.
The big banks have been coddled long enough. It’s time for the Harper government to get serious about shared sacrifice and make the banks pay their fair share.
Tax breaks pad corporate reserves
"Corporations claim they use the money saved from tax cuts to invest in machinery and equipment, and to create jobs. A StatsCan analysis, however, refutes this claim, showing that investment in machinery and equipment has decreased in lock step with cuts in corporate tax rates over the last 10 years. What businesses are doing is hoarding cash, adding $83 billion to their reserves since the 2008 recession."
- Striving for Social, Economic, and Tax Justice, Jean Symes, CCPA Monitor, Feb 2012.
Tax Breaks = Spending
The Harper government hides spending choices in Personal and Corporate Tax Breaks.
$70 billion spent on personal tax breaks
$26 billion spent on corporate tax breaks
Tax breaks, tax credits, and tax loop holes are simply unfair. They grant special favours to groups the government likes, or reward some behaviour the government likes and force the rest of us to pay more.
These billions should be spent on universal programs Canadians have identified as priorities, like public health care, education and social services. In addition, we could have money for new programs like early learning, long-term care, home care and pharmacare. We don't have a deficit problem, we have a revenue problem!
The Rich VS the Poor
The richest 1% of Canadians now pay a lower total tax rate than the poorest 10%. Why doesn’t this shock us anymore?
How Big Was Your Last Pay Raise?
In the past 12 years, Canada’s top CEOs have seen their salaries go up an average of 444%. In 1995 the top ten earners made a combined total of $60.7 million— by 2007, that number had jumped to about $330 million.
Whose Canada? Is it Stephen Harper's? Or yours and mine?
Canada's 100 best-paid CEOs are recession-proof
While Canadians struggle to recover, an elite few have proven to be recession-proof. The 100 best-paid CEOs in Canada breezed through the peak of the recession in 2009 with an average $6.6 million in compensation. That's 155 times more than what a Canadian earning the average wage of $42, 988 earns.
The rich get richer ...
The richest 1% of Canadians doubled their share of income between the late 1970s and 2007; and the richest 0.01% quintupled their share. Meanwhile, average wages in Canada have remained stagnant for about 30 years.
The value of public services
When the Federal government cuts public services, they’re actually taking money out of your pocket! A recent study by the Canadian Center for Policy alternatives estimates that the average Canadian household takes advantage of about $41,000 a year in public services.
That’s 41,000 dollars you don’t have to spend on things like doctor’s visits or water treatment. Also, you don’t have to buy your own fire truck… unless you want to. They do look pretty cool.
Tax cut folly
The total cost of the Harper government's tax cuts between 2006 and 2013-14 is a staggering $220 billion. That money could have been used to reduce wait times in health care, reduce tuition fees, create an early learning and child care program, improve Canada Pension Plan benefits, tackle poverty and fight climate change. Sadly, these just aren't priorities for the Harper government.
Corporations are doing just fine, thank you very much!
Federal Corporate tax rates over a 12 year period:
2000 – Tax rate was 30%
2004 – Tax rate had dropped down to 21%
2008 – Tax rate was lowered to 19.5%
2011 – Tax rate lowered to 16.5%
2012 – Tax rate going down to 15%
In a 12 year period the federal corporate tax rate will be cut exactly in half. When was the last time you had your tax rate cut in half?
In 2009, Statistics Canada reported that $78.4 billion of Canadian assets were invested in the tax havens of Barbados, Bermuda and the Cayman Islands, exceeding the GDP of these tiny jurisdictions many times over.
Five big banks hide big money
Between 1993 and 2003, the five big banks used their offshore accounts to avoid paying $16 Billion in Canadian taxes. - University of Quebec study
Canada doesn’t have a spending problem
Total government spending in Canada has dropped dramatically over the last 16 years. In 2002, total government spending in Canada as a percent of Gross Domestic Product (GDP) was 53%. In 2008 it was 39%. Governments in Canada have been cutting their spending levels for years. We don’t have a spending problem.
Canada doesn’t have a deficit problem
Canada is in the very best fiscal position of the richest countries in the world. In the G7, Canada has the lowest total government debt of all countries – by far! According to the International Monetary Fund (IMF), by 2014, total government debt for G7 countries is predicted to be: Japan (142%); Italy (123%); United Kingdom (91%); United States (83%); France (82%); Germany (81%); Canada (32%). Does that look like a worrisome position for Canada?
Canada has a revenue problem
In 1995 total government revenue in Canada was 36%. In 2008 it was 33%. A drop of 3% may not seem like a lot. But it actually represents a loss of about $50 billion a year in revenue for governments in Canada. That’s $50 billion that could be invested in health care, education, child care, public pensions and social services.
Canada has a revenue problem because it has a tax fairness problem
1. Personal income taxes – Between 1990 and 2005, the total tax rate went up for the poorest Canadians and it went down for the wealthiest Canadians. The richest 1% of Canadians now have a lower total tax rate than the poorest 10% of Canadians. Tax fairness has been flipped upside down in Canada when it comes to personal income tax rates.
2. Corporate income taxes – Canada is leading the race to the bottom on corporate tax cuts. We have the lowest corporate tax rates in the G7. Our corporate tax rates are way lower than the US our closest economic competitor. Yet more jobs are not being created. Productivity and inevstment in equipment in Canada has been declining for years.