Prime Time Crime
(Prime Time Crime exclusive Sept. 12, 2005)
By David Marley
The numbers discussed in the accompanying column ought to make folks sit up and pay attention. It's so much more powerful to reduce numbers into units that are easy for people to relate to personally. These facts are especially upsetting when one realizes that relatively poor people in the so-called "have" provinces are subsidizing relatively wealthy ones in the so-called "have not" provinces". This makes absolutely no sense, particularly if you factor in the relative cost of living in the major centres of various provinces.
Alberta's wealth already shared
Calgary Herald
Wednesday, September 14, 2005
Mark Milke
Prosperity can induce the silliest behaviour. Lucky lottery winners might build that unique home they always wanted only to later sell it at a loss because no one else likes their faux-Roman villa; teenagers with too high of an allowance might think money comes easily and thus later vote for the NDP.
Bad taste and unwise spending are prevalent enough personally. But counter-productive suggestions multiply exponentially when observers from outside jurisdictions get hot and bothered about Alberta's tax revenues and start to toss out ideas.
Queen's University Professor Thomas Courchene's recent call for Alberta to share natural resource wealth is one example; another came from NDP leader Jack Layton, who suggested that "improved" equalization would help head off any tension between the provinces.
Even the otherwise sober Victoria Times Colonist helpfully suggested Albertans might just want to voluntarily send cash to fix Winnipeg potholes and help Nova Scotia universities. Then Ontario Premier Dalton McGuinty chipped in with a proposal to revisit equalization.
Memo to those whose feet are not on economic terra firma: Alberta's prosperity means this province's consumers and companies buy additional goods and services from everyone else. For example, new vehicle sales in
Alberta this year are up 18.4 per cent over the previous 12-month period. That's triple the national average and it helps Ontario.
A great Alberta economy also boosts British Columbia when dockworkers in Vancouver and Prince Rupert are busier with imports later sold in Alberta.
That Alberta's prosperity is already beneficial to the rest of the country is clear. But as it concerns sharing tax loot, i.e., fixing prairie potholes and financing Atlantic institutions, Alberta -- as well as B.C. and Ontario -- already do more than any reasonable person capable of math calculations can consider fair.
Over the last 25 years according to the C.D. Howe Institute, thanks to counterproductive federal transfer programs, every Alberta family of four has transferred the annual equivalent of $2,470 to other provinces; Ontario families wrote cheques of $2,013, while a B.C. family gave more than $1,024 annually, on average.
Through federal taxes, those three provinces consistently sent net transfers to Ottawa while the receiving seven provinces and three territories happily cashed the cheques.
In just the fiscal year ending March 2005, here are the amounts received by each family of four in the recipient provinces. (The money arrived via government but it is useful to look at such transfers on a per-family basis.)
A Newfoundland family of four took $5,797; Nova Scotians received $5,131 while $6,829 was handed over to a New Brunswick clan. Prince Edward Islanders hit the lottery with $7,457, Quebecers received $1,392, and Manitoba and Saskatchewan families received $5,050 and $2,076 respectively.
These are all net amounts; that means the Institute already calculated what taxpayers in those provinces received from Ottawa minus what they paid into federal coffers.
The response to such facts is usually two-fold: first, ludicrous denial by the mathematically challenged Bloc Quebecois and their provincial counterparts who eternally claim Quebec is shortchanged, or second, the more general response from many across the country: such transfers are desirable because we should all "share."
Limited redistribution from the tax base to poverty-stricken fellow citizens is sensible. But only someone with a strange view of economics can defend bribing entire populations to stay in areas beyond what local conditions would naturally support.
But for some, that's the Canadian way, including cementing some transfers (equalization) in the constitution.
There's nothing moral about taking cash from productive regions to encourage entrepreneur-dampening behaviour elsewhere, including governments that waste it on corporate welfare (almost all).
Nor do such transfers make sense when the average home costs $245,704 in Calgary, $325,985 in Toronto, and $430,471 in greater Vancouver. Those city's families could use the extra tax dollars they now send to people who live in Saint John (where an average home costs $118,889), or Winnipeg ($135,861), or Quebec City ($151,454).
Critics who want new and improved equalization (Layton) or another tier of redistribution added (Courchene) miss the perverse and unfair flaws that already exist in federal transfers.
If equalization and other transfer programs are to be revisited, it should be with a plan to permanently blow them up.
The whole equalization scheme derives from the politics of envy and is feeding an entitlement culture gone mad in this country. As the author of the column says, this tax transfer regime ought to be permanently blown up! Let's agree with the premier of Ontario and have a national debate on this issue. Inter-provincial equalization payments, like the tax system in general, immigration and a myriad of other public policy matters, is long overdue for a rethinking.
"A nation of sheep begets a government of wolves."
- Edward R. Murrow
David Marley is a former lawyer and political advisor and can be contacted at dmarley@uniserve.com
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