One of the more commonly used terms in Canadian federal political discussions is the “Ottawa bubble” that can have a variety of different meanings, but typically is used to describe the culture on Parliament Hill that is often very different from what exists in many Canadian communities.
From my own perspective there are two aspects of the Ottawa bubble that I find most discomforting. One is the frequent trend to suggest that the views of everyday Canadians are irrelevant and only the views from interest groups and other highly partisan organizations are deserving of consideration in debate. As an example, frequently I find issues that are reported as being widely opposed in Ottawa are in fact strongly support by citizens in Okanagan-Coquihalla. The other ongoing concern I have relative to discussion on Parliament Hill pertains to how your tax dollars are viewed in Ottawa, compared to in Okanagan Coquihalla.
To be clear, as taxpayers it is your money taken or otherwise paid to Ottawa from your wages, combined with various taxes and other user fees you pay that keep Ottawa running. The same applies to Victoria at the provincial level and also with your local municipality or regional district with property taxes. One thing all taxes have in common is that you pay them and the higher the amount of tax the more you will pay, the less money you will have remaining to provide for your own household expenses, savings or enjoyment. Conversely when taxes are cut, you will pay less and some of the money saved from taxes can be spent or saved in whatever manner best meets your personal needs.
I raise this point because in Ottawa, whenever our Government announces tax cuts you will seldom see the paying of less tax is reported as a savings for taxpayers. It is frequently, as was the case recently, reported as being a cost. From the perspective of many in Ottawa who depend upon your tax dollars for operating revenues, less taxes (that create savings to taxpayers) is a cost to them. It could mean fewer staff, less increases in wages or benefits, even the elimination of a program or possibly not the expansion or creation of another. For this reason the idea of citizens paying less in taxes tends to be looked down upon in Ottawa by those who earn a living from the payment of your taxes. Last year The Parliamentary Budget Officer released a report on Federal tax changes that received little attention however the report contained some interesting information.
Federal income tax cuts announced by our government have resulted in accumulated savings to Canadians of $17 billion over the past decade. Likewise the cut to the GST rate has resulted in accumulated savings of $13 billion over a similar time frame. The same report also found that these tax cuts most benefitted “low-middle income earners (households earning between $12,200 and $23,300), effectively resulting in a 4% increase in after-tax income”. Even the lowest income earners in Canada who do not pay some taxes were found to have realized an after-tax gain of 2.2%. Surprisingly the top 10% of income earners realized a net after-tax gain of just 1.4%. These findings are in stark contrast to the narrative that tax cuts only help the wealthy and penalize the poor. In reality this report concludes that tax cuts over the past decade have resulted in higher after tax net income for all Canadians. This is also consistently why the overwhelming majority of citizens I hear from in Okanagan-Coquihalla support tax cuts and do not favour higher taxes.
I mention these things because last week another report from the Parliamentary Budget Officer concluded that the recently announced family tax cut by our Government will, and I quote directly “will have a net fiscal impact of $2.2 billion in 2015”. The Ottawa Bubble was quick to report this as a $2.2 billion cost to Ottawa, however for Canadian families that is $2.2 billion in tax savings that stays in your household budget and will not be spent in the Ottawa bureaucracy. While some oppose tax cuts and believe citizens should pay more in taxes—whether it be pension income splitting for seniors or income splitting for families, it is my view that all Governments must continue to strive for efficiencies and keep taxation levels affordable for all of its citizens.