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Callum MacLeod: By going after the banks, Ottawa has politicized tax policy—and we are all paying the price

Commentary

Last week saw another one of Canada’s largest banks, National Bank, commit to lowering its headcount. National Bank marks itself as the fourth Canadian bank to announce significant layoffs in the past year alone. Bank of Montreal, Royal Bank, and Scotiabank have already announced plans to cut employees. The total number of job losses is expected to be more than 6,000, with analysts predicting that more within the banking sector is on the horizon.

It prompts the question: what gives? 

Declining profitability is one of the main factors. Another is increasingly punitive federal policies including a wave of increased taxes over the past two years projected to cost Canadian banks approximately $10 billion over the next five years. They come in three forms:

  1. The 2022 budget announced a one-time 15 percent tax on taxable income over $1 billion for large banks and insurers for the years of 2020 and 2021; 
  2. The same budget announced a permanent 1.5-point increase in the tax rate (from 15 to 16.5 percent) on taxable profits over $100 million for financial corporations; and 
  3. In the 2023 budget, the government amended a clause in the Income Tax Act that shifted dividends paid to financial institutions on Canadian shares from untaxable income to taxable income. 

The policy rationale for these taxes—what amount to a targeted attack on a single sector—is insubstantial at best, and outright discriminatory at worst. 

The government’s purported reasoning can be traced to some statements made by Finance Minister Chrystia Freeland during a parliamentary committee hearing in late 2022. She argued then that for any new tax, “there [should] be an intellectual justification and a fact-based justification.” As she outlined, the case for these tax increases was that “paying your fair share” is a key priority for the government and the sector disproportionately benefited from its COVID-19 emergency response. 

This reasoning is faulty and raises several questions. The most obvious problem is the singling out of the financial sector. It’s hard to argue that it disproportionately benefited from COVID-era policies—especially since it played a key role in helping the government implement its emergency response. Similarly, as a matter of general tax policy principle, there’s nothing self-evidently fair about targeting a particular sector with punitive taxes. It fails the basic tax principle of neutrality. 

As for the implicit argument that banks are greedy or not “paying their fair share”, it reflects a failure to reckon with the second-order consequences. Corporations don’t pay taxes; they collect taxes. It’s Canadians therefore who will end up paying for them. 

This is apparent in the recent run of job layoffs cited earlier. It will similarly manifest itself in increased fees or premiums for everyday consumers and ultimately in stock prices which will hurt retirees and others invested in the sector. 

Not only will these taxes hurt consumers directly, but they will also have impacts on the wider economy. As Canadian GDP continues to stall, the banks’ ability to provide credit and essential banking services will be pivotal for reigniting growth. A strong and dynamic banking sector is a key prerequisite to higher rates of growth. The government’s policy here is handicapping its growth-enabling capacity. 

It also raises complicated questions about the government’s relationship with the sector. One gets the sense that the government believes by virtue of its heavy regulation of banking (including foreign ownership restrictions) it has a right to expect something of a quid pro quo. Punitive taxes or COVID program delivery or Freeland’s recent demand that the banks lower their fees are expressions of a relationship that’s rooted as much in federal policy imperatives as it is in market forces. This is an unhealthy way to think about the relationship between markets and the state. 

If Ottawa believes that corporations should be subject to more formal regulation or pay higher taxes, then it should make its case and go about enacting such policy changes neutrally and transparently. It shouldn’t rely on threats or sector-specific policies to cajole particular companies to do its political bidding. 

This of course doesn’t mean that consumers may not have issues or problems with their banks. There may indeed be a case that the government should be liberalizing the market for greater competition in the name of lowering fees or improving customer experience. But the solution is a change to the federal government’s overall policy framework rather than threats or implementation of punitive policies. 

Finance Minister Freeland claims the government’s series of anti-growth and punitive bank taxes are rooted in a strong intellectual and fact-based foundation. The opposite is true. They amount to the politicization of tax policy. The losers will be the employees and investors of the banks themselves and Canadians as a whole. 

Jeremy Roberts: We can’t afford to take our caregivers for granted

Commentary

When I was in high school my brother went through what we affectionately refer to as his “nudist phase”.

Every time he would go to the washroom, he would strip buck-naked and leave his clothes in the bathroom. 

This made for some interesting conversations. He once scared off a pair of Jehovah’s Witnesses who got much more than they bargained for when they rang our doorbell.

At my 14th birthday party, I was in my living room with some friends, preparing to blow out the candles on a cake. From my vantage point behind the table, I could see the stairs that ran to our second floor. Suddenly, perched at the top of the stairs was my brother, in all his glory. 

