When a country creates most new jobs in the public sector only, and the public sector keeps growing and growing, it’s not surprising that inflation and zero (private sector) productivity kill both the economy and the well-being of every single citizen.
As public sector workers are striking across Canada for more pay, even though they—without doing any actual work—earn more and receive more generous benefits packages than anyone in the private sector, Canadians have learned some hard truths: most new jobs in recent years have been created in the public sector, while private sector employment and prosperity are declining.
This is becoming a huge problem. Even upper middle class people are feeling the pain and finding it increasingly impossible to make ends meet. As a result, the federal government keeps setting up an ever-growing array of support programs (to help with the inflation or rent). But such programs require even more public sector workers who can run the calculations and determine the Canadians eligible for the various support benefits. If you are one such recipient, think about the fact that your cheque from the government has had to pass through at least a hundred, handsomely remunerated hands. The truth of it is this: it becomes a vicious circle with the government pulling money out of people’s pockets and then returning some of it through support payments. How about leaving the money in those pockets in the first place and, thus, avoiding the need for more public employees and expensive program administration?
In a recent tweet, NDP leader Jagmeet Singh had this to say:
“I believe that if you work 40hrs a week, you shouldn’t struggle to put food on the table. Or worry about how you’ll pay for rent.”
Excellent, and he’s right. Now, let’s look at some facts.
Back in 2012, I rented a studio apartment in Toronto for $1,400 a month, hydro/electricity not included. Nor was there any building security and other amenities. I recently checked and saw that my former studio apartment now rents for $2,500 a month. Hydro/electricity is still not included. By comparison, the apartment I rent (from the same landlord) in Québec has more than twice the surface area, and everything is included, and this building has top on-site security and many other amenities. The cost? Just around $1,100 a month. Great, isn’t it? But not everyone is privileged enough to live in Québec (they are not self-employed and cannot just up sticks; they don’t speak French).
The fact is that most Canadians (in English Canada) pay astronomical rent for spaces that seem to be getting smaller and smaller with fewer and fewer amenities. Is it any wonder that there is so much homelessness?
I ran an online income tax calculator: a Canadian earning $45,000 will see his or her income reduced to around $30,000 after the shakedown by the taxman. If you live in Toronto or in Vancouver, or most other places in between these two, neither $45,000 nor $30,000 is enough to survive. So, what to do? Hire ever more public sector employees to calculate and cut support cheques? Support cheques that are not even a drop in the ocean in light of inflation and the perennially high cost of living in Canada?
No, the real solution is more drastic, but one that will ensure future prosperity for Canadians of all sizes and shapes.
Consumption taxes are more appropriate and more fair than income taxes. Any reasonable government should be able to run just fine if citizens pay nothing but consumption taxes. In Canada, however, we pay both—and that is just not sustainable.
I am fully aware that the federal government will never break free from its addiction to income taxes, but there is still a way to do it better. Before going on, I have to admit that this is not my idea exactly, but has been raised over the years by some people in the NDP as well as the Green Party: eliminate all income tax for people earning less than $100,000. This way, the Canadian mentioned before would get to keep all of his or $45,000 and would not require any support payments (for which he or she actually pays with his or her own taxes/money!).
Then, of course, there is guaranteed basic income (anywhere from $1,000 to $2,000 a month). Such a system would instantly render surplus dozens of federal support and welfare programs, which means thousands and thousands of fewer public employees. Even the Canada Pension Plan (CPP) could be shut down, thus doing away with the onerous employer/employee contributions added to the annual income tax bill.
With zero taxes on incomes under $100,000 and a system of basic income, Canada could easily become one of the most prosperous countries out there. The private sector would boom and boost Canada’s now-negative productivity rate. Everyone would be a winner. But such an approach requires honest and common-sense politicians, whom we don’t have at this time.