DEBUNKING THE LIBERAL TAXAND-SPEND MYTH.

Liberals often share two common myths: that running deficits and racking up debt can continue indefinitely; and that there is no limit to how high taxes can be raised. Both must be debunked.

Deficit spending might have to continue in the wake of the pandemic. But Canada's problem is that the Liberals, pre-COVID, were a disaster already.

Since 2015, they have hiked deficits, debts, taxes and regulatory burdens. As a result, investment in 10 of Canada's 15 major business sectors dropped by 17 per cent, as domestic and foreign investors fled for more profitable countries, representing a loss to the economy of more than $185 billion. Two of the top three credit rating agencies downgraded Canada. The current account balance, or outflow of funds annually, jumped.

In other words, the Liberals squandered the good times and they cannot revert to their tax-and-spend ways. The parliamentary budget officer recently stated the country has two years before this level of spending becomes completely “unsustainable.”

The deficit will ebb naturally as the economy gets back up and running, but fiscal discipline is not the DNA of the Liberals, or, for the matter, the NDP, the party the Liberals often rely on to pass their profligate spending packages in this minority Parliament.

It's also worrisome that a large number of refugees from discredited Ontario Liberal regimes now sit around the cabinet table or advise it. Lest we forget, between 2003 and 2018, the Ontario Liberals took the province's debt from $139 billion to $348.7 billion and collapsed its credit rating to “negative” levels. Taxes jumped, and excessively subsidized solar and wind schemes made its economy uncompetitive. Hundreds of thousands of steel, auto and manufacturing jobs disappeared.

Once bitten, twice worried, investors began dumping stocks in recent weeks amid rumours the federal Liberals were about to hike capital gains and other taxes.

The inconvenient truth is that the Liberals are not trustworthy stewards of the economy. The fact is that Canada is already one of the highest-taxed countries on earth. There is no room left for tax hikes, without leading to more dire consequences.

As of 2020, Canada had a top personal income tax rate of 54 per cent, top corporate rate of 38 per cent and a sales tax of up to 15 per cent, depending on the province.

This is close to Portugal, which has a 59 per cent income tax rate, 23 per cent sales tax, but only 21 per cent corporate tax rate. The caveat is that Portugal, like other countries in Europe with high taxes, has an enormous underground economy that pays no taxes.

Other high-tax jurisdictions include Sweden, Denmark, Finland and Austria. Notably, all have considerably lower corporate tax rates than Canada.

Most revealing, however, are rates in the United States and Australia. The United States — our economic customer, partner and rival — has a top income tax rate of 50 per cent (which does not kick in until significantly higher levels of income have been reached), sales taxes that vary from zero to 11.74 per cent and a top corporate tax rate of only 21 per cent.

Australia — which also has a resource-based economy and offers comparable social services to Canada — also has lower taxes across the board. Its top income tax rate is 47 per cent, its corporate rate is 30 per cent and the sales tax is only 10 per cent.

Canadians, by most measurements, are overtaxed and our governments are over-indebted. This predicament happened before COVID, not because of it, and has been caused by years of mediocre governance.

Polls, however, show that the priorities of most Canadians are dealing with the pandemic and jobs — not more spending on free dental, daycare or solar farms.

“People know this money has to be paid back and the best social program is a job,” said Goldy Hyder, president and chief executive officer of the Business Council of Canada.

And they're right.