Tax cuts: Are they really worth it?

November 5, 2007

I am trying to imagine the conversation I may one day have with my grandchildren about how my generation squandered $60 billion in tax cuts within the space of a single federal budget without investing a cent of it in something that will last for future generations.

We are living in very surreal times in Canada.

We have a minority federal government that has once again ‘stumbled’ upon a ‘surprise’ budget surplus of hallucinogenic proportions -- $13.8 billion, with projections of billions more to come – but we have a finance minister who is hellbent on frittering it away.

Let’s put this windfall into perspective, if only for the sake of our grandchildren.

The surplus comes on the heels of a 10-year economic hot streak, where our nation’s economy has grown to become the ninth largest economy on the planet.

These are prosperous, heady days. But what are we doing with our prosperity?

The federal government has decided, against mainstream economic wisdom, to cut the GST by another percentage point. This will yield the average family enough extra cash to order in a pizza once a month. Money well spent?

Taking all of the income tax changes announced in the pre-Halloween mini-budget, it is easy to conclude that Canadians have been handed a trick in the guise of a treat.

For all the bluster, a single parent will save up to $298 this year, $184 in 2008, and $94 in 2009. And that is the maximum possible gain.

These gains will be lower for anyone making less than $38,000 a year – and considering that’s the average wage in Canada, we’re talking about a lot of working families who have very little to gain from $60 billion in tax cuts.

By 2009, a single individual will get back 39 cents a day and a single parent will get back a measly 25 cents a day from these tax cut announcements.

It’s time we start asking ourselves whether all the pomp and pageantry around tax cuts is really worth it.

Do we think our public health care system came from a tax cut? How about clean water, safe borders, and childhood education – do these things come from tax cuts?

When, not if, our economy takes a turn for the worse and we look back at the billions of dollars this government squandered on tax cuts, our children and their children may rightly ask: what did our parents' generation leave behind for us?

Crumbling infrastructure. A polluted planet. Housing, tuition, and child care that's unaffordable to the majority. An ever-growing gap between the rich and the rest of us. Abject poverty and utter despair among our neglected First Nations.

Think of what that $60 billion could buy that could benefit the majority of Canadians for years and decades to come. Opportunity lost, squandered.

As consumer citizens, we could all decide to take our tax cut money and run, but as caring, civic-minded citizens there is much to learn from the generations that came before us.

They took the fruits of economic growth and invested it in public health care, education, social programs, roads and railways that benefited the majority and served as an investment in future generations.

They could have just worried about themselves, but they had bigger dreams, a longer-term vision that helped fuel the growth of the middle class, affluent nation my generation enjoys today.

Instead of planning ahead 10, 20, 100 years from now, we have a federal government that is spending our money like drunken sailors giddy with shore leave, thinking only in terms of the next election.

I suspect our children and grandchildren will wish dearly that our generation demanded more, not less, of our government.

Theirs will be a far more sobering reality.

Bruce Campbell is the executive director of the Canadian Centre for Policy Alternatives.