Light passes one way through political glass

Posted on June 28, 2007
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There has been quite a lot of fuss lately from Newfoundland and Nova Scotia about federal government treatment of oil royalties and federal transfer payments.

In a nutshell, the provinces don’t want oil royalties to count as income when their transfer payments are calculated.

Some people say transfer payments represent the return of tax money remitted by Atlantic or other have-not provinces to Ontario and other wealthier provinces on purchases from the firms in the richer provinces. Those people say that the GST may be paid to Ottawa from Toronto, for example, but if the person who purchased the item lives in New Brunswick, the tax actually came from there and should be spent there.

A more common view in Ontario and Alberta is that transfer payments are simply a form of welfare transferred from the richest provinces to the poorer to enable the poorer to spend amounts somewhat equal to the richest provinces on basics like health and education.

From their point of view, the Maritimes want to keep all of the welfare cheques or employment insurance cheques after they’ve got a job.

Newfoundland and Nova Scotia say Prime Minister Harper’s Conservative government promised the oil money wouldn’t be counted. It has been known to happen that parties will, to win votes, make promises that aren’t always based on justice or even what the parties intend to do if they are elected. A promise may not necessarily be logical or just.

If there is a deeper, more complex, argument supporting the Newfoundland and Nova Scotia claims, I don’t yet know what it is. Perhaps someone will enlighten me.

What I do know is that the provinces seem to look at money they get from the feds as an entirely different kind of thing altogether than the money they pay out to their own citizens.

For decades single mothers, on welfare, have been trying to tell government that it would be a good idea to let them keep some of their welfare benefits, unemployment benefits, prescription drug benefits etc. after they got an entry level job or while they went back to university to acquire the educational qualifications that could get them off welfare and unemployment forever.

The same governments that have such a clear vision of how clawing back oil revenues will interfere with their progress to self sufficiency didn’t seem able to grasp the concept that confiscating all assistance to welfare recipients interfered with their attempts to become self sufficient.

Funny how they can see their case with such clarity and be blind to their own citizens identical request, isn’t it?

A simple solution

As a geezer, I have just become eligible to apply for the old age pension. When Paul Martin was Minister of Finance in the Chretien government, the feds engaged in various tough measures to balance the budget. One of them was to claw back the old age pension from rich people who didn’t really need that small safety net.

They do it by taxing back 15% of any portion of it that creates taxable income over $60,000 per year (adjusted now, for inflation to $63,511. For ease of demonstration, I’ll use the original base numbers. If you are a pensioner and your taxable income is $70,000, they take back 15% of 10,000 or $1,500 of your old age pension when you submit your tax return. If your taxable income is $90,000, they take back 15% of $30,000 or $4,500.

By the time your taxable income reaches the current adjusted rate of $102,865, they claw back all of the Old Age Security money they sent you during the year.

Isn’t that an extremely simple and, I think most of us would agree, very generous formula?

Why couldn’t a similar formula be applied to oil royalties for Atlantic provinces?

More to the point, why couldn’t, why isn’t, a similar formula devised to ease the transition of welfare families to self sufficiency?

Why is it that light passes one way only through the windows through which governments see the world?


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