Canada’s Debate

“It is a paradoxical truth, that… the soundest way to raise the revenues in the long run is to cut the tax rates.” John Kennedy

I have taken this simple but elegant saying to heart on numerous occasions. I noted with more than a little amusement when Mr. Bush enacted his tax cuts a couple years ago he took in more gross revenues then any of his predecessors. Unfortunately he spent the surplus on a couple muddied wars.

The crux of the problem as I understood it was one cannot tax to prosperity. Politicians can merely regulate on a less destructive level. So when I read Joe’s Chinese Democracy Thread I was intrigued. Success is achieved when one is aware of the balance between economic freedom and political freedom.

More recently, I did not understand the full ramifications of the income-trust scandal or to put it another way, the potential loss of investment revenue which has dogged the loonie since the Flaherty’s announcement. link

“Although energy trusts represent 20% of Canada’s oil and gas production and just 16% of revenues, they accounted for more than 30% of all tax revenues paid by this sector, due in part to the higher tax rates individual shareholders pay on their trust distributions.”

According to the authour this change represents a loss of around 30 billion dollars out of the Canadian economy. Maintaining investment is the key to governing stability, for all social reform cannot be modeled on something transient. The goal was to achieve fair taxation but has this had a positive result? We are now working with less not more.

To illustrate investment losses on a meaningful level let us address the gas rationing of eastern Canada this winter. This problem came about from the closure of a Petro-can refinery in 2005 and was exasperated by the rail strike which combined with a refinery malfunction and lead to a significant chunk of eastern Canada being put on gas rationing.

While I don’t have the links on hand, I’ve heard operational refining capacities are in the neighbourhood of 95% for Canada and 90% for our southern neighbours. This means if something goes wrong the remaining refineries are not equipped to pick up the slack.

A lack of investment right?

Under better circumstances our investment dollars are taken in and put in core infrastructure, health and welfare. Start shifting the money away into other outlets and it doesn’t take a mathematical genius to see a funding shortfall. Such behaviour also promotes double dipping ala roadtaxes which become nothing more than slush funds for other projects. Erosion of public programs quickly ensues. Is more money the answer in this case?

Therefore it is in everyone’s best interest to not only attract outside investment but monitor the flows of money. Do you know where your money has been lately?

In the west, several contracts for shipping wheat and beef have been lost because of the fickle nature of again the railway. This has presented itself as an obstacle to change by impeding the supplier from diversifying his customer base which has traditionally gone south.

Again a labour dispute which has stemmed from a lack of investment.

Our best hope is to call for more transparent accounting measures. Yeah I know, good luck. But without a definite plan, and a clear reprioritisation of stated goals we will continue to be pulled in a million directions at once and watch helplessly as urban decay advances. We need a plan.