No internet tax for Canadian media

I agree with Conservatives who reject an internet tax to support Canadian media but for different reasons.

    Heritage Minister Melanie Joly. Image: Huffington Post

Conservatives reject taxes do so because they reject government intervention in what they see as a commercial enterprise. If media corporations can’t stand on their own without support from taxpayers, then they should fall.

But media are not only an enterprise; they are reflection of who we are and necessary for an informed citizenry. The goal of all legitimate media is to report unfiltered news and if my taxes go towards achieving that end, then it’s money well spent.

Use of an internet tax to support Canadian media is controversial. Politicians who are normally on opposite sides of the issue agree on this one. Two lobby groups that I support are on opposite sides. The Friends of Canadian Broadcasting supports the internet tax. Open Media rejects it.

A parliamentary committee recently recommended the internet tax, which Prime Minster Trudeau promptly rejected. The recommendations weren’t even unanimously supported among committee members. Predictably, Conservatives rejected the tax and some Liberals supported it. Prime Minister Trudeau sided with the Conservatives (again, for different reasons).

Before decided which side you’re on, it’s useful to know what it is. It’s a tax on streaming content over the internet as opposed to a tax on cable or satellite content, or over-the-air broadcasting.

What it’s called is determined by which side you’re on. Opponents call it a Netflix tax. “Applying the 5-per-cent levy to broadband distribution, that’s a Netflix tax,” said Conservative committee member Peter Van Loan. “Efforts to turn back the clock to an earlier era are doomed to failure.”

Prof. Michael Geist agrees with Van Loan but doesn’t find it necessary to call it a Netflix tax. It’s an internet tax because it applies to all internet content and as such, it’s a bad idea. Geist, a law professor and Canada Research Chair in Internet and E-commerce Law, sees the internet as more than a source Canadian content:

“A taxation system such as the one used for cable and satellite companies is highly inappropriate given the Internet’s importance for communication, electronic commerce, Web banking, education and tele-health. Given its integral role in virtually every aspect of modern life, it is wrong to treat network access as little more than an ATM for the cultural sector.”

Geist points also points out that such a tax is inconsistent with the Broadcasting Act because internet providers are not “broadcast undertakings” under the act.

Trudeau took the line that he was protecting the middle class: “We’re not going to be raising taxes on the middle class through an Internet broadband tax. That is not an idea we are taking on.”

Canadian media deserves support. Open Media suggests that the proceeds from the sale of cell phone wireless spectrum could go to Canadian content. Tax revenue should be used to support public and private broadcasters as suggested by Friends of Canadian Broadcasting. Small market broadcasters like CFJC in Kamloops should continue to receive funding from the CRTC.

Canadians pay one of the highest internet rates in the world. The best way to support Canadian media is to ensure that Canadians have an affordable, high speed internet where innovators can create content.

Stop calling royalties a tax

In raising royalties, Rachel Notley’s NDP government is simply returning Alberta to its roots. Former premier Peter Lougheed urged a sensible development of the tar sands and fair royalties. After flying over the tar sands in 2006, he remarked:

Bust

“I was just up there on a trip, just helicoptering around, and it is just a moonscape. It is wrong in my judgment, a major wrong, and I keep trying to see who the beneficiaries are. It is not the people of the province, because they are not getting the royalty return that they should be getting.”

Corporations like to confuse royalties and taxes because they would rather not pay anything to government, regardless of merit or ownership. Royalties are “rents” says Gordon Laxter, economist and founder of the Parkland Institute of the University of Alberta.

“Many think of royalties as taxes. Any government fee must be a tax. Wrong. Private woodlot owners and musicians collect royalties. No one calls them taxes. When governments collect royalties they aren’t taxes either. Royalties are one way to capture economic rents. Leases, ecological charges and corporate taxes are other ways. Government ownership of resource companies is the only way to collect all the rents,” he says in the Monitor magazine.

By rents, Laxter means the profit from a piece of land or real estate. A tax is not that, it’s a levy on income. Royalties are rents, compensation for the use of public land.

When Lougheed flew over the tar sands moonscape, he was being rhetorical when wondering who the beneficiaries were. As former premier, he knew that the beneficiaries were Big Oil and not primarily those who owned the land.

