03/29/2012 07:14 EDT | Updated 05/29/2012 05:12 EDT

Workers of Canada Unite -- Against a Budget for the One Percent

On March 29, the Harper Conservatives have a choice. They can continue with this failed and destructive experiment in their 2012 federal budget. Or they can recognize that economic growth is best achieved by putting more spending power in the hands of workers.


For the past two decades, Canadian governments and Bay Street financiers have been conducting an ideological experiment on our economy. Their hypothesis: The only option to manage government finances is to cut public spending and drastically reduce tax revenues.

For a select few, this experiment has been an overwhelming success. Corporate profits and the salaries of top executives are steadily rising. Our corporate tax rate is the lowest of any G7 country, and our effective rate is lower than virtually all high income OECD countries.

But it's a sharply different story for Canadian workers. Spending cuts have meant stagnant wages, cuts in benefits, calls to claw back pensions, and efforts to dismantle vital public services.

Attempts to shrink our way to an economic recovery have been futile. The inequity between the richest and poorest in our society is growing at the fastest rate amongst developed nations, according to the OECD. This is harming our economy, dragging down Canadian workers, and eroding the middle class.

It's time for this failed experiment to end.

Whether it's public health care, community infrastructure, child care, or seniors' care, public services are the great equalizers of our society. They need to be strengthened, not torn apart. We need to move to a better tax system, where everyone pays their fair share.

Slashing government revenues with irresponsible corporate tax cuts and ineffective tax credits is not creating jobs or economic growth. If anything, corporate tax cuts reward job cuts, and are being used to erode the wages and benefits of Canadian workers gained over decades of collective bargaining.

Corporations rely on our public services -- they drive our economy. So corporations need to pay their fair share to protect them.

Our current tax system is riddled with loopholes and ineffective tax credits -- along with easy access to tax havens -- that benefit the wealthy while robbing funds from public services that all Canadians need and want.

The most destructive loophole is the stock option deduction. It allows Canada's highest paid executives to have their employment income taxed at half the rate of others. Not only that, this loophole only encourages the reckless speculation that led to the global economic crisis.

The capital gains deduction costs Canada over $6 billion a year in revenues. Yet it doesn't lead to concrete, job-creating investments. It just fuels real estate speculation and corporate mergers and acquisitions.

Successive Liberal and Conservative governments have eliminated top tax rates for the wealthiest Canadians -- the only ones who have seen real income growth in the past 20 years. Today, the top rate is 29 per cent -- whether you make $130,000 a year or $130 million.

But instead of accepting the failure of this experiment, the Harper Conservatives want to expand it. Instead of looking at other, more equitable choices, they are intent on using the economic recovery as an excuse for more spending cuts, such as targeting Old Age Security (OAS).

This is a red herring crisis, and only serves to distract from the urgent need to address the very real crisis facing 11 million Canadians without a workplace pensions plan. Cuts to OAS will only make it worse.

Pressures on workplace pensions, and securing retirement income for all Canadians, could be addressed by strengthening public pensions. I repeat the labour movement's call for a national summit on retirement security. It is long overdue that all aspects of this critical public policy issue were discussed by all stakeholders.

But of course, eroding pensions is in line with the rest of the experiment, further shrinking the government's responsibilities to Canadian workers.

There is a better way; one that recognizes and embraces our responsibility to provide for our families, contribute to our communities, and take care of our fellow Canadians.

We need to move to a more progressive tax system. This means closing tax loopholes and cutting off tax havens.

We must also get rid of ineffective tax credits that only benefit the rich. Too many of these credits don't help the poor, and drain revenues from universally accessible services. We need to be directly funding public services that are available to everyone -- like public transit, child care, arts, and sports programs for our families.

And profitable corporations and the wealthiest Canadians need to pay their fair share.

Over the past 20 years, the overall tax rate for the poorest Canadians has gone up 20 per cent, while the rate for the richest Canadians has gone down by 10 per cent. Our country's wealthiest -- the one per cent -- pay a lower overall tax rate than any other group -- including the poorest 10 per cent.

Corporate tax rates have been cut by 60 per cent in the last 30 years. They are now lower than the effective rate of the poorest Canadians.

This is simply not right. It's not what's best for our economy, and it's definitely not best for Canadian workers.

On March 29, the Harper Conservatives have a choice. They can continue with this failed and destructive experiment in their 2012 federal budget.

Or they can recognize that economic growth is best achieved by putting more spending power in the hands of workers. This means concentrating on creating and keeping jobs for Canadians, strengthening wages, benefits and pensions of Canadian workers, and creating a tax system where everyone pays their fair share for the public services and programs we all depended on, every day.

Paul Moist is national president of the Canadian Union of Public Employees.