Wednesday, December 9, 2009

Poverty and Taxes

I received this from PIA (Public Interest Alberta) and I think it is provocative and worth reading. Poverty is affects thousands of children in Edmonton Public Schools and indicators suggest that the problem is getting worse. Teachers are facing the realities of children who are hungry and without sufficient clothing every day in our schools. I am concerned, as I'm sure you are, about the fate of families who were vulnerable BEFORE the economic meltdown and now find themselves in increasingly challenging circumstances.

Last week, John Kolkman (Edmonton Social Planning Council) and Bill

Moore-Kilgannon (PIA) spoke to the federal parliamentary committee that is

developing a national poverty reduction strategy when they were in Edmonton.

The executive assistant for MP Tony Martin approached them afterward and

said he really liked the exchange they had about tax cuts. He has taken an

excerpt from the transcripts of the hearing and sent it out across the

country today. We thought you might be interested in reading it.

From: Tony Martin, MP

Last week, the HUMA committee nearing the end of its two-year study on the

federal role on poverty reduction traveled in western and northern Canada.

Here is a remarkable exchange between Tony and two Alberta witnesses

suggesting a way to reframe the political and public debate on cutting

taxes. (For the entire testimony, visit the HUMA Committee website.)

Tony Martin (Sault Ste. Marie, NDP): Mr. Savage mentioned yesterday in the

hearings that at some point, the discussion has to happen in this country

about taxation and fair taxation and progressive taxation-taxation that

actually works in the interest of those who need it to work on their behalf

so they can participate in society and live with some dignity. Why not start


Out there, for the most part, middle-class Canada wants to pay less

taxes. What they want to see in every budget that comes down, whether it's

provincial or federal or municipal, is a tax reduction. They don't seem to

understand-or maybe they do, but turn a blind eye to it-that with every tax

reduction, there is less money in government coffers to pay for the programs

we need to help those who are in need.

Government doesn't do stuff that the general public, for the most part,

isn't willing to support. Ultimately, in four years, or a year and a half,

we all have to go back to our constituents and we have to make a case: Elect

us because this is what we stand for. If we're willing to stand up and say

that we're going to give you tax cuts, chances are, we'll get re-elected. If

we stand up and say no, we're going to raise your taxes, our horizon is

limited. That's the reality.

How do we get to a place in Canada today, given what we're hearing as we

travel the country on the issue of poverty and on groups, like the disabled,

who are really struggling just to get the basics, where we can get the

discussion going in a constructive, positive way so that people will be

willing to support the kinds of investments we need in order to make Canada

the country that we all here believe it has the potential to become?

I'll leave it at that.

Mr. Bill Moore-Kilgannon (Executive Director, Public Interest Alberta):

I think your question is incredibly important. It's certainly a discussion

here in Alberta where the provincial government likes to say that it has the

lowest tax system in the country. We are the only province that has a flat

tax. When you look at the actual numbers what you'll actually find is that

low-income people pay the fourth highest taxes in Canada in Alberta because

of the flat tax. So it's erroneous to say the provincial government in

Alberta can be cutting taxes because of our oil and natural gas wealth. But

the distribution of the taxes is obviously not shared equally.

You used the word investment and I think that's exactly the way we need

to talk about a commitment to a poverty elimination strategy. I would urge

us as well to talk about poverty prevention. When we do so I think they can

easily make the case that these are important investments that benefit the

quality of life for absolutely everybody.

The return on investment approach, whether you look at investments as

I've been talking about in early childhood education and care, greater

access to post-secondary education and the diversification of our economy

absolutely need to be crucial parts of how we talk about poverty elimination

and support for people with disabilities, who have an incredible amount to

offer. I've been hearing that the provincial government is now out of money

through the EI fund to support people with disabilities in colleges and

technical institutes. Many of those people who are in mid-program are going

to be young people with disabilities and are being cut off from the money.

So as of January they will not be returning to school.

Those are the stories that we need to tell so that people understand

that these are real investments. When we've done polling we don't do like

the Canadian Taxpayers' Federation and just do a poll on "would you like a

tax cut"? That sounds good but "would you like a tax cut" if it would mean

that your mother in the long-term care system is going to have to pay

significantly more? "Would you like a tax cut" if it's going to mean less

access to post-secondary education? "Would you like a tax cut" if we're not

going to have childcare so that your granddaughter is able to get into

quality child care so that your daughter is able to go back to school and


If you frame it that way then every time we've done polling, even in

Alberta, the numbers are completely different. When the provincial

government asks "what are your priorities?" tax cuts were number 8 or 9 on

the list of where they want to see government spending. So we have to talk

about priorities and what matters to Canadians in their lives and make sure

those investments are being put in place so that at the end of the day we're

building a system where people truly have choices that allow them to move

forward and benefit from the wealth that we all share.

If I were a politician, which I'm not, that is how I would approach it

with my constituents telling them their dollars are well spent here.

Mr. John Kolkman (Research and Policy Analysis Coordinator, Edmonton

Social Planning Council): I just wanted to respond very directly to Mr.

Martin's question.

Ed Broadbent, someone I think you know, wrote a very interesting opinion

article in the Globe and Mail on November 24, the 20th anniversary of the

Eliminating Child Poverty Resolution. One of the things he suggested was

that the federal government increase the marginal tax rate on people with

individual taxable incomes above $250,000 per year by to 35%, which is

exactly what people in the United States pay making that level of income.

That's a six percentage point increase. From 20% to 35%, the federal

government could generate an additional $4 billion a year in revenue.

What if the federal government were to decide with that $4 billion that

they were going to put that into some key priorities? For example, the

Caledon Institute has calculated that child tax benefits could be increased

by about 50% above current levels with an additional $4 billion investment.

Perhaps some could be applied to enhancing the disability tax credit that

Bev talked about.

I think there is some room to look at raising the marginal tax rates on

very wealthy Canadians. In a sense we're non-competitive with the United

States, which has a 35% tax rate above $250,000 in individual taxable

income. I think if it was framed in that way, and if those dollars were

dedicated to fighting poverty, you might be surprised. There might be more

support for that kind of proposal than we think at the current time.

1 comment:

why_knot said...

Great post Sue.

It seems to me that, as a society, we have chosen to value some jobs at a far lesser value in terms of pay, yet consider the services provided as a necessary part of society.

To my mind,if that is the choice that we collectively have made, then we have to consider whether we feel it is all right for part of our society to live in absymal poverty, or whether we think that we are prepared to assist those that do jobs that others won't do, but expect someone else to do.