Despite Lougheed’s pleading for Albertan’s to “think like an owner,” successive Alberta governments fell sway to the push from Big Oil who threatened to leave Alberta if royalties were increased. It was an idle threat, of course. Other governments, like Norway’s, impose higher royalties and Big Oil still continues to profit.

Western provinces tend to think small when it comes to their economies.  Like a young adult, no longer a teenager, provinces fail to think in grown-up ways. Western provinces have trouble seeing beyond living their parent’s basement and working at the equivalent of a fast-food restaurant – quick and easy natural resource extraction.

Mel Watkins, one of Canada’s foremost political economists, foresaw adult economies in his 1963 “staple theory of economic growth.” Simply put, his three pronged maturation involved the export of resources only after they had been processed; then on to the production of finished products instead of importing them; and finally, mature economies which become self-supporting and not dependent on resource extraction.

It hasn’t dawned on Western Canadians that we are there, at the third stage. We have cities with populations over a million; we are large enough to be self-supporting. Unfortunately, the quick-and-easy resource extraction mentality is hard to shake. B.C. Premier Clark imagines our future as the exportation of LNG and has lowered rents to please investors.

The reality is that B.C. and Alberta have the population, the talent and ingenuity to complete the last prong of Watkins’ vision. We need to think like grown-ups.

 

Road to prosperity isn’t paved with reduced wages, labour unrest.

Maybe it’s a clever political manoeuvre.  In a recent newsletter sent to all households in B.C., the provincial Liberals suggest how they would reform government using Ireland and New Zealand as models —  countries who have shown “how we can save tax dollars by making the delivery of government services more efficient and effective.”

tripartite

The idea of reducing taxes through efficient government strikes special resonance in B.C., but that alone was not the key to the phenomenal economic growth in Ireland.  One key decision was to make all education free — no tuition fees for colleges and universities.  B.C. already has frozen tuition fees, and has one of the lowest costs for education in Canada, but it’s not free.  Do the Liberals propose to lower tuition fees further, or even make education free?

Another part of Ireland’s success is the tripartite agreement reached between government, business and labour.  The resulting labour peace and coordinated industrial strategy focusses the  Irish towards a common goal.  A government that is openly hostile to labour, as in Ontario, is a recipe for reduced productivity.  Will the Liberals establish a good  relationship with unions, as well as business?

Irish artists pay no tax.  The spin-off generated by recording groups, for example,  has increased economic activity in the recording industry.  Nelson Riis, MP, has proposed a private member’s bill that make income generated by artists, up to $30,000, tax free.  The bill has received all party support in Canada’s parliament.

Ireland’s government is now considering a “basic income” scheme in which all citizens receive an annual income, regardless of whether they are working or not.  An guaranteed universal annual income could eliminate welfare payments and provide relief for many workers (usually women) who leave  well paying jobs to care for children or elderly parents.

If the Liberals plan to implement some the Irish solutions, it could be a  clever political manoeuvre to steal the thunder of the NDP.  It has worked for the federal Liberals.  They silenced right-wing critics by implementing the policies of the Reform party. Canadians watched numbly as the feds implemented drastic cuts to health, education and welfare.  If Reform had done the same, there would have been a revolt in the land.  One way to silence political opposition is institute their policies.

Tax saving can have a disastrous effect when it is an ingredient in a different political recipe.  Just look at what happened in New Zealand.  They  swallowed the right-wing concoction whole.  Taxes were cut to the rich on the pretense of creating jobs.  Spending to education and social services were cut, as well as subsidies to farmers .  Public utilities were sold off.

The result was an increase in unemployment and despair in the countries youth.  Teen prostitution increased 800 per cent and 11,000 citizens left the country last year.  Urban crime has become a major problem.  Capital took flight as the rich took their tax cuts and invested their wealth in safer economies elsewhere.  Power outages occur in the private utilities that were unheard of in the public utility.

New Zealanders tossed out the right-wing radical government last December but repair to the damage caused will be a long time coming, and they will probably never get their utilities back.  The new prime minister, Helen Clark, has some advice to others who want to try the New Zealand experiment, “Don’t try it.  It won’t work.”

