A Bay Street sign, the main street in the financial district is seen in Toronto, January 28, 2013. Moody's Investors Service has cut the ratings of six Canadian financial institutions, including the previously "Aaa" rated Toronto-Dominion Bank, due to concerns about rising consumer debt and high housing prices. TD, the only publicly traded bank that still carried Moody's top rating, was downgraded, along with Bank of Nova Scotia , Canadian Imperial Bank of Commerce, Bank of Montreal, National Bank of Canada and Caisse Central Desjardins, Canada's largest association of credit unions, Moody's said on Monday. Mark Blinch/Reuters
The common perception among Canadians is that everyone — and especially those in the business world — hates taxes, so it may come as a surprise that, although it's hard to get them to talk about it publicly, many business people quite like taxes.
They like what they do for the country, and they wouldn't mind paying more.
No wonder they are unwilling to speak out. It would be like breaking omerta, the rule of silence. There is an entire Canadian industry, claiming to be pro-business, that wants us to hate taxes.
The Fraser Institute, a charity funded largely by wealthy donors and a few corporations, has its Tax Freedom Day, which it bills as "the day you stopped working for government and started working for yourself."
Then there's the Canadian Taxpayers Federation, "dedicated to lower taxes, less waste and accountable government."
There is also one of Canada's national treasures, Toronto Mayor Rob Ford, who, whether on Jimmy Kimmel or closer to home, can't stop talking about government waste and his campaign to eliminate "the gravy train."
And, of course, our prime minister, Stephen Harper, who once famously said, "I don't believe any taxes are good taxes."
My colleague Kevin O'Leary, of CBC's Lang & O'Leary Exchange and Dragon's Den, takes a similar line.
Tax supporters hesitant to talk
Among my many friends in business, I find that this strident anti-tax attitude is quite rare. But when I went looking for business leaders to talk to me about it, I was surprised that most declined to go on the record.
One of those willing to speak publicly was Frank Graves, whose multi-million-dollar business, EKOS Research, is one of Canada's best-known polling companies.
Graves sympathizes with the unwillingness to discuss a subject that he equates to visiting the dentist or eating vegetables.
"Nobody really, in their heart of hearts, likes paying taxes, but I think in Canada in particular, there's a broad recognition that it's necessary to pay taxes in order to pay the freight on some of the important things to keep the country and the economy going," Graves said.
Graves contributed a chapter to Tax Is Not a Four-Letter Word, a recent book edited by Alex and Jordan Himelfarb, father and son, that explores the love-hate relationship Canadians have with taxes.
"On some issues of taxation, particularly business taxes, and perhaps taxation on higher-income levels, there is some self-interest, and business leaders are a little more supportive of a lower-taxes regime than would be the general public," said Graves.
But he insists that businesses, especially larger businesses, realize "that taxes are an essential ingredient of having a healthy economy."
Tax revenue funding essentials
It's a feeling held not just by larger businesses.
"I don't have a problem paying taxes, especially as a small business owner in Canada," says Gail Vaz-Oxlade, personal finance author and founder of My Money My Choices, a community-based financial consulting program and website.
She says complaining about taxes "knits us together" as Canadians.
"In reality, our tax rates have declined steadily in Canada," says Vaz-Oxlade. "How can you complain about that?"
"I have long believed that if we got a bill at the end of every year that showed us what [the government paid] for medical care, for schooling costs, for the care of our community, if we got that bill and then it was stamped 'paid in full by your taxes,' we would have more of a sense of where our money was going," she says.
Contrary to the Fraser Institute slogan, Vaz-Oxlade's analysis means that when you pay taxes to the government, you are still working for yourself.
Canada's tax rates among lowest in world
Comparing taxes between different countries is surprisingly difficult. For example, health care is funded primarily by private insurance in the U.S. but is largely paid for with general tax revenue in Canada. Some benefits, like the well-funded Canada Pension Plan are sometimes counted as "payroll taxes" even though most people will get that money back.
Despite all that, most independent analyses show that Canadian business and personal taxes are among the world's lowest.
"My personal sense is that as we've seen our tax levels in this country decline pretty significantly, we haven't seen a corresponding rise in our economic performance," said Graves.
He says that when tax rates were higher, Canada ranked near No.1 in the world when it came to standard of living. He is not crazy about going back to those kind of tax levels but also knows that lower taxes come at a cost.
"I am saying that the argument that lower taxes and less government equals a more prosperous economy has been laid bare as not a particularly effective strategy," Graves said. "We've been in a process of relative decline."
Media perpetuate negative view of taxes
Several people I spoke to blamed "the media" for the popular feeling that taxes are bad. It is true that in political journalism, there are few better news stories than showing that governments, especially penny-pinching ones, have "wasted" money.
There was media outrage over money spent by the federal government before the G20 summit, for example. Treasury Board president Tony Clement was especially roasted for the cash he spent on a gazebo. But the money, all recirculated into the Canadian economy and used to beautify a recreational region that many Canadians visit, was a microscopic fraction of the hundreds of billions of dollars spent annually on the hospitals, roads, schools and social programs that make Canada a good place to live.
Being a watchdog on government spending is a valid media role, but it may leave the impression that all government spending is wasteful. Getting rid of "the gravy-train" is like balancing the budget by cutting back on paper-clips and erasers. It's not a significant line item.
"What's important for the business community is making sure we get value for our tax dollars, and some of the [opposition] that you get to taxes is as a result of that distrust of government, misspending, waste, inefficiencies," says Sheldon Lieba, president of the Mississauga Board of Trade. "And, of course, that's what we hear so often in the media, which causes concern for where our tax dollars are going."
Fear of big government fading
Like other urban business groups, Lieba's members would be willing to pay to solve problems like traffic congestion and gridlock, he says. But that's not all.
"Strategic investment of tax dollars that will help benefit economic prosperity, quality of life, is good for businesses equally as residents," said Lieba. "Businesses aren't averse to paying taxes, maybe even paying more taxes where they see value for it."
And it's not just business willing to pay more tax. Graves says that EKOS polling shows that Canadians in general are changing their views on government spending. When asked whether they would prefer spending on health and education or low taxes, they choose the spending.
Even when the question is posed in a more negative way, contrasting high taxes and big government with low taxes and small government, results show that fear of big government has been shrinking for a decade.
Graves says he thinks the question of what we expect government to do and how much we are willing to pay for it will become a growing political issue.
"Problems in the economy, particularly in the younger portions of the economy, don't seem to have been solved by the pursuit of austerity and diminished government.," he said. "It may be, in fact, that it is having the opposite effect.
"I like to make profits and like to make really good profits, but I also feel that there's nothing wrong with paying your share and that, in fact, a healthy economy works best when it has a good balance of fairness and profits."
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