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Have we turned Canada into a nation of freeloaders?

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VANCOUVER -- I remember the day my high school-aged son first asked for designer jeans. My husband and I had just come through a long decade of trying to get ourselves educated and into careers while raising two kids -- which is a long way of saying that we were not rich. Our budget did not extend to designer jeans. Nor did I want to get into an on-going battle with adolescents whose expectations exceeded our income.

In those days, government support for families with children came in the form of a modest family allowance cheque that arrived every month. So I told my son that, since he was now old enough to be discerning about style, he was now old enough to choose his own wardrobe and I would hand over his family allowance cheque each month for him to pay for it. If he really wanted designer jeans, it would take three cheques, but it was his choice.

Then a funny thing happened. Once it was his money that was being spent, his values changed. As long as someone else is paying, you want -- no, need -- the best and the fanciest. Why not? When it is your own money, you become more careful. My son did not get himself designer jeans. He did not even get the big-box store standard jeans that I would have bought him.

Suddenly, used jeans without labels from thrift stores were good enough to wear to school.

All of us are more careful with our own money than when someone else is picking up the tab. That is why I get concerned when I look at who is and who isn't carrying the freight for government services in Canada. Government services from health care on down are paid for by taxes.

However, according to 2010 tax return data, 58 per cent of us pay only five per cent of taxes. These are net taxes where any taxes paid are offset by government payments received. So it is safe to say that a good half of all Canadians have no skin in the game. What government provides does not come out of their pocket.

Let me make very clear I am not beating up on the poor. I have often expressed and strongly support the view that, in a country as rich as Canada, no one should ever have to go cold or hungry or naked for that matter. However, I know half of Canada cannot afford to provide designer jeans for the other half, especially when those in the lower income half can be making up to $50,000 a year.

This issue arose during a recent discussion on tax policy, that is, what form our taxes should take. Should we have mainly consumer taxes such as the GST or mainly income taxes and how do we choose? For many, the choice hinged on making the tax system ever more progressive, that is, increasing the absolute and proportionate tax burden on higher income people while reducing it at the bottom of the income scale. But, when you look at the data, we have already been there and done that.

More than the bottom half of the population, not the bottom 10th, not the bottom fifth, not even the bottom third, contribute virtually nothing. Meanwhile, the top two per cent pay more than 30 per cent of all taxes and the very few among us (0.8 per cent, or less than one in a hundred) pay 20 per cent. This is how much tax the rich actually pay. It does not say how much more they could have, should have or would have paid had the tax system been seen to be more balanced. We cannot measure how many productive people choose to leave the country (or not come here in the first place) because of high taxes. We know there are ways to legally avoid taxes. The simplest way is to work less and enjoy your wealth in the form of tax-free leisure.

In our democracy, those paying little or no taxes also represent a good half of those eligible to vote. Since it is not their money, why should they not ask government for the very best services and why should they have to choose among them? Maybe it is time to stop treating half our population as dependent children and to start allowing them to contribute, even modestly to their society, and to making choices like responsible adults.

 

Troy Media business columnist Roslyn Kunin is a consulting economist and speaker.


-- Troymedia.com

Republished from the Winnipeg Free Press print edition July 29, 2013 A9

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