Tax reductions may be useful as part of an overall strategy of government.  But tax reductions alone, while popular, only benefit the rich.  And the Irish solution involved cooperation —  businesses  limited profits in return for a 10 per cent reduction in corporate taxes. This makes taxes only slightly less than Canada’s.  Personal taxes are approximately the same.

Do the Liberals plan to make government more efficient by reducing union jobs and weakening the labour code? If they plan is to go to war with union workers, as Alberta and Ontario have done, the result will be disastrous.  The road to prosperity in B.C. isn’t paved with reduced wages and labour unrest.

Slide in wages , not taxes, to blame for plight of middle class

If these are the good times, I don’t want to know the bad.  Somebody is making a lot of money, but it isn’t middle class Canadians.   Stock markets are soaring, economic indicators are up, but it’s the rich who are getting obscenely rich.

The-Shrinking-Middle-Class-440x330

Middle class Canadians are  working harder, but even with two wage earners in a family they are sinking deeper into debt.  Household debt soared alarmingly by 14 percent in the last decade, according to the Vanier Institute of the Family. Canadians vainly try to maintain a life style they once enjoyed as children when their parents were relatively well off.  They dream of a life of conspicuous consumption that they see  on American television, a life now beyond the grasp of most Canadians and Americans.

The incomes of middle class Canadians are slipping away. Family incomes dropped 6 per cent from 1989 to 1998.  This was a time in which things were supposed to be getting better — the recession of the early 1990s was over.

But try as they might, middle class Canadians are becoming  sucked towards either the extreme pole of poverty, or for a very few at the opposite end, riches.  As they struggle to live the dream, preparation for retirement is sacrificed.  Savings dropped from 10 to 1.5 per cent of after tax income.  Their lost standard of living aches like a phantom limb, a way of life permanently severed. They want answers to the aching loss in their standard of living.

An easy target of their grief is taxes — a cure promoted by the rich, who have the most to gain by tax cuts.  But taxes actually fell slightly in the 1990s, says the Vanier Institute (measured constant dollars). The Tax Revolt should be an Income Revolt, but many Canadians have bought into the mythical benefits of lower taxes.  The billions of dollars of tax reduction announced in the recent federal budget will only amount to a few hundred dollars per person, annually.

No, taxes are not the culprit in the drift towards the bottom . The main reason for the loss in standard of living is a drop in wages, which fell relative to inflation.  Unions participated in the national cause of debt reduction though lower wage demands.  Minimum wages dropped in constant dollar values.  There was a shift from permanent, well paying jobs to part time and  short-contract jobs, and a resulting loss in benefits.  More health care paid out of the employee’s pocket.

Taxes are way of keeping the poles from widening. The plight of low income families has worsened as a result of reduced transfer payments to the provinces from the federal government.  Now that we have a budgetary surplus, more money should be provided in the form of unemployment insurance, universal day care, and other transfers to low income Canadians.

As the middle class slipped into the ranks of the working poor, the poor slipped into the ranks of the destitute homeless.  This was especially true in large cities, according to the Canadian Council on Social Development.  Poverty jumped by the greatest amount in Canada’s largest cities: Montreal, Vancouver and Toronto.

The faces of the poor are easily recognized.  The greatest numbers are single mothers, followed closely by recent immigrants,  urban aboriginals, elderly women, and children.  I would have thought that in a country that loves children, Canadians would gladly pay taxes that goes to see them decently clothed, fed and sheltered.

The urban poor are soon to be joined, I suspect, by farmers abandoned by an uncaring government who is not concerned at all to see them plowed under by global free trade.  Other countries are prepared to subsidize a rural life, but the prime minister’s classic shrug seems to say, “let them eat dirt”.

If you can’t find a compelling social or moral reason why tax dollars should help the poor, think of it in practical terms.   As poor Canadians resort to crime, the cost of policing, the court systems and incarceration increases.  Think about the lost productivity of those millions of people who are not doing useful work that could benefit themselves and society as a whole.

The good times roll, it seems, to the beat of a funeral dirge.