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A tale of two pandemic programs
When the pandemic hit, the government wanted to use Employment Insurance (EI) to address the sudden loss of income people were dealing with. Critics quickly reminded them of the significant difficulties workers were already experiencing accessing the program in good times, which is why there had been years of pressure to revamp it. In the heat of the moment, there was no way EI was going to be responsive enough to offer the support needed for such a significant event. New Democrats suggested the government should take the lead of other jurisdictions, like Australia, that were making direct payments to individuals to tide them over. This led to the creation of the Canada Emergency Response Benefit or CERB as most people came to know it.
Once conditions were set, people were encouraged to apply for the benefit. The criteria was simple enough, and most people who had earned $5,000 the 12 months prior were deemed eligible. Originally, it seemed as if the benefit was available whether the individual was an employee, or self-employed. Then, in late 2020 people began receiving letters informing that they may or may not be eligible for the benefit they had been receiving. It was clear the government was changing rules mid-stream and among those most effected were self-employed.
Now, some are being told they will have to pay their CERB money back. This is, in many cases, despite seeking assurances at the outset that their application for the benefit was the appropriate course of action. To make matters worse, the government agreed in late April to avoid this scenario. That was when they supported an NDP motion to ensure that, “those who have applied in good faith for and received benefits through CERB or other programs to support them through this crisis will not be unjustly penalized.” Not only are they changing their rules, their breaking their word. It’s obvious they are as comfortable going after the little guy, as they are reticent about reining in the biggest players in our economy.
Of course, the CERB wasn’t the only program designed especially for the pandemic. The Canadian Wage Subsidy (CEWs) was brought about to try to keep employees in place through the pandemic as much as possible. At first, the government thought a ten percent subsidy would be enough to keep workers in jobs. New Democrats argued, persuasively, for a much larger 80% subsidy that would help businesses, especially small and medium sized ventures. As we encouraged an appropriate subsidy, we also warned against the potential for abuse from the biggest employers.
That reticence was based on the 2008 stimulus package which was accepted by companies who went on to pay lavish executive bonuses. This led New Democrats to warn the government that it would be best to build protections against such profiteering into the CEWS. They chose to ignore that suggestion to predictable results. A National Post report explains that 68 publicly traded companies who received the CEWS also paid millions in dividends to shareholders. That means taxpayers are indirectly subsidizing payments to shareholders at the same time as the government is asking some CERB recipients to pay back what was applied for in good faith.
The difference could not be more stark. While the Liberals go after people who are barely surviving the pandemic, they're refusing to go after big corporations that received a wage subsidy, made profits, and payed massive dividends to their shareholders. New Democrats think that isn’t fair and are calling on the government to stand by their original decision not to punish those who were encouraged to apply for the CERB before they changed the eligibility rules.
HUGHES MARKS INTERNATIONAL WOMEN`S DAY IN PARLIAMENT
Ottawa – With parliament reconvening after a constituency week, Algoma-Manitoulin-Kapuskasing MP, Carol Hughes reminded MPs there is so much work that remains to ensure women are full and equal partners in society.
``Yesterday was International Women’s Day and while we celebrated gains that have been made, there is still much work left to do,” said Hughes.
The MP went on to itemize the challenges that MPs should concern themselves with such as barriers to women’s full economic, social and political participation in our society, the need for pay equity legislation, an affordable national universal child care program, affordable housing.
Hughes also challenged MPs to work to address violence against women and reject all restrictions on women’s reproductive rights; to improve the lives of indigenous women and girls; and to address the specific challenges faced by women of colour, members from the LGBTQI2S+ and the disability community.
``A long list for sure but, all women deserve fairness, affordability, opportunity, value, the freedom to live without fear,” said Hughes.
For More Information: Jamie Burgess, Office of Carol Hughes, 613-996-5376 - firstname.lastname@example.org
It’s time for corporate Canada to earn their tax breaks
It’s an established economic principle that people respond to incentives such as a reward for good behaviour or punishment for bad behaviour. Most people understand this on an innate level without ever looking at the studies that backs this up. An example of this is the classic carrot or the stick motivators that parents use to modify the behaviour of children. It’s no surprise that governments use these same motivators to coerce the population to do things like file taxes (stick) or make their homes more energy efficient (carrot). Where use of this idea tends to be abandoned is when governments pursue measures based on dogmatic belief and ignore empirical evidence.
An example of that took place on January 7th of this year. That was the day that corporate Canada had, on average, completed paying their taxes (for the year!) and started accumulating wealth. The theory behind such a woefully small contribution to the public coffers argues that a low tax rate will allow corporations to re-invest in their businesses’ machinery and equipment and even employ more people. This is the trickle-down economics theory that has been ham-stringing western economies since it’s ascension.
