From: dmccrea6@mach1.wlu.ca (doug mccready F)
Subject: Re: Deficit, Deficit, who's got the Deficit? was: NDP "communism?"
Organization: Wilfrid Laurier University
Date: Mon, 25 Jan 1993 11:14:25 GMT

>No one seems to have brought up the point that a special cap on transfer
>payments to the richer provinces (BC, Alberta, Ontario) was put in place
>several years ago.  While all provinces have been affected by the reduction
>in Federal transfer payments, Ontario has been especially hard hit.  The
>recession has been very severe in Ontario and were it not for the special
>cap, Ontario would be receiving billions of dollars in extra payments
>from the Federal government.  In general, the Federal government appears
>to be totally indifferent to the permanent loss of hundreds of thousands
>of jobs in Ontario's manufacturing sector.
>
>I agree that the Federal government had to cut back on transfer payments to
>the provinces, however the distribution of whatever money is available
>should be based on current realities and not on an outdated concept of
>which provinces are rich and which provinces are poor.
>

It seems to me that Ontario had the ability to reduce the impact of the
recession if it had made investment attractive. As firms find it less than
attrative to invest, they will move out or close up shop and that makes the
recession hard on workers. I am not a worker who has been affected by the
closing of plants and all three of my sons have continued to get part-time
jobs throughout this period in Ontario but because my taxes keep going up I
am considering leaving Ontario too. Why would I stay when I could ply my
trade in Alberta or elsewhere for the same salary and much lower taxes. I am
looking and Rae could stop me - if only he would adjust to reality.

>I don't particularily like Bob Rae and his policies, but this is one 
>case where his comments are right on target.

Well, I have just explained where his comments are wrong. Sorry, the federal
government has a formula based on tax revenues for equlaization grants - it
has a formula for EPF and they have not changed the formula. The formula
works to hepl poorer provinces but Ontario still does not qualify. There is
sympathy and the numbers aren't fixed in stone - the formula is. Therefore,
you are wrong and RAe cannot be supported.
 
The formula for equalization is based on the tax collections of 29 revenue
sources (see my textbook for the 29 taxes) and measures it against the
potential revenues if the base was average to determine what the payment
will be - Ontario does not qualify.

Rae wants a change in the formula - a formula which has been undergoing
minor adjustments since 1966 as the tax bases were expanded to be even
fairer but then the question becomes - should the federal government take
over all financing in Canada? If so we had better wipe out the expense of
having provincial governments ( that would save a bundle of tax dollars and
in Ontario a whole bunch of silly scandals).

>
>
>
>-- 
>John Stewart -- Computing and Communications Services, Carleton University
>Internet: jstewart@ccs.carleton.ca or Mr.Canoehead@algonquin.carleton.ca  
>"The average middle income family with two parents and children pays $2,945
>more in Federal taxes than they would have under the tax policies in place
>before the Tories first came to power in 1984."


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