Opinion: That’s right folks, this here ‘miracle’ tax cut will cure all of your ills, so mark your ballot and step on up! (2025)

Opinion

Of all the dirty tricks of the political trade that are played during elections, none are as cruel and misleading as tax cuts.

Desperate to make voters love them, politicians flood the campaign with promises of cuts to income tax, sales tax and boutique credits that, they claim, will transform our lives by giving us more income to spend in a more dynamic economy.

This election has been no different. In the first week, the Liberals, Conservatives and New Democrats all proposed tax cuts that would drain tens of billions of dollars from the federal treasury.

Unfortunately, tax cuts rarely, if ever, produce the results that their political champions claim they will produce.

When you hear a politician promise a tax cut, please remember these three things.

First, broad-based tax cuts are very expensive but provide very little benefit to individuals.

Second, tax cuts provide savings only to the wealthy; if you earn less money, you pay less taxes and, thus, get fewer benefits.

And last, the legacy of tax cuts promised now is weaker government services and higher deficits and debt down the road, particularly when taxes are cut in lean economic times. A new economic analysis produced for this election campaign once again reveals the ugly truth about tax cuts.

A paper published March 28 by the Canadian Centre for Policy Alternatives does a deep dive into all the tax cut and transfer pledges made by major parties in the first two weeks of the campaign. The paper captures pledges from the Liberals and Tories to cut the lowest federal income tax bracket, increases to the basic personal exemption proposed by the NDP and the removal of GST on new homes, a pledge shared by Liberals and Conservatives.

David MacDonald, the CCPA’s chief economist, calculated an average cash benefit from these pledges and found — unsurprisingly — that the Liberal and Tory tax measures provide increasingly more benefits to Canadians as their income rises.

The Conservative plan would provide an average $700 benefit to the richest 30 per cent of Canadians; the richest of all citizens would reap nearly twice that amount. The Liberal plan is structured very much the same way except that the richest 30 per cent of Canadians get $300 in average benefit.

And what of the lowest-income earners? The CCPA calculated that Canadians living below the Market Basket Rate measure, the official poverty line, would get a whopping $11 annual benefit from Liberal tax measures, while the Tories would provide $25, on average.

The NDP, on the other hand, has proposed tax measures that load up benefits for lower-income Canadians while providing much less to the highest 30 per cent of income earners. And a surtax on incomes above $129,000 would give that bracket a slightly larger tax burden. Partly as a result of that, the NDP plan would end up channelling more than $600 in added government support to those living below the poverty line.

Taking stock of all the numbers, this is what you get: billions of dollars stripped from government coffers to offer the wealthiest tax filers savings of somewhere between $6 and $13 per week.

Try not to spend all of it in one place.

Of course, none of this may be persuasive for voters who, let’s be honest, have a “what’s-in-it-for-me?” mindset.

Well, even if you don’t care about whether poor people are a bit poorer because the rich are getting richer, you might be concerned about the cumulative impacts of tax cuts on government services and the broader economy.

The CCPA found that in its first year, the NDP proposals would cost the treasury $17 billion, the Tory plan $12.2 billion and the Liberals $5.4 billion. And that’s just in its first year; the value of tax cuts goes up as population and the economy expand.

Tax-cut activists will argue that money from tax cuts will be reinvested in the economy, creating jobs and growth in GDP. Except that tax savings don’t do any of that. People who already have the means to spend don’t spend incrementally more when they get a tax cut. They just become, generally, more wealthy.

No, the biggest impact of tax cuts is on government’s ability to deliver services.

In Manitoba, for example, the former Progressive Conservative government cut taxes by more than a billion dollars at the same time as they were under-funding health care, education and transfers to municipalities. When the NDP was elected in 2023, it decided to embrace political expediency and keep most of the cuts.

The consequences of both the introduction and retention of tax cuts are profound and lasting: wait times for key health-care services continue to be intolerably long while school boards and municipalities are jacking up property taxes to deal with the dual impact of underfunding and inflation.

Tax cuts may very well be table stakes in modern electioneering. In other words, you simply cannot hope to compete to win an election without offering people some sort of tax relief.

However, when all is said and done, tax cuts are simply the way politicians try to buy your vote with money they don’t have. And that’s a pretty cruel hoax.

dan.lett@freepress.mb.ca