Corporate Canada has enjoyed multiple tax cuts for two decades and the rate they are charged has been cut in half over that period. When examining the outcome of those measures over the same time, it’s clear that the tax breaks are not performing as anticipated. Instead of investing more in machinery and equipment, these businesses are hording their returns. In fact, investment in those areas has been cut in half over the same period that taxes have gone down.
These are global examples for all of corporate Canada and there will always be outliers – some companies do invest in their capacity at a much higher rate and there are those that don’t at all. But best and worse case examples are not what government policy should be developed upon. That’s why studying the rate of investment as a share of the Gross Domestic Product (GDP) offers the best window into the performance of tax incentives. When judged that way, corporate tax cuts are not performing.
The Fraser Institute, a right-wing think tank, reminds us yearly about tax-freedom day for individuals. They use the individual tax burden as a rallying cry call for tax breaks, but their campaign is disingenuous, and they say nothing about the disproportionate burden placed on individuals as compared to corporations. The silence is deafening, and it shows us all we need to know about the Fraser Institute.
Throughout the decades of corporate tax relief another trend has been growing - inequality. As the rich get richer, there is less for everyone else. Even the Managing Director International Monetary Fund has stated that it’s time to properly tax the rich. This is the same organizations that prescribed austerity budgets for decades, which makes the call all the more surprising.
The truth is we need taxes – perhaps now more than ever given the significant increase in catastrophic weather events – but the wrong people are carrying most of the freight. There is room to encourage corporations to earn tax breaks by investing in the way that had been hoped for when low rates were handed to them without strings. Most other tax incentives are conditional. It’s time to apply that idea to all of them. Without that, inequality will continue to grow, and the cost will become the services and programs most people rely on. Nobody complains about tax bills when the fire truck shows up to save their house. Keep that in mind the next time a politician starts promising tax cuts.
Service cuts coming home to roost!
While it’s tempting to view the role of a government through the lens of big national and international issues, there is a lot of administrative work that comes with the job as well. Ministers inherit full departments staffed with bureaucrats responsible for fleshing out and administering policy directives and legislative initiatives. While this may not sound as flashy as some of the issues that grip parliament, it has a huge effect on people’s lives.
This has been coming for years and for some front-line workers it is old news, but the ability of the government to administer many of its programs has slowly become less effective and the proof of that is now out in the open. A recent study from the Canadian Federation of Independent Businesses provides the latest example of the problems people are having accessing necessary services and information from federal departments. The report focuses on CRA wait times which have gone up. CRA claims they are dropping less calls, but it’s clear that the system is only accepting more calls while adding longer wait times to speak to an agent. In addition to that nearly 40% of the calls that were processed provided the callers with incorrect information. According to the CFIB, most of those calls related to the GST/HST which should be fully understood by those answering on behalf of the department.
This shouldn’t be too surprising. For decades governments have cut into the meat of our public service to the point that they are not able to meet our needs. Now that we have more proof of this, it is time to consider a reinvestment in those services which have proven to be under-staffed.
CRA has been hit, like all departments, by governments choosing to pursue balanced budgets while handing out tax breaks at the same time. That means that although some Canadians received tax breaks, we all paid for those with reduced services from thread-bare departments. For example, Veterans Affairs and Human Resources and Skills Development Canada lost 24 per cent of their staff between 2012 and 2016. In the same time period, the Canadian Food Inspection Agency lost 20% of its staff, and Statistics Canada lost 35 per cent of its full-time staff. That’s cutting meat, not fat.
Adding to the problem is the fact that most people don’t receive much in the way of tax cuts. Those have always flowed to top earners who rely less on services like employment insurance. Despite that the promise of tax cuts continues to be sold – quite successfully – to Canadians who receive little and lose a lot in the process. It’s also affecting businesses – especially small ones – who may not have the resources to spend exorbitant amounts of time of the telephone waiting to speak with someone.
It’s time to build this up again so that Canadians needs are met by their government. The problem has been building for a long time and we knew that it was getting worse before the CRA phone issue was confirmed. CRA attempted to address those issues with a new phone system which only resulted in more callers waiting in a queue to speak to an agent and then again to speak to someone in the department if the agent was unable to provide an answer.
What’s missing from the equation is an over-arching plan to ensure Canadians receive the service they require in a timely manner. Government demands on individuals never cease and there are penalties for those who don’t comply in time with their taxes. Yet there are no penalties for governments that make it more difficult for us to receive accurate information to fulfil these responsibilities.
Carol Hughes MP