Wealth tax a foolhardy ploy to keep spending.
Francis, FP2
Canada has been boxed in by the federal Liberals’ unsustainable and unjustifiable spending spree. Now, they plan to impose a one-time “wealth tax,” which sounds like music to NDP ears, but will accelerate the country’s decline. Indeed, it would be foolhardy to think this is a one-time thing, or that it is a proper tax, as we’re talking about double taxation, or confiscation of personal assets, cash or otherwise, on which taxes were already paid.
The federal debt is already over $1.1 trillion, due to the government’s frenzy of pandemic giveaways to buy votes. This year’s deficit is expected to be $354 billion and there is no plan to pay down the debt or balance the books.
The sensible solution would be to rein in spending and support the private sector so it can recover. This should involve creating a positive environment for business development and success, reasonable and stable levels of taxation, incentives for venture capitalists and encouraging universities to emphasize studies in science and technology.
But Canada’s left-wing government believes it can simply continue to spend — a belief that will come crashing down if already-high inflation continues to rise and we see a corresponding rise in interest rates. When that happens, investment (and job creation) will grind to a halt, asset bubbles will burst in dramatic fashion and governments will be forced to raise taxes or slash spending.
Earlier this month, a paper from the Montreal Economic Institute (MEI) debunked the Liberal notion of a “wealth tax” and called it a “predictable failure.” The paper based its analysis on Parliamentary Budget Officer (PBO) estimates of the amount of revenue the government could expect from implementing the Liberals’ one-time tax on “extreme wealth.”
The PBO estimates that a three per cent tax on net wealth over $10 million and five per cent on wealth over $20 million would yield up to $82.5 billion in revenue over five years. Yet, according to MEI, “The likelihood of collecting that amount of money from the wealthy is very low, because it assumes the affected families will not engage in tax avoidant behaviour. As such, the most realistic estimation was a net revenue of $60.7 billion over five years, collected from more than 68,000 Canadian families.”
Liberal MP Nate Erskine-smith told ipolitics the government could use the money to pay for pandemic and climate-change measures, as well as reconciliation with First Nations. But MEI said this “wealth tax” would only cover a fraction of the $240 billion spent on COVID support, $100 billion on stimulus, plus all the new spending in the budget.
“Put bluntly, the revenue-increasing measures (from the wealth tax) are expected to generate an average income of $18.7 billion a year whereas the government intends on spending over $1 billion a day in 2022,” it concluded.
The report said wealth tax proponents have a naive, cartoonish notion of wealth — that there are piles of cash sitting in vaults. In fact, the “wealth” that will be taxed is fuelling the economy, and it has already been taxed. This wealth is not in vaults: it is in farms, oil wells, mines, factories, stores, corporations, homes, apartment buildings and portfolios that generate economic activity and jobs.
The culprit is spending. Canada’s per capita government expenditures reached unprecedented heights before the pandemic, and are now off the charts. Worse, the Liberals have used the COVID-19 crisis to camouflage the launch of a welfare state on steroids by providing exorbitant programs such as universal daycare, subsidies and higher pensions.
At the current rate, overspending and debt will increase until the country hits the debt wall. The only solution is to cut costs, control them and encourage, not punish, enterprise and job creation.