The (un)constitutionality of equalization payments

August 26, 2005 by · Leave a Comment 

On Friday, August 26, 2005, the Globe and Mail ran an editorial about Ontario possibly falling into “have not” status among the provinces in coming years, and the role that federal equalization payments might be playing. It concluded:

“Do the current program and other federal transfer mechanisms need reform, accountability and an accurate means of measuring their impact on all provinces? Absolutely. Should the rich provinces get back all the dollars their taxpayers send to Ottawa, thereby eliminating the so-called fiscal imbalance? Absolutely not, because that would reduce federalism to nothing more than a financial balance sheet and effectively turn the central government into a non-profit collection agency for the wealthier provinces.”

To my knowledge, Ontario has not proposed that it receive “all” of the money its taxpaying residents pay to the federal government. Ontarians and their government recognize that, as Canadians, they must contribute to exclusively federal matters like the military, for example. However, Ontario is indeed losing under the current equalization scheme, and it is losing unjustly.

In a free and democratic country, a government may spend only what the country’s constitution gives it authority to spend. Canada’s constitution gives the federal government only the authority to pay out the amounts set out in the Constitution Act, 1907, which is still in force and binding. The Constitution does not give the federal government authority to redistribute wealth via the current federal equalization payments. If the federal government wants to engage in such spending, it should be seeking a constitutional amendment.

Because the federal equalization payments are unconstitutional, Premier McGuinty is wrong to ask for federal money . However, Ontario would be in the right to demand an end to equalization payments, and a corresponding reduction in federal taxation. This it could rightly do in the name of freedom and the rule of law.

How to win the softwood lumber war

August 26, 2005 by · Leave a Comment 

National Post, Letters
August 25, 2005

Re: The Case For Surrender, Andrew Coyne, Aug. 24.

Mr. Coyne is right that Canadian provinces are subsidizing timber, and that those subsidies are bad for the economy. They also encourage environmental harm and poor forest management. He also has a clear-cut case on the wrong-headedness of domestic retaliation: imposing more taxes on goods imported from the United States would only lower the Canadian standard of living.

However, I cannot agree that Canada should simply surrender. There is another, quite peaceful, option. Canada should buy some commercial time on major U.S. media networks so that we can speak directly to hardworking, overtaxed American homebuyers.

I can see the commercial now: happy, smiling, Canadians waving their Canadian flags in front of their newly built homes. The overdub: “By overtaxing imported Canadian lumber, the U.S. government has made it more costly to build a home in the United States. But there is an upside: by paying more to build your home, you have made it possible for Canadians to build their homes at lower rates. We, the new home owners of Canada, thank you for your ongoing financial commitment to the housing of Canadians.”

It would not be long before Americans demanded the axe be taken to U.S. taxes on Canadian wood.

Paul McKeever, Oshawa, Ont.

Canadian duties on US imports: attacking Canadian consumers

August 25, 2005 by · Leave a Comment 

On August 25, 2005, the Toronto Star published an editorial saying that Canada should speak directly to the American people about the consequences of US duties on imported Canadian lumber. I agree with that part, but disagree with the Star’s suggestion that Canada threaten to “launch a painful trade war”.

US duties already impose a painful consequence for Americans: the duties force American consumers to pay a higher price for their lumber and their new homes. Were Canada to retaliate by imposing duties on imported US goods, Canadians would similarly suffer an unjust hike in their cost of living and a decrease in their standard of living. A trade war would be “painful” to Canadian consumers of US goods, first and foremost.

Our federal and provincial governments must not lose sight of the powerful fact that the Canadian lumber producer’s greatest ally is the American consumer. The appropriate response is to give American consumers an honest and true perspective: that the US lumber producers’ war on Canadian lumber is actually a scheme to loot the pocket books of American consumers.

Courting the 'burbs

August 6, 2005 by · Leave a Comment 

National Post, Letters
Saturday, August 06, 2005

Re: A City Stunt that’ll Play Well in the ‘Burbs, Adam Radwanski, Aug. 5.Contrary to Mr. Radwanski’s speculation, Stephen Harper’s promise to make drivers, cyclists and pedestrians subsidize GO Transit and Toronto Transit Commission fares will not “endear” him to those living in the 905 belt. Mr. Harper does not propose that drivers receive a similar subsidy for their gasoline, licensing fees, artificially inflated auto insurance premiums or car maintenance costs. Nor can I imagine that drivers, cyclists and pedestrians will discontinue their current mode of transportation for a chance to give Mr. Harper a peck at the GO’s Kiss ‘n’ Ride.

To make residents of Oshawa, Ont., or Flin Flon, Manitoba subsidize GO and TTC riders is not merely something that will turn off Harper’s “conservative base” — it will rightly turn off anybody who believes that it is wrong to hitch your wagon to another person’s horse. Each individual should pay the full cost of his own freight, and should choose only the method of transportation that he or she can afford.

Mr. Harper would do well to advocate the tried-and-true policy of personal responsibility: “Pay only for what you get, and get only what you pay for.” The something-for-nothingers displeased with that message have already parked their votes and their Volvos elsewhere.

Paul McKeever, Uxbridge, Ont.