Alternatives to Austerity

For the past thirty years, our governments, in collusion with the business sector, have been trying to sell us a bill of goods about how their coffers are empty, how they must cut down the size of the state and how they cannot afford the cost of our public services anymore.

Therefore, they are obliged to cut their expenditures in order to balance the budget and to eliminate the deficit. In other words, their hands are tied.

However, what they are not telling us is that we have alternatives to their measures of austerity, which have been discredited by the major economists around the world, notably by Joseph Stiglitz, economist and Nobel Prize winner, who warns against such cuts, which do nothing but aggravate the economic situation and lead to recession.

It’s hard to believe that after the Second World War, companies and banks were paying the bulk of the taxes at 56%.

Throughout the years, successive governments have cut down the tax rate until now, companies, financial institutions and banks are only paying 15% at the federal level and 12% at the provincial level.

However, because they have umpteen tax loopholes, tax credits and tax havens, they end up paying a pittance of 4%,that is if they pay at all. Consult the book by Brigitte Alepin, economist & Harvard graduate: «Ces riches qui ne paient pas d’impôts»

Consequently, the role of taxes in the distribution of wealth has failed miserably. Salaries have been stagnating and inequalities have been rising for the past 30 years, while profits for the one per cent have been soaring.

Twenty years ago, salaries of the top brackets were only 10% higher than the average salary. Today, this gap is ten times higher.

Even the experts of the IMF and the OECD were obliged to admit that austerity measures don’t work; worse still, they contribute to increase inequalities and a loss of jobs.

On the contrary, pundits urge governments to stimulate the economy by increasing expenditures on social programmes and by increasing the taxes on the highest 10% of profit earners.

Here are some alternatives to cuts in social programmes: Don’t believe governments when they tell you: We have no other alternatives to austerity:

1. Before 1988, there were 16 levels of progressive tax brackets for individuals. Today, these brackets were reduced to 4. By increasing the tax brackets to 12, we can increase our revenues by 10 billion dollars.

2. We are the only country among the OECD with a public health care system but with no public system for medication. Here, in Québec, we pay 30 % more for our drugs. In negotiating better prices with pharmaceutical companies, as Australia, New Zealand and other countries have done, we can save another billion dollars.

3. Quebec is the most generous province in its fiscal favours to companies and banks. We dole out a whopping 960 million dollars in subsidies to the multinationals and the rich, who are already making record profits. In Ontario subsidies to companies cost every citizen $165.00 yearly, whereas in Québec, the cost per citizen is $776.00. We could save 1720 billion dollars by cutting these favours to businesses.

4. The biggest hoax of the 20th century is that in relieving the tax burden of companies, they will miraculously create jobs. The example of Bombardier, which has benefited from the largest of subsidies and is now outsourcing its projects to India, disproves this idea. Even Mark Carney, previous governor of the Bank of Canada was scandalized by the 620 billion dollars, on which companies are sitting, without investing a cent to stimulate the economy or to improve their infrastructure. Why would any company go through the trouble of creating goods, when they can make more money speculating on the casino we call, the stock market?!!

5. It is a well-known fact that the majority of banks and financial institutions do not pay a cent in taxes. We could be saving billions of dollars, if we were to re-establish the tax on Capital gains and reduce the tax loopholes for the richest one per cent.

6. Public Private Partnerships (PPP) lead to collusion and corruption as evidenced by the Charboneau Commission and the sad example of the CHUM hospitals. Business people think that the public purse is a well without a bottom, from which they can withdraw money to their hearts’ content. Quebec tax payers dish out 30% more for their infrastructure than any other province. We can save at least 11.3 billion dollars, if we were to undertake our own projects, as we used to before partnerships became fashionable.

7. According to OECD calculations, Quebec is losing the exorbitant amount of 8 billion dollars, every year, in tax evasion, an amount that exceeds our supposed collective debt. We could save billions by recuperating these amounts hidden in tax havens.

Tell M. Martin Coiteux, minister in charge of administration and of cutting social programmes, that we have the means to do better.

Tell him that it is his neoliberal ideology that is preventing him from implementing alternatives to austerity.

Tell him that cutting necessary services to the poor, the vulnerable and the needy, is not courageous but rather cowardly.

Tell this government that with a vote of 40% in the last elections, they have no right to pillage our public services.

Sources of solutions: Coalition oppose à la tarification et à la privatisation des services publics.


This article originally appeared in Volume 35, Issue 15, published December 2, 2014.