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March 1, 2000

THE MARTIN BUDGET: ASSAULT, WITH INTENT

Miguel Figueroa
Communist Party of Canada leader

OVER THE PAST several years, Canadians have learned to dread the arrival of February, bringing another painful budget from Paul Martin and the federal Liberals.

As if the winter doldrums weren't bad enough, every year since 1994 we have suffered a steady diet of ruthless cuts to health care, unemployment insurance, post-secondary education, and pensions.

Tough medicine, they say, but necessary to cure the "deficit disease" and restore Ottawa's financial health. Have patience, because better days were just ahead.

Finally, those better days are here - or so we were repeatedly told. Six years of service cuts and the wholesale dismantling of the public sector were worth it after all. With the deficit eliminated, its coffers bulging with surpluses, the government could finally restore funding levels, lower taxes, and attend to the long-term debt - all at the same time.

So it was only natural that when Finance Minister Paul Martin rose in the House on Feb. 28 to deliver this year's budget, working people, farmers, pensioners, students, people on social assistance – all victimized by years of vicious "restraint" policies - had higher expectations than in the past.

But after their years of sacrifice in so-called "common cause" struggle to defeat the deficit, they received only crumbs, in the form of some limited increases in program spending and tax reductions.

Originally, the much-heralded tax cuts were to make up only one-third of the overall federal surplus (together with one-third to new program spending, and one-third to debt reduction). But months of drum-beating by the Business Council, the right-wing opposition and the corporate press pressured the not-unwilling Liberals to make tax cuts the central plank of the budget, comprising more than $58 billion of the $100 billion-plus in surpluses over the next five years.

Who stands to benefit most from these tax reductions? Low-income Canadians and those on social assistance benefit the least, if at all.

What about the so-called "middle-income" earners, who carry the main tax burden? The Liberals had promised that they would benefit most from tax cuts. In fact however, those earning less than $30 000 a year (more than half of all Canadian taxpayers, according to 1996 returns) will receive only a pittance in tax relief, even after all the changes kick in over the five-year period.

The biggest beneficiaries are upper-income Canadians, those earning over $65 000 a year. Not only will their basic tax rate be reduced, the 5% surtax on high incomes will also be gradually eliminated over five years.

Who is in this $65 000-plus income bracket? Revenue Canada data shows they number only 6% of all Canadian taxpayers. So much for the idea that tax cuts are primarily for the "middle class."

The richest of the rich stand to benefit even more, thanks to reductions in the capital gains tax; in 1996, more than 66% of total capital gains were reported by the top 1% of all taxpayers.

All in all, approximately 65% of the tax benefits will go to the highest-income 30% of taxpayers, and more than 42% of the benefit will go to the top 10%.

Then consider the whopping reductions in taxes paid by corporations. Corporate tax rates will plummet from 28% to 21% over the next few years, effectively falling into line with the low U.S. corporate tax regime. The so-called "level playing field" to help out cash-strapped corporations on both sides of the border can only shift the overall tax burden even further onto the backs of working people.

And what about the big banks, racking up staggering new profit records this year? The Liberals' answer: give them a tax break!

And the oil companies, gleefully gouging us with record-high gasoline prices at the pumps, and openly boasting about their windfall profits? Give them a tax break!

Once Martin's rhetoric about "putting tax dollars back into the pocket of hard-working Canadians" is stripped away, the real truth is revealed. This budget is an unprecedented assault on Canada's (somewhat) progressive tax system, and a big step towards the Tory/Reform "flat tax" proposals.

On the spending side, the one-time $2.5 billion injection into health care and post-secondary education makes a mockery of the Liberals' pretensions about defending Medicare and accessible education. In fact, it helps set the stage (with Alberta premier Ralph Klein momentarily in the lead role) for the destruction of universal healthcare, and its replacement with U.S.-style "two-tiered," privatized medicine. This budget constitutes an assault, with intent to destroy Medicare in Canada.

And how do the Liberals spell budgetary "relief" for family farmers, reeling from the deepest farm crisis in decades: "N-O-T-H-I-N-G."

The same answer goes for women and young families, long promised a universal national child care program, for students, crushed by rising tuition and buried under a mountain of debt, and for the unemployed, more than 70% of whom can no longer even access unemployment benefits.

As for "defence"… well, that's another story. Anyway, the Americans told us we had to finance that, for the "common good" of NATO.

The bottom line? Martin's budget 2000 is a monumental assault on working people, with the intent of transforming Canadian society along neoliberal, pro-corporate lines. Let no one suffer any illusions on that score!

© 2000 Communist Party of Canada