Christmas comes early for corporate Canada
Last week’s economic update could have been an opportunity for the government to show it was serious about tackling some persistent issues that can’t seem to gain traction when it comes to federal spending. Instead, it turned into an early Christmas gift for corporate Canada. That’s because the government came up with $14.4 billion dollars to write off capital costs. What’s worse, we’re going deeper into debt to do it.
While some of these costs are attached to a tax write-off mechanism to quickly recoup the costs of machinery and equipment, there are more vague measures that allow them to invest in assets. That means they can write off more for private corporate jets and limousines, while so many Canadians struggle to make ends meet. Part of that struggle now includes paying for these incentives.
Only a week later we received a jarring reminder of how poorly public investments can perform when GM announced they will be shuttering their operations in Oshawa. GM had been on the receiving end of billions in bailout money and loans from Canada and Ontario only a decade ago, but didn’t bother to consult with either government before deciding to close their plant. This is despite the fact that Canada lost money on the bailout and there is still an outstanding loan for more than a billion dollars according to Export Development Canada. This illustrates how there is no loyalty from corporations which is why New Democrats support the idea of attaching conditions that guarantee job retention and job creation when public money is used in this manner.
The former parliamentary budget officer looked at the economic update and concluded that Canada is deficit-financing the corporate sector. But this is nothing new. Decades of corporate tax breaks have consistently shifted the burden onto Canadian households. Sixty-five years ago, people and corporations contributed equal amounts of income tax to the Canadian government. By 2016, the balance had shifted to the point that Canadians paid $145 billion in income tax, while corporations paid $41 billion. Instead of doing anything to re-establish balance, the government came up with even more for corporations.
What makes this so frustrating is the realization that so many issues and pressing needs are underfunded or unaddressed. Personal debt has grown to the point that Canadians owe $1.69 for every dollar of disposable income. Despite this knowledge, the government chose to merely study Pharmacare even though it would help ease the burden for many households that struggle with expensive prescription drugs. We only have to look at countries that have implemented full and comprehensive pharmacare systems to understand that it benefits those who are struggling to pay for medication and companies that no longer have to finance an employee drug plan. It is an opportunity to invest in a way that helps businesses and households, but the government refuses to make it a real priority.
There’s also First Nations’ education which is still operating under a significant funding gap and a growing housing crisis in Canada. Both of those problems have only received a fraction of what is needed to make any headway, but the government has moved swiftly to address corporate concerns-—again. The incentives from the economic update come on the heels of our $4.5 billion purchase of the Northern Gateway pipeline making it closer to $20 million that we have been willing to borrow from households to finance the biggest businesses this year alone. Somewhere along the way the government has to balance its spending so that the people who are paying the freight receive more of the benefit.
Time and again blanket handouts to corporations have not resulted in desired outcomes, but government after government has been unwilling to stand up to corporate Canada and ask them to earn them.