Mortified that my friends might see, I shot a panicked look to my best friend, who was well-familiar with my brother’s latest phase. I did my best to send a psychic plea for help.

To my relief, my friend got the message, glancing quickly to the top of the stairs.

Summoning all of my dramatic flair, I drew my other friends’ attention out the front window, pretending to see a wild animal. Everyone rushed to the window, while my best friend dove up the stairs and successfully redirected my giggling brother back into the bathroom to get dressed.

Crisis averted.

My brother wasn’t actually a nudist. While he does have a mischievous personality, his phase was largely driven by his being on the autism spectrum.

Like many individuals with autism, my brother has dealt his whole life with a severe developmental delay as well as many behavioural challenges. His stripping, for example, may have been the manifestation of a sensory tactile aversion to the fabrics, tightness of clothes, or a feeling of being confined. He is also completely non-verbal and suffers from epilepsy. 

While his “nudist phase” is something that we laugh about today, it is emblematic of the experience of countless caregivers across the country. Whether you have a family member with a developmental disability, dementia, or a chronic illness, you have to be constantly ready to address your loved one’s needs. You are always on duty

With my brother, this includes helping him go to the washroom, getting him dressed, feeding him, making sure he takes his medications, and assisting him with recreational activities. Keeping him safe is always top of mind: in parking lots, the pool, shopping malls, and social outings. It is a 24/7 job.

It is estimated that over 8 million Canadians, like my parents and me, are caregivers today. That’s around one-quarter of the population. These caregivers spend a combined 5.7 billion hours supporting their loved ones. Their contribution to care is valued at approximately $97.1 billion. For context, that’s more than double what the federal government spends on health transfers to the provinces each year.

It’s not an exaggeration to say that without family members assisting with the care of their loved ones our health and social support systems would collapse.

Despite their vital role in the system, caregivers receive little to no support from our governments. Because of this, they often experience high levels of burnout, mental health challenges, and difficulties maintaining jobs.

A few years ago, a group of concerned citizens banded together and, with support from the Azrieli Foundation, launched the Canadian Centre for Caregiving Excellence (CCCE), our first umbrella organization to advocate for caregivers across Canada. This week, CCEC convened Canada’s first National Caregiving Summit in Ottawa, which brought together hundreds of advocates, researchers, caregivers, and government partners to kick-start a discussion about how we as a society can better support these vital contributors. I was proud to be a panelist and participant. 

The goal is to develop a comprehensive National Caregiver Strategy, which would ensure that we have a coordinated approach nationwide for supporting caregivers. A plethora of problems could be addressed through such a strategy, including:

  • How can we ensure that caregivers who balance responsibilities at home and work have the proper Human Resources supports and protections?
  • How can we help caregivers better navigate the complex web of public supports available to their loved ones?
  • How can we put in place stronger mental health supports for caregivers experiencing burnout?
  • How do we better ensure a strong and stable health care and developmental sector workforce that can assist with respite and ease the burden?
  • How can we better financially support caregivers who are giving up work in order to help care for a loved one?

All of these questions and others will have been addressed at this summit. And not only will we have had experts from around the country coming together to talk about this challenge, but we’ll also have had the benefit of many experts from abroad who flew in to share their experiences. 

Some might ask: why is this necessary? Don’t family members have a moral obligation to care for their loved ones? 

The answer is: of course they do. That’s why there are so many of us doing it every day.

But that doesn’t mean that they should have to do it without any support.

When boarding a plane, flight attendants always advise parents that, in the event of an emergency, they should put their own oxygen mask on before helping their children with theirs. This isn’t ageism. It’s because we need the parents to stay healthy so that they can continue to assist their children as needed. 

The same principle applies here. As a society, we’re not providing an oxygen mask to our caregivers even though they dedicate countless hours to providing invaluable care to their loved ones. We risk losing some if we don’t.

Rosalynn Carter, America’s former First Lady, is quoted as saying: “There are only four kinds of people in the world—those that have been caregivers, those that are caregivers, those who will be caregivers, and those who will need caregivers.”

As you read this, you yourself may be taking care of an ageing family member or a loved one with a disability or chronic illness. You yourself might rely on someone as a caregiver. And even if you don’t fall into this category today, chances are you might at some point in your lifetime. Statistics suggest that half of us will be a caregiver during our lives. 

So join our conversation! Check out the updates from the summit. And talk to your elected official about what they are doing to support caregivers. Together, we can make sure that caregivers get the supports we need so that we can continue doing what matters most: caring for those we love.