Listening to corporate spokespeople and the media, you would get the impression that we are teetering on the edge of poverty. As a country, this is absolutely untrue. But for many individual Canadians, poverty is a reality. This is the result of Market-oriented policies which Canadians thought had been rejected when they elected the current federal government.
In 1993 (the latest year for which statistics are available), the number of people living in poverty grew to 4.8 million. This is 1.2 million more than in 1980, and it represents almost 18% of the Canadian population.
Since 1989 when the House of Commons unanimously resolved to eliminate child poverty, the number of poor children has grown by 331,000, to 1.8 million. The majority of these children live in two-parent families.
Among families in which the oldest parent is 30 or younger, 41.2% live in poverty. This is a time bomb for the future.
At the same time poverty is growing significantly, the wealthy in Canada are growing wealthier. The richest 20% of Canadians have increased their share of total income in Canada to 39.9% of all income. The poorest 20% of Canadians get only 6.4% of total income.
In terms of wealth the wealthiest 1% of Canadians own more than the bottom 80%. This enormous disparity in income and wealth increased because of the tax policies of successive governments. The top tax rate on the richest Canadians was lowered from a high of around 80% in the 1960's to about 50% today. Canada remains one of only three major countries without any tax on wealth -- even the United States and many of its individual states have wealth taxes.
Corporations have done even better. Generous tax treatment has meant that many highly profitable corporations have escaped paying income taxes altogether. Others have been able to reduce their taxes to a point where they pay a lower percentage than any of their employees.
Federal government tax policy has consistently lowered the corporate share of income tax relative to what individuals pay. Thirty years ago, corporate income tax accounted for 20% of all federal revenue. Now it accounts for about 7%. During the same time, personal income tax has risen from 32% of federal revenue to 50%.
As governments cite the debt and deficit as the reason why they must cut back on public services, we need to remind them that this is no solution.
New Zealand is the perfect case study of what happens with this approach. Four successive governments have vigorously reduced taxes on corporations and the rich by one half. They privatized major crown corporations. They cut social programs. The result: Unemployment shot up from 4% to 12%. New Zealand's economy fell into a seven year recession, while other industrialized countries' economies grew by an average of 20%. Poverty among children in New Zealand reached one in four. The youth suicide rate doubled and now is the highest in the world. Crime went from one of the lowest among industrialized countries to the highest. After ten years of slashing programs, privatizing services and giving tax breaks to the rich and corporations, New Zealand's debt is nearly three times higher than it was in 1984.
Yet this same failed approach is what corporations and the federal government want for Canada. If Canada made corporations and the wealthy pay their fair share, we could go a long way to achieve a significant lowering of our deficit. On the individual side, we could introduce a tax on wealth over $1 million when it is transferred.
On the corporate side we need to eliminate a variety of tax loopholes that allow corporations to avoid paying their fair share. It is outrageous that a company like Canadian Pacific can make a $422 million profit and pay no corporate income tax-- in fact, they received a tax credit of $5.7 million. Chrysler Canada's effective tax rate was only 2.3% on its profit of $418.8 million. Currently, corporations owe about $40 billion in deferred taxes.
Information from Ont. Coalition for Social Justice.
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