(The following article is from the November 1-15, 2009, issue of People's Voice, Canada's leading communist newspaper. Articles can be reprinted free if the source is credited. Subscription rates in Canada: $30/year, or $15 low income rate; for U.S. readers - $45 US per year; other overseas readers - $45 US or $50 CDN per year. Send to: People's Voice, c/o PV Business Manager, 133 Herkimer St., Unit 502, Hamilton, ON, L8P 2H3.)

By Liz Rowley, leader, CPC (Ontario)

In his October 22 economic update, Ontario Treasurer Dwight Duncan told us how well the Liberal government is handling the global economic crisis. Then he got to the nub of things: 205,200 jobs lost in the first 7 months of the year, an official unemployment rate projected to rise to 9.9% this winter, the continuing decline of manufacturing and secondary industry, forestry, mining, and construction. For working people, that means falling incomes, more personal bankruptcies, and a huge uptake in Ontario Works (social assistance). Seriously under-funded social programs and public services will no longer be paid from the corporate and personal income taxes which have sustained them for 60 years. Social programs will now be paid for (or not) out of revenues generated by the HST (Harmonized Sales Tax) which will be introduced in July 2010.

     Why is this happening? Because corporate profits fell 49.7% in the last year, and corporate tax revenue fell 48.1% in the same period. According to the Liberals, it's up to the public to bail out those corporate profits by cutting the Marginal Effective Tax Rate by 50% (from 32.8% to 16.2%), to make Ontario one of the lowest corporate tax jurisdictions in the industrialized world for new investment.

     How will they do it? By eliminating the Capital Tax (a tax on capital, not labour), by reducing the Corporate Income Tax (CIT) by $4.5 billion a year, and by rebating $4.5 billion in Input Tax Credits to corporations which, under the HST will pay a fraction of the sales tax they pay today. That's why corporations support the HST.

     The cut to the provincial CIT from the current 14% to a bargain basement 10%, combined with Harper's cut to the federal CIT to a new low of 15% by 2012, will result in a combined 25% CIT rate. That's lower than most corporate tax rates in the industrialized world, and 15 percent lower than the US Great Lakes states with which Ontario competes.

     Who will pay then?

     The public of course. The Liberals have cut a deal with the Harper Tories to legislate a 13% HST on all goods and services sold in the province, with a few exceptions. The HST will add another 8% to many necessities currently taxed at 5%. Like other VAT (value added) taxes levied in Europe and elsewhere, the initial rate increases over time. The 13% HST will almost certainly do the same.      It's a shell game that will see working people take on almost 100% of the tax load, while corporations see their sales tax shrink to almost nothing. To sweeten the deal, the Liberals will send three cheques worth up to $900 to each Ontario household. That shows just how important this tax shift is to Big Business.

     And that's not all.

NEW PROGRAM/SERVICE CUTS

    The update also states that "The Treasury Board/Management Board of Cabinet will conduct a rigorous strategic spending review focused on high impact areas to ensure continued relevance and effectiveness of government programs and services and the way they are funded."

     In other words, a new round of cuts is on the way, despite the fact that hospitals, health care, public and post-secondary education, transportation, housing, social services, and public services are already grossly under-funded and accumulating big (and illegal) deficits.

     Ontario's Children's Aid Societies have already gone public to say they cannot carry out their mandate to protect children without more funding. Same message from Ontario's hospital boards, school boards, municipalities, colleges and universities.

     When prodded about how the government will balance the budget and reduce the $24.7 billion deficit, Premier McGuinty again raised the possibility of "Dalton Days" - a reference to the Rae Days introduced by the NDP government in the early '90s, which forced public sector workers to take 12 unpaid days off to reduce payroll costs and the deficit.

     Dalton McGuinty, like his adopted brother Bob Rae, has no trouble contemplating wage cuts in the public sector. This may be a trial balloon to gauge reaction to another attack on the public sector in the midst of a deep recession and in the wake of the 2009 "gun to the head" negotiations in auto and in the municipal sector.

A RUNAWAY TRAIN

    The Liberals contend (like the Tories) that what's good for Business is good for Ontario. That couldn't be further from the truth. This government is actually turning off the lights, delivering a flat tax in the name of "tax reform", opening up Ontario's industry and resources to exploitation by the highest foreign and domestic bidders, and abandoning public services to be paid for by consumption taxes and subsequent privatization.

     It will take a mighty movement led by labour to stop this runaway train, which many don't yet see has come unhinged. Some responsibility for this lies with economists like Hugh Mackenzie, son of former NDP Labour Minister Bob Mackenzie, whose October 26th Toronto Star column mocks "the left" for demanding that corporations should pay the freight when it comes to the delivery of social programs and public services in Canada.  

     This is the policy advocated by the labour movement over many decades. So we have to ask: why is Mackenzie moving away from this position, and advocating the boss's line in the Toronto Star?

     The OFL Convention meets this month, and could brace the labour movement for a fight on the HST and corporate tax cuts, linking it with the struggle for good jobs, wages, pensions, and strong universal public services. These are gains that workers fought for and won, and that we must mobilize to defend now.

PROGRESSIVE TAX REFORM

    Progressive tax reform means scuttling the HST and reversing federal and provincial corporate income tax cuts. It means raising corporate taxes, introducing taxes on inheritances over $500,000, eliminating taxes on incomes under $35,000, eliminating regressive sales taxes, removing education from the property tax, and more.

     Progressive tax reform also means funding for Medicare, education, social programs, and affordable housing that Canadians want and need. It means sustainable economic development, social and cultural investments, job creation, and action to protect and restore the natural environment.

     This fight is about the future, for ourselves, our children, and our country.

     Note: The Communist Party (Ontario) is campaigning this fall to "Axe the Tax", rescind corporate tax cuts, and for progressive tax reform based on ability to pay. Call 416-469-2446 for more information.