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Monday, 26 March 2012

Equity and taxation – An effort at a rebalancing policy.

For several years there has been discussion of how do we even consider increasing taxes to support revenues rather than continuing drastic cutting measures that seem to be the politically acceptable solution.   Kudos to some Ontario physicians, likely led by Michael Rachlis,  that are rallying around a call for increasing taxation to the highest income earners. 

Their message – “Tax us. Canada’s worth it”.  

The focus is on policy that clearly advocates for increasing taxation, and uniquely the call is coming from the very group that would be impacted.   Almost all physicians would fall into the top 10% (<$100000 annual taxable income), and the vast majority would fall into the top 1% (>170,000).  Only a handful would have taxable incomes in the top 0.1% (>640,000) which would be more typical of corporate CEO salaries and investment earners. 

While the campaign is aimed more at Ontario, there is a clear message to the federal  government as well.  The expected increased income federally would be about $3.5B.   That is actually only an increase of 1.5% in expected revenues. 

As it is budget week in Canada, unlikely that major policy shifts will be announced federally, but just to recap where Canada stands budget-wise from 2011-12. Canada’s accumulated debt is about $586B just over twice the annual expenditures of government.   We spend some $33B in servicing the accumulated debt.  In 2011-12, Canada’s expected deficit was just short of $30B, that was down from $56B during the bailout years of 09-10.  

Canada’s Gross Domestic Product is estimated at $1.58Trillion, the 14th largest economy globally.   That puts the government debt to GDP ratio at about 37%.  However, given the large propensity of debt accumulated at provincial and other public sector governments, the collective debt to GDP ratio is about 86%.  On an international basis that puts Canada in a much more precarious position.  The inserted global map puts Canada into perspective and more in keeping with European nations. Of course one can and should argue if debt to GDP is a valid indicator of progress, it is the measure that the International Monetary Fund tracks most closely. Public debt ratios   .   Noting that the graphic puts Canada as having a higher ratio than the US, but the IMF listing puts the US at a 95% ratio.  The disparities likely reflect the uncertainty in the calculations. 

So – having laid out the fiscal argument, who better to argue for increasing taxes than those that will be affected by such a policy.  Kudos to the group.  Be an advocate, ask your physician if they are aware of the campaign and have signed on?

While the sign up is designed for physicians, other public health professionals should read the backgrounder  on the current skewed taxation structure in Canada.  www.doctorsforfairtaxation.ca.  Notable as well are the low corporate taxation rates and the lack of estate taxation, both of which if modified slightly could greatly improve the fiscal reality.  

In a separate piece, the Health as if everyone counts blog also published a piece on the shortcomings of the Ontario Drummond report, in particular the implications of the policy of tax reductions since 1995 and the impact that implementing redistributive taxation now would have on stabilizing Ontario revenues Ted Schrenker: Life A.D. (After Drummond) part 2

Are we starting to see a pro-taxation revolution in the works?   

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