​Alberta’s Looming Tax Meltdown​: Part 1 – Lessons From the NDP

With a new NDP government in Alberta moving quickly to increase taxes, and the federal NDP continuing to climb in the polls, it’s interesting to reflect on the accomplishments of the 1990 Ontario NDP government, specifically regards taxation.

Like the new incoming Alberta government, the Ontario NDP were not afraid to tax. They didn’t see a tax they didn’t love. Taxes went up on everything — especially fuel and commodities. And taxes went up for virtually everybody. This was the first Ontario government to increase taxes paid by seniors (mainly as result of cancellation of tax benefits to seniors). But it was the high earners, the success stories, the NDP really went after.

They say fairness, but it’s the winners that lose

The real story under the NDP government was the increase in marginal tax rate for high income earners.

According to Canadian Business Economics the marginal rate for those earning over $75,000 (in 1993) increased from 48.2% to 53.2%. The same report states that to offset the tax increases on a salary of $100,000 per year would have required an increase of $16,600 – 22,700! Remember, these are 1993 dollars we’re talking about.

Let’s look at some of the effects of this policy. First and foremost, the NDP started the deficit party in Ontario — that is still carrying on today. When the NDP was elected the government of Ontario, the deficit was 35.4 billion. When the NDP were finished in 1995, the deficit was 90.7 billion — almost tripled! And that was the start of the very sad tax policy that has plagued Ontario to today. Not one political party since the NDP government has had the courage to do anything but keep adding on debt in the hope that it will all miraculously disappear once the good times return.

The results, now the scorecard is in

What is the end result of governments that love to tax? One word— predictable. Since 1990 Ontario GDP has fallen. In 1990 Ontario created 42% of the Canadian Provincial GDP; now, that share is 36.73%. From 1990-2014, Ontario’s debt-to-GDP ratio grew from 13.4% to 38.9%. We have seen a near complete undermining of government to do what it should — by government itself! All of this budget inaction has led to one result: the precipice of “unsustainable deficit”. Because all three Ontario political parties cannot get over their addiction to higher and higher taxation.

Let’s go back to Canadian Business Economics report on the result of the budget of the 1990 NDP government: “Upper-income families bear the heaviest tax increases. Nevertheless, the vast majority of Ontarians, including even many low and particularly middle income earners, face substantial tax increases. The only group sheltered from the NDP tax increases is the low-income single elderly who benefit from the greater targeting of property and sales tax assistance for seniors.” Who benefitted from higher taxes? No one.

And now we are facing the prospect of an NDP federal government. A government in waiting that has already declared its intention to raise taxes. At Taggart Galt we have always advocated responsible government and fair taxation. But when governments lose control of their finances, continue to take on more and more debt over and above already outrageous taxation revenues, then it is time to do what is best for you and your family. You have a right to organize your affairs to your advantage. Now’s the time to stop thinking about it, and do it.

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