Only a few weeks ago, Prime Minister Jean Chretien was hinting that in the upcoming election campaign, the Liberals would renew the partys commitment to core social values. But the economic statement released yesterday by finance minister Paul Martin represents a shocking betrayal of Canadas social programs.
They had a clear choice to make and they chose tax cuts for the wealthy over improved health care or housing for the homeless or more accessible education, said National President Judy Darcy.
Under intense pressure by the business community to cut taxes, and faced with a Canadian Alliance election platform that promised steep tax cuts, Paul Martin caved in.
Combined with tax cuts announced in the budget earlier this year, the Liberals have now committed $100 billion to tax cuts. By contrast, in yesterdays mini-budget Martin committed only $600 million in new social spending most of which will be used to speed up the privatization of the post-secondary sector and $500 million to environmental initiatives.
Martin had the nerve to go on television and criticize the Alliance platform, saying you cant build a country that way. Well, no-one ever built a country on tax cuts, said Darcy.
Transfers still less than in 92
During the 1990s, the Liberals destroyed Canadas social fabric by massively cutting transfers to the provinces that help cover their health care, post-secondary education and social services costs. The CHST transfer this year will be lower than it was in 1992; significantly lower once inflation and population growth are factored in.
The looming surpluses gave the Liberals a great opportunity to begin to rebuild vital social programs but instead they chose to starve programs the vast majority of Canadians depend on.
The mini-budget will provide some benefits to lower-income Canadians and working people. A fuel rebate will help cover the steep costs of home heating, the child-tax benefit has been tinkered with, students will get an increased education deduction, the disability tax credit will increase, and the tax rate applied to incomes up to $30,000 will decrease by 1 per cent.
The Liberals have scattered around modest tax cuts in the hope of buying some votes, Darcy said. But their real goal is to divert our attention from the big tax cuts for the richest Canadians.
Big tax cuts for most wealthy
Corporate tax rates will drop by 25 per cent. Capital gains taxes were lowered immediately, compared to the January 1, 2001 implementation of the personal income tax cuts. (Its important to remember that almost half of all capital gains go to persons with incomes of more than $250,000.)
The cuts to personal income tax rates reveal further skewed values. Persons earning up to $30,000 get a cut of one percentage point, those earning between $30-60,000 get a cut of two percentage points and those earning between $60,000-$100,000 see their tax rate drop by three percentage points. While the 29 per cent tax rate will still apply to incomes over $100,000, persons in that category will benefit from the elimination of the 5 per cent surtax.
The finance minister also moved aggressively to speed up debt reduction, claiming that one of the most important steps we can take to ensure a better future for our children is to reduce the burden of debt. We disagree. What better legacy to leave our children than quality health care, an end to child poverty and ready access to a university education?
Facing a surplus of unprecedented proportions, the Liberals ditched their promise to balance program spending and tax cuts/debt payments 50/50, devoting almost the entire surplus to tax cuts and debt reduction. The little funding that was pitched as a contribution to post-secondary education will in fact be used for research P3s and corporate subsidies, rather than reducing tuition or rebuilding crumbling buildings.
The Liberals talk about a just society, but this budget exposes their real priorities, said Darcy. This economic statement does virtually nothing to strengthen the programs and services that we count on as Canadians. Its a shocking betrayal of the social values that the vast majority of Canadians cherish.