Don't forget taxpayers in any new fiscal federalism

Par Gordon Campbell

textes seuls

Canada's premiers are meeting once again this week to discuss ideas for strengthening Confederation. Central to that endeavour is the need to ensure that all governments have the revenue they need to provide the services for which they are responsible - within taxpayers' ability to pay.
Canadians contribute about half-a-trillion dollars annually to their governments at all levels. That should be more than enough revenue to pay for all of the programs and services governments provide. The question is: How can we better use that money to benefit taxpayers across Canada? How can we better ensure that all levels of government in every province have the fiscal capacity to deliver reasonably comparable levels of service at reasonably comparable levels of taxation?
Premiers have often called on Ottawa to assist in funding all sorts of worthy national priorities, from health care, skills training and postsecondary education to transportation, infrastructure and a national pharmaceutical strategy; to say nothing of our common commitment to closing the gaps for aboriginal Canadians in health, education, housing and economic opportunity.
These are all vitally important national needs that should be supported within governments' means. But there is a limit to what provinces can expect or should demand from Ottawa, because taxpayers also deserve a break.
Simply put, governments at all levels are taking too much out of taxpayers' pockets for too little marginal benefit, leaving working families too little to make ends meet and get ahead. If the federal government has more money than it needs to fulfill its responsibilities, its first priority should be to reduce the tax burden on all Canadians with a significant tax cut. This should take precedence over any increases in equalization or massive new increases in federal transfer payments to other governments.
Governments striving to increase revenue should focus on economic growth and wealth-creation. While we look at modernizing fiscal federalism, we should also be driving a national competitiveness agenda - with competitive tax rates at the top of the list.
To compete and prosper in today's economy, we must step up our commitment to train, attract and retain skilled workers. We need new investments in postsecondary education, skills training and apprenticeships. We also need to dramatically expand our efforts to recruit skilled immigrants, with flexible and pragmatic new immigration policies and national strategies for credentialing in areas of skills shortages.
Let's create wealth by closing the social and economic gap with aboriginal Canadians, the fastest-growing segment of our population. The sooner we close the aboriginal skills training gap, the faster we will address skills shortages and improve the quality of life for aboriginal Canadians.
Working together, Canada's governments can generate economic growth by expanding targeted investments in infrastructure and transportation. We need to open up Canada's Pacific Gateway and establish a Pacific corridor into the heart of the country and the continent with strategic investments in our ports, airports, roads, bridges and border crossings.
We should foster greater mobility of labour, investment and truly free trade within Canada. British Columbia and Alberta are leading the way in this regard through a new landmark agreement that establishes the second largest economic union in Canada, after Ontario. This is something all provinces could do on their own, without a penny of new federal funding.
These are all far more urgent priorities, in my view, than a wholesale renewal of the equalization program. At a minimum, any change in equalization must not create new barriers to competitiveness through policies that tilt the scales against taxpayers in provinces that foot the bill.
Provinces that receive equalization should not have a higher fiscal capacity than non-recipient provinces. Provinces that benefit from equalization should not have higher per capita program expenditures than the average of provinces that foot the bill. And equalization subsidies should not grow faster than the average rate of inflation or the average rate of economic growth for Canada.
We should not make the equalization formula even more unfair and complicated by counting assessed property values as a measure of fiscal capacity when, in fact, these property values are not a measure of taxpayers' ability to pay. In the new fiscal federalism, commitments made should be commitments kept. And all governments should respect the hard work it takes for every taxpayer in every province to generate the revenues we are entrusted with.
As we meet in Newfoundland, the premiers should consider how we can strengthen Canada's competitiveness through lower taxes, strategic national investments, co-ordinated planning, new relationships with aboriginal Canadians and fair transfer payments.
Gordon Campbell is Premier of British Columbia

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