Top of the list was deficit reduction. Here are the remarks of Prime Minister Stephen Harper at the closing of the Summit.
We arrived here amid growing concerns over the growth of sovereign debt. As we strive to build strong, sustainable and balanced economies, that is the issue we have had to tackle head-on, and we have arrived at firm targets for advanced economies on debt reduction and reducing debt-GDP ratios. The targets are a 50 per cent deficit reduction by 2013 and a debt-to-GDP ratio that should be at least stabilized or on a downward trend by 2016.
You may remember the last time Canada engaged in deficit reduction. Coming out of the 1990s recession, the federal and provincial governments cut back dramatically in health, education and social spending to eliminate deficits. In Ontario, the deep cuts to social assistance rates have still not been restored -- this despite persistent advocacy to raise the rates.
The call for a new round of deficit reduction coming out of the G20 summit raises real concerns about whether Canada and provinces like Ontario have the will to eradicate poverty, or whether people living in or near poverty will once again be sacrificed to deficit reduction.
Slashing program spending does not have to be the path Canada chooses for the future. Consider the advice of David Dodge, former Governor of the Bank of Canada and architect of then-Finance Minister Paul Martin's deficit cutting budgets which gutted social spending. In an opinion piece published by Bloomberg News, Dodge contends that Canada does indeed have a structural deficit -- one that won't go away through economic growth. He does not rule out spending cuts, although he acknowledges that it would entail "a significant reduction in services" and that the "quality of education, and investment in roads and public transit also would decline." Dodge concludes that restoring Canada's fiscal balance ultimately requires raising more revenue.
After deficits were eliminated in the 1990s, tax cuts became the order of the day. Bruce Campbell, from the Canadian Centre for Policy Alternatives, says that the OECD has tallied the cost of Canada's tax cuts between 1995 and 2005.
The OECD estimates that between 1995 and 2005 tax cuts reduced Canadian government revenue capacity by $50 billion per year.
Add to that another $34 billion in lost revenue annually as a result of the Harper Government's tax cuts. Compare that to the Canada's 2009-10 federal deficit of $53.8 billion and you can understand why people like David Dodge are now arguing that raising more revenue has to be how we cut the deficit.
Dodge prefers consumption taxes, for example restoring the 2% cut to the GST, with refundable credits for low and modest income households. He also favours user fees for public programs like health care and post-secondary education.
There are other options for raising public revenue. Campbell points out the need to reverse corporate tax cuts and make Canada's personal income tax system more fair.
The first step is to make Corporate Canada part of the solution, instead of being part of the problem. It starts with reversing broad based cuts to Canada’s corporate income tax system. These cuts do nothing for corporations whose profits have been obliterated by the economic crisis. They benefit profitable companies, notably banks and oil companies, which are more likely to build up cash balances, take over other companies or buy back their own shares instead of making real job-creating investments.
The second step is to bring fairness back into Canada’s personal income tax system, beginning with a new higher tax rate for those with incomes over $250,000 a year.
Fighting deficits cannot be an excuse for another round of cuts to Canada's public services. If we are going to achieve a poverty-free Ontario in a poverty-free Canada, we need to let our federal and provincial legislators know how important taxes are for providing the kind of services and supports that make our nation more vibrant and more just; that we are willing to contribute to the common good by paying taxes; and that we expect the tax system to be fair -- with those who have more, contributing proportionately more.