The end of austerity is not on the table, which is why the politics of food and groceries are undergoing major changes. Conservatives are trying to pass the torch from a party of small-government conservatives to one that is now pushing supply-side economics. If the new Justin Trudeau government succeeds in raising food taxes, and undermines Medicare, the next Conservative leader will inherit the legacy of selling off basic services, says Susan Delacourt.
“Nowhere is there a deeper ideological divide on this issue than with supply-side economics,” explains Susan Delacourt. “For progressives, the only thing the market is capable of is re-engineering ordinary lives by bringing down consumption, or at least across-the-board price increases.”
Indeed, to those left out by an underlying market power imbalance, it seems that the only choice to balance individual and collective consumption (or to “consumer as stockholder”) is to leave the market and raise taxes. Increasing taxes is portrayed as a more progressive tax system: a carbon tax is portrayed as progressive because it rebates low-income people, which can still be paid indirectly through payroll taxes and other payroll deductions. For people who work for private organizations, and pay a non-transferable CPP tax on their wages and benefits, the minimum income tax is about as progressive as they come.
But the government is losing a key support base by imposing a carbon tax on households – something that is actually regressive, because we are, when everything is taken into account, poorer than under pre-war conditions. In fact, the cuts taken by progressive governments are more about shifting taxes from hard-working Ontarians to a declining middle class, which is precisely what was promised to them.
There is a real public interest in shifting income taxes to a progressive tax system, because redistribution is a form of public spending, and is very good for the economy. But it is useful to bear in mind how much more redistribution is necessary than what has been experienced over the past three decades of Conservative “real growth,” since the 1978–79 Conservative tax changes resulted in very large, if not prohibitively high levels of inequality.
Supply-side economics transfers from the companies that emit the largest amounts of carbon to the people who produce the most carbon. Yet these are the same people who are precisely the low-income workers, who on average, are barely any better off after the 2008–09 recession than they were five years earlier.
Other than seemingly shameless, non-issues like “when” and “how much” tax rates should go up, none of the major parties have made statements about how they intend to use tax revenue to invest in the communities they represent. No real explanation is offered of how the available revenue is to be used in a form that advances the basic public policy goal of living within the means of your income.
But in the 2016 U.S. presidential election, everyone could identify a massive tax cut for the rich as their number one priority. Neither Donald Trump nor Hillary Clinton even mentioned how these tax cuts for the rich would be used. They never explained how they would contribute to reducing inequality.
That same lack of interest in how tax revenues will be spent was visible even in the Harper government, which proudly boasted about how much tax revenue it had grown its financial base for its budget, with little sense of how those revenues would be used.
The platform that Trudeau built on keeping tax rates low and increasing government spending may not reduce inequality, but as this budget shows, it actually hurts it by fuelling more inequality and re-distributing more income towards those who already had the biggest share.
The challenges of the next decade will be whether we want to continue living on an earth that is overpopulated, developed with unsustainable resources and degraded to the point that it begins to break down, which produces economic and environmental crisis.
One area in which we can make fundamental gains in the living standards of those less fortunate than us is food. Right now, it seems to be doing a number on the Liberals, who are trying to deal with the worst iteration of Justinflation – a creeping inflation that is like a snowball rolling down a hill, ignoring all rules of economics and politics.