[R-G] Hidden agenda of cuts could follow Harper win

[Anthony Fenton]

Hidden agenda of cuts could follow Harper win
http://www.harperindex.ca/ViewArticle.cfm?Ref=00157

Funding for public services will dwindle due to corporate tax cuts -  
CLC economist.

Andrew Jackson says corporate tax cuts will require a future Harper  
government to make service cuts.Ottawa, September 15, 2008: Canadians  
know many things about Stephen Harper and his Conservatives. They know  
the Conservatives have a lot of money to spend on their election  
campaign, and they know what the Conservative government has done.  
They don't, however, really know a lot about what's in store if the  
Conservatives get a majority government.

"The only real promise from the Conservatives has been a cut in diesel  
tax for truckers," Jackson told HarperIndex.ca in a phone interview.  
He is concerned about what he sees as he looks ahead: although Harper  
inherited a large federal surplus when he became Prime Minister, the  
tax cuts he has made will force massive program cuts.

Economist Andrew Jackson of the Canadian Labour Congress is concerned  
about what he sees as he looks ahead. Stephen Harper inherited a large  
federal surplus when he became Prime Minister, but tax cuts he has  
made mean he will soon face a big deficit without massive cuts.

"Moving forward, the once-large underlying federal surplus is modest  
at best because of the two-point Conservative cut to the GST," he  
wrote on the The Progressive Economics Forum. This cut alone will cost  
$ 12 billion this year, rising to $14 billion in 2012-13, even before  
accounting for tax cuts to corporations."

"Federal fiscal capacity will continue to shrink significantly," as a  
result of these cuts. The federal corporate tax rate in 2008 is 19.5%,  
but it is set to fall in four steps to 15% by 2012 (to 19% in 2009,  
18% in 2010, 16.5% in 2011 and 15% in

2012) . Each one point cut in the rate costs Ottawa $1.75 Billion per  
year. Thus, by the end of the term of the next government, federal  
corporate income revenues will fall by almost $8 Billion per year  
compared to the status quo, and by more than $15 Billion compared to  
revenues that would have been collected at the 21% rate in place as  
recently as 2005 (including the previous surtax)."

Together, the GST cut and the corporate tax cuts represent a minimum  
of $20 billion that will have to be cut from other parts of the  
federal budget, Jackson warns. Savings of this kind cannot be achieved  
by cutting small programs and limiting photocopier use. Cuts need to  
be to whole departments and program. Canadians are not being told what  
services are going to but cut, but it seems certain many will be, says  
Jackson.

He notes that the Liberals have "endorsed these corporate tax cuts -  
notwithstanding the fact that already deep and costly cuts have  
dismally failed to stimulate new business investment. The Liberals cut  
the federal corporate tax rate from 28% to 21% in 2000, and promised  
further cuts (to 18.5% by 2011) even before Harper was elected. They  
have since enthusiastically endorsed the planned cut to 15%, and even  
added another 1 point cut, to 14%, as part of the 'green shift.'"

"Only the NDP have opposed these deep across-the-board corporate tax  
cuts," writes Jackson. Both the Conservatives and Liberals "have  
locked themselves into the same fiscal box, and only the NDP has the  
room needed to make new commitments."

Harper Conservative vs. Public Values Frame
   Corporate tax cuts and defunding public services / Public  
accountabilty, safety and protection
   Hidden agenda / Openness

Links and sources
   The Progressive Economics Forum
http://www.progressive-economics.ca/2008/09/10/the-conservative-liberal-fiscal-box/