Stoking the Flames of Separation

Updated: Oct 28, 2020

As Trudeau continues to dole out billions at his daily cottage press conferences, there are growing calls for the government to provide a fiscal update.


Trudeau has repeatedly indicated that the government is operating in a very liquid state and that providing an update simply isn't possible. "Mr. Trudeau on Tuesday told reporters any attempt to square the massively increased spending with the federal government’s bottom line would be 'an exercise in invention and imagination'" https://www.theglobeandmail.com/politics/article-trudeau-defends-continued-spending-as-pressure-mounts-to-release/.


I'd say it's time to get inventive!


So what happens when the government is unable or unwilling to do its job? As usual, the private sector begins providing ideas. This article from Trevor Tombe looks at some "out of the box" ideas for repaying the ever increasing COVID-19 debt https://www.macleans.ca/economy/economicanalysis/why-canada-might-need-a-temporary-covid-19-tax-and-repayment-fund/. While the idea of a COVID Debt Repayment Fund is intriguing, I am adamantly against raising taxes to repay government debt.


The thought of this Liberal government handling a multi-hundred billion dollar COVID debt repayment fund is downright frightening.


So why is a temporary "COVID Sales Tax or CST" a dangerous idea? Whether it was the replacement of the Income War Tax Act with the Income Tax Act https://www.canada.ca/en/revenue-agency/services/tax/individuals/educational-programs/learning-about-taxes/learning-material/module-1-understanding-taxes/history-taxes.html or the flip-flop on GST/HST over the years https://www.theglobeandmail.com/news/politics/second-reading/then-now-liberals-on-the-gst/article4303372/, it is abundantly clear, once a government becomes accustom to new tax revenues, it doesn't like to relinquish that power.


Second is the fact that the COVID-19 pandemic has hit provinces differently across this country. The result, health care transfers and various other supports are disproportionately allocated throughout the country. Provinces, such as Saskatchewan, who had a total of 660 COVID-19 cases, (as of today) are likely not going to receive the news of a 1.5% CST for the next 10+ years very well. Additionally, some of the provinces least hit by COVID-19 rely heavily on the oil and gas industry to produce tax revenue. With the Trudeau Liberals enacting Bill C-69 (pipeline ban) and Bill C-48 (tanker ban) in 2019, these provinces are at a significant disadvantage in footing their portion of any CST amounts. This will only add to the already increasing separation sentiment in the West.


So how do we go about repaying the billions that the Liberal government has accumulated in the past few months? Why not look inwards first? As of 2019, the Federal Government employed 287,978 people https://www.canada.ca/en/treasury-board-secretariat/services/innovation/human-resources-statistics/population-federal-public-service.html at a cost of $46.1 billion https://www.tbs-sct.gc.ca/ems-sgd/edb-bdd/index-eng.html#orgs/gov/gov/infograph/financial or a stagerring $160,081 per employee.


The same bloated payroll budgets can be seen in provincial governments as noted in this recent article from the Fraser Institute https://www.fraserinstitute.org/blogs/salaries-and-benefits-often-account-for-more-than-half-of-all-provincial-government-spending. One would think a similar conclusion could be reached if you looked at municipal government budgets as well.


They only true way to effectively repay the COVID debt, without raising taxes (on a population that can ill afford more) or drastically reducing front line services, is to unleash the potential of this country. This would include ending foreign oil imports, championing our energy industry, bringing manufacturing jobs back to Canada, promoting domestic tourism and reducing red tape such as inter-provincial trade barriers.


This of course would require our leaders coming together and making decisions that supported Canadians as a whole. Unfortunately, this pandemic has only exasperated existing divisions and one can only suspect that the flames of separation will only grow further as the health crisis wears off and the full impact of the economic crisis rears its ugly head.


The COVID-19 motto, "We're All in This Together" is fading fast.


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