Boost taxes for corporations and rich, report suggests

The province has a revenue problem, not a spending problem.

That's one of the conclusions of Public Services Foundation of Canada chair Judy Wasylycia-Leis, who recently wrote a 96-page interim report on how the province should fix its financial problems.

The Public Services Foundation of Canada is a “not-for-profit, non-partisan organization that is devoted to in-depth research on the public sector and advocating for quality public services,” she said.

After receiving a request from the Ontario Public Service Employees Union, Wasylycia-Leis led a commission on the subject dubbed the Ontario Commission on Quality Public Services and Fairness.

The commission conducted public hearings across the province, including in Sudbury, in January and February, and has come up with 16 interim recommendations.

Wasylycia-Leis, a former NDP MP from Manitoba, said she hopes to come up with more specific recommendations when she releases her final report this October.
The interim report is a response, of sorts, to the austerity measures touted in the Drummond Report and the provincial budget.

She said the province's plans to cut public services and privatize others is short-sighted. Instead, she prescribes increasing taxes for high-income earners and corporations.

“Our spending as a percentage of GDP has stayed relatively stable for the last 20 years,” Wasylycia-Leis said, speaking to Northern Life after a press conference at Tom Davies Square April 12.

“As Don Drummond himself pointed out, Ontario is near the bottom of the provinces in terms of expenditures on a per capita basis, and we know that public services actually stimulate the economy at the same time.

“The issue is not how you reduce and eliminate public service jobs, the issue is how do we deal with the revenue side if we don't have the fiscal capacity to actually pay for the services we need because we've lost money through the recession and tax cuts.”

One of the recommendations suggests a two-per-cent increase in the personal income tax rate for those earning more than $500,000 per year, which would bring in more than $500 million per year.

Another recommendation suggests the corporate income tax rate be boosted back to 14 per cent, which would provide the government with $2.5 billion in additional revenue, as well as reversing the elimination of the corporate capital tax, which would provide the government with $1.8 billion in additional revenue.

When it was pointed out that these recommendations are similar to some of the NDP's provincial budget demands, Wasylycia-Leis responded by saying, “good on the NDP for arriving at that conclusion.”

“It's hard not to come to that conclusion if you listen to people and the economists,” she said. “It's staring us in the face.”

Another recommendation is that the province implement a “fairness test” in future budgets to assess the impact of key tax and spending policies on income inequality. The test would “ensure the poorest Ontarians are not hit the hardest by these choices,” the report said.

“We should all be focused on recognizing if we don't start focusing on this growing gap between the haves and the have-nots, you're going to continue to see a loss of purchasing power by middle and low-income families,” Wasylycia-Leis said.

“That has a further negative impact on government revenues, and further contributes to a deficit.”

Several other recommendations focus on the privatization of public services, suggesting that all of the major privatization initiatives over the last 10 years be reviewed, that the province develop policy mechanisms to ensure safeguards when public dollars go to corporations to deliver public services and that any privatization initiative meets certain criteria.

“This government seems to be so bent on pursuing more (privatization),” Wasylycia-Leis said.

“What we've said is at least go back and look at the dozens of privatization projects that you've embarked on, that haven't been reviewed, and do a cost-benefit analysis. Ornge is the obvious one.”

Other recommendations in the report:
- The Ontario government establish a Public Services Proclamation, which would be a declaration of Ontario's commitment to the core values that underlie public services.
- The Ontario government adopt a comprehensive plan to articulate and communicate to Ontarians the social and economic benefits of quality public services.
- The Ontario government institute public consultations about the need to reduce income inequality, the role of public services, a progressive tax system and a modern industrial strategy.
- The Ontario government should undergo public consultation, ensure adequate provincial funding, and ensure employees' benefits and entitlements before downloading any services.
- The Ontario government implement several cost-sharing reforms to reduce municipal costs.
- The Ontario government make significant new investments to protect and expand community health and social services, including those which assist people with disabilities, children's treatment and protection programs and mental health services.
- That the Ontario government and OPSEU work together to prepare a report by June 30 with “practical, forward-thinking recommendations that enhance the delivery of quality public services and programs.”
- That the Ontario government commit to ensure public assets which generate revenue remain in the public sector – eg. The Liquor Control Board of Ontario (LCBO).
The full interim report can be read by visiting publicservicesfoundation.ca.

Posted by Mark Gentili