(The following article is from the November 16-30, 2007 issue of People's Voice, Canada's leading communist newspaper. Articles can be reprinted free if the source is credited. Subscription rates in Canada: $25/year, or $12 low income rate; for U.S. readers - $25 US per year; other overseas readers - $25 US or $35 CDN per year. Send to: People's Voice, c/o PV Business Manager, 133 Herkimer St. Unit 502, Hamilton, ON, L8P 2H3.

By Liz Rowley

The Harper government's Hallowe'en mini-budget contains corporate tax cuts that Finance Minister Jim Flaherty boasts are "much deeper and much faster than ever contemplated before". By 2012, the corporate tax rate will drop to 15% - almost half the 28% rate in 2000. The small business tax rate will fall to 11%.

     What's it worth? More than $13 billion annually in lost revenue: enough to pay for the previous Liberal government's child care deals, the Kelowna Accord with Aboriginal Peoples, the Canada-Ontario Agreement, and the offshore arrangements, which would have cost $5 billion over 5 years (CLC Submission to the House of Commons Finance Committee 2007 Pre-Budget Consultations).    How low can we go? According to Flaherty, the goal is to lower Canada's corporate tax rates below every industrialized country in the world. That's something, considering that our combined federal/provincial corporate tax rate of 36% is already lower than Japan (41%), USA (40%), Germany (38%), and Italy (37%). Among the G-7 countries, only France (33%) and the UK (30%) are lower.

     Can they do it? It seems they can. These massive cuts are being delivered in a mini-budget, by a minority government, with the support of Dion's Liberals, and not only because they don't want an election. This is the corporate agenda in neo-liberal times, and the Liberals are just as willing to deliver tax cut as the Tories.

     Harper is following a path laid out by Brian Mulroney in the 1980s, when tax shifts from the corporations and the wealthy onto the backs of working people were the opening salvos for a massive redistribution of wealth.

     The Harper Tories are selling corporate cuts with personal income tax cuts that they shamelessly assert are designed to help the poor (by raising the exemption and reducing taxes to 15% at the lowest end) and the manufacturing sector ("we have our tax instruments").

     But the real story is the gains for the super-rich. While the marginal tax cuts for the very poor will not make any difference to their living standards, the very rich will receive enormous tax cuts (including capital gains tax cuts). On the other hand, the higher paid and middle income working class is going to pay much more, when property taxes, consumption taxes, payroll taxes (including health taxes in Ontario), and user fees are added in.

     Add on the costs of programs that won't be adequately funded, such as tuition for post-secondary education, child care, Medicare, housing, infrastructure funding for cities, public pensions, employment insurance, pay equity, etc., and the costs being loaded onto working people are astronomical.

     One week after the mini-budget, Mississauga City Council voted to levy a 5% property tax surcharge over and above the operating budget tax increase to pay for infrastructure renewal. Across Canada, the cost of infrastructure renewal is estimated at $100 billion, according to the Federation of Canadian Municipalities, which has campaigned for 1% of the GST to be transferred to cities to pay for this and other costs. But the Tories and their provincial counterparts have ignored the financial crises which now threaten to bankrupt local governments across Canada.

     Finally, they are selling corporate and personal tax cuts with the incentive of using further budget surpluses (projected at $11.6 billion this year) to pay down the debt. The message: Canada is rich, and the Tories are going to share the wealth with the working class and poor. Nothing could be further from the truth.

     Like the CLC, the NDP, and progressive organizations across Canada, the Communist Party has opposed the mini-budget and the corporate and personal tax cuts that are its centerpiece.

     Instead the CPC calls for immediate action to (1) increase corporate taxes to the 2000 rate of 28%; (2) restore the capital tax eliminated in 2006; (3) make capital gains taxable at the rate of 100%; (3) introduce wealth and inheritance taxes on estates over $1 million; (4) abolish the GST (and provincial sales taxes); (5) restore progressivity in the personal income tax by re-establishing 10 steeply graduated tax brackets, and (6) eliminate taxes on incomes under $35,000.  

     The CPC also calls for massive public investment in affordable social housing, municipal and provincial infrastructure, a national child care program, public and post-secondary education, implementation of the Romanow recommendations to expand Medicare, and funding to immediately redress the third world living conditions of Aboriginal Peoples in cities and on reserves.

     A new financial deal for cities is urgent, but it should not include GST points. One of the most regressive consumption taxes, the GST should be completely abolished. The Tories are keeping it because while they're lowering it today, they can raise it tomorrow, as other countries have done.

     Instead, cities need constitutional status and new taxing powers that would enable them to tax corporate wealth and generate the funds needed to run municipalities in the 21st century. In the short-term, federal and provincial governments must cover 75% of the capital and operating costs of public transit, 100% of the costs of social housing, public health and welfare, and provide adequate and stable long-term funding in statutory provincial and federal grants.

     New progressive tax measures, and a new economic direction for Canada, add up to a new government, the sooner the better. This Tory minority, which with the support of the Liberals acts like a majority government, can do great damage in a very short time. It's time to defeat them, and to replace them with a coalition of forces committed to address people's needs in the next Parliament. This should be the main objective for all labour and progressive organizations in the weeks and months ahead.