OPINION — Waiting for the tax cuts

Anyone who has ever been in the military has heard the expression, “Hurry up and wait.”

Although it won’t admit it, the Ontario administration of Bob Rae is telling residents the same thing.

Through its new tax-and-spend plans, it wants to “hurry up with tax increases,” taking rates to the highest level in the history of this province. As for spending cuts which are supposed to offset the taxes and rescue the projected $17-billion deficit for 1993-94, well, they will just have to wait . . . and wait . . . and wait.

Much of the so-called deficit reduction through spending cuts isn’t scheduled to take place for several years. In fact, there will be no evidence until after the next provincial election.

It is another New Democratic Party example of paying for the poke today but not finding out until tomorrow whether the pig is in it.

Take it from someone who has been both a participant in and an observer of the political process for more than 40 years: Parties in power can not be trusted.

Words such as “assurances,” “pledges” and “commitments” lose their meaning in the political context.

Spending cuts have a way of disappearing, but the tax increases slapped on working people come budget day are real and permanent.

The presentation by Ontario Finance Minister Floyd Laughren in May promised an equal measure of spending cuts and tax increases. We got hit by the taxes immediately, or by Jan. 1, 1994, but the spending cuts are like that proverbial cheque that’s “in the mail.”

What Laughren forgot in his mixture of real tax hikes and illusionary spending cuts is a key ingredient: economic growth.

Such growth is created by people who produce things. The more that is produced to meet increasing demand, the more new jobs and services are in turn created. Other than short-term, make-work projects, government does not create jobs; the private sector does.

What the three NDP provincial governments have reminded us of is the ancient truth that government has the power to destroy jobs, something they have been doing with considerable efficiency — especially that of Ontario. How does the private sector create jobs? It invests in new plants and equipment and conducts research and development to bring new products to the marketplace.

And how does the private sector do all this? It does so by having enough corporate profits to reinvest and enough incentives to make such expenditures desirable.

Ontario’s 1993 budget was like the NDP’s first two budgets — loaded with inhibitors to growth (the opposite to incentives). Three examples: higher personal income tax rates, 61% of federal tax until Dec. 31 to make up for the first part of the year, and then 58% in 1994; extension of the 8% retail sales tax to most insurance premiums; and the proposed corporate minimum tax. What the NDP has been camouflaging with its class warfare rhetoric is that business, especially small business, historically is the greatest source of job creation. Basic economic behavior is not complicated. If you give people a reason to invest — that is, a profit they can keep — they’ll do it. If you put obstacles in their way, they will either work around them or sit tight until such obstacles are removed. Or, as is happening in Ontario, they send their money elsewhere.

Working people reach a point, as we have today in Ontario, where it doesn’t make economic sense to work a little harder or invest a little more of their money, because the resulting income is only lost to higher taxes. Government is supposed to act with tax dollars in a big way, in the wise and prudent manner of an individual spending directly from his purse. The Ontario government hasn’t been doing that. Its actions since its tax-and-illusion budget in May prove it doesn’t understand elementary economics . . . and is incapable of learning.

— The writer, a native of northern Ontario and a prospector, resides in Timmins, Ont.