By Cole Parkinson
With the federal budget out for all to see, discussions have continued about the state of Canadian economics, as the pandemic continues.
On May 25, Bow River MP Martin Shields rose and gave a lengthy statement on the Budget Implementation Act.
“Governments have historically had three sources of revenue: tax, borrow or print money. This process has been around for governments for a long time. The Egyptians, 3,000 years ago, had an extensive twice-yearly collection of grains they could then distribute in less productive times, for government workers or lesser classes. The Incas had a similar system in the Americas,” said Shields. “Over time, forms of governments that have been ruling have taxed those they are in control of with some form of payment, be it commodity, currency or even servitude. The ruling authority would decide on the use of the collected tax. In my family history, going back to Scotland in 1207, there was a tax collector. He is part of my family history. The collection of taxes has been going on for thousands of years.”
Shields continued looking back at taxes in years past in Canada.
“When it comes to taxes, people can pay, resist or be non-compliant. Penalties for non-compliance varied over time. Many of us remember the Boston Tea Party and how the American colonies resisted paying taxes. Since 1867, in Canada, taxes have been based on trade. It was a trade-based type of tax. In 1916, there was a corporate tax. There was a world activity going on called (the Second World War). In 1917, there was a temporary Income Tax War Act, combining corporate and a new individual tax to be reviewed after the war, after (the First World War),” he said. “After (the Second World War), in 1948, the temporary act was replaced by the Income Tax Act, the basis for what we have today, which should be totally thrown out and redone, as it has only been tinkered with for the last 60 or 70 years.”
With the newest federal budget projecting a deficit to sit over $350 billion this year, Shields touched on how many Canadians were wondering where their tax dollars went and how the spending would benefit them.
“Different levels of government in Canada have taxation. The federal and provincial governments can rack up debt, but municipalities cannot. We have huge debt in both federal and provincial governments, but the municipalities have figured out how to do it without creating that long-term debt,” he said. “Over two calendar years, we have had an economic snapshot, a fall economic update, but no budget. Finally, Canadians will be able to understand, maybe, for themselves what their tax dollars will pay for.”
“There are 724 pages jammed with (federal government) promises, promises that will add to the federal debt of more than $1.2 trillion. It is a great tactic to make certain Canadians never read it; it is so long and complicated.”
Shields also took aim at Prime Minister Justin Trudeau.
“In fact, we heard before the current prime minister added more debt than all the other prime ministers before him combined. That is quite an infamous accomplishment. I have listened to Liberals extolling accomplishments, and it almost sounds like they are making acceptance speeches for an Oscar. It may not be the award many of my constituents would like to give them for this budget, one with $100 billion, not million, unaccounted for. However, what is a few billion between friends,” he continued. ‘This is taxpayer money. I often hear the prime minister say, ‘We will take this debt on our shoulders.’ It is the taxpayer money and taxpayer debt, and it is their children and their grandchildren’s debt. Is it printed money by the billions on a weekly basis on which the government has depended. This modern monetary theory is interesting: print all the money it wants and do not worry about the debt. That does not work at the municipal government level or at the personal level, so how can it work at the federal level.”
Shields also touched on the inflation issue that affected Germany in the 1920s.
The hyper-inflation in Germany during that period saw the government printing more and more money in order to pay striking workers.
“Many of us have heard the stories of Germany in the 1920s. There was hyper-inflation, spending rapidly as the value dropped. A wheelbarrow full of money could buy a loaf of bread one day, but not the next day. The Great Depression brought stock market paper with no value. More recently, there was the 2008 bank depression. Greece, Venezuela and other countries just printed bigger numbers on their bills and there was still no value,” said Shields. “What is the (federal) government doing with this budget? If the government continues this trajectory, by 2026 Canada will have spent $39 billion on debt interest payments alone. That is more than child care at $8.3 billion, more than EI benefits at $25.6 billion and more than the Canada child benefit at $27 billion, all of which are programs in this budget.”
“We must look introspectively and ask ourselves where this money is coming from. It is being generated as numbers on a screen and then printed on expensive paper, or plastic bills these days, which is another resource sector product. The government will be printing more money than it earns from Canadian taxpayers. Is this a recipe for disaster? I know what my constituents think, and it is not a pretty picture.”
Shields once again asked what the federal government was promising Canadians.
“What is the government promising for Canadians? I have heard about many government programs, but what drives the economy despite this incredible spending on government programs and increase of government employees? Does the private sector not build the economy by producing services and products of value? It employs people to do this. The companies and the employees then pay taxes that support the needs of society,” he stated. “Do government programs build the economy based on printed money? This has not worked in other countries or historically. Each person in Canada now owes an average of $33,000 in federal debt. Does the (federal) government want people to depend on it instead of gainful employment? I would hope not, but does this budget do that?”
“Canadians and future generations will be saddled with the burden of the government doubling the national debt, and for what? I cannot wait for members to ask me about government programs. What about the $100 billion recovery line in the budget? Is that more government jobs?”
With the Bow River riding on his mind, he gave the House a snapshot of how his constituents were feeling after the latest budget.
“I speak with my constituents in mind. They are hard-working, no-nonsense, results-driven people. Do they want a budget with handouts? No, they do not. We have incredibly intelligent, innovative, hard-working people in my constituency and across this great country who are willing to invest in businesses and hire productive people to produce services or products that are valued. Is the government interested in doing that with this budget? My constituents question that. If the government was as focused on getting Canadians back to work as it is on marketing and slogans, my constituents would be better off,” he explained. “In this House, parliamentarians must follow certain standards of House procedure and conduct. It would be impossible for me to accurately convey the feelings my constituents have, using the words they have spoken to me. I would be subject to reprimand and would certainly be compelled to retract my comments.”
As the deficit continues to grow, Shields expressed concern about how that will affect further generations.
“The spending promises are at an all-time high and there is no plan to balance the budget in the future. Generations of Canadians will be paying for the (federal) government’s promises. The snowball effect of this pandemic on every sector of the economy, on every moment of our lives going forward will not be easily forgotten. I remember the 20 per cent interest rates on my mortgage, and that was a response to inflation in the 1970s. Can members imagine what that would do to my constituents’ mortgages today?” he asked.
“Canada’s future does not rest in a slogan, a campaign or even a single political party, but in the determination of our people to work, to innovate and to flourish.”
After a question from Martin Champoux, Bloc MP for Drummond, QC around investing in renewable energy, Shields answered by stating he was excited about those opportunities sprouting up in Alberta.
“We look for things for the future, things for our environment, things for our workforce, things for energy and what we can do. In the province of Alberta, I have seen some of the most phenomenal innovative projects to do with different forms of energy. There are fantastic ideas coming out of Alberta, coming out of the resource sector, for how they can develop and work with new technologies and do this, but I do not see that in the (federal) budget,” answered Shields. Heather McPherson, NDP MP for Edmonton-Strathcona also asked about Shields’ opinion about wage subsidies being used for employers “who are not negotiating in good faith with their workers?”
“Of course, we have to have accountability, and one of the things we have lacked through the spending programs, through these programs that have been running out, is accountability. We need accountability for those tax dollars spent, and that has been lacking. In the (federal) budget, going forward, when they talk about $100 billion unaccounted for and what they might spend it on, that is the lack of accountability we have with the current government,” replied Shields.