Our self-image needs a reality check

TheStar.com – opinion/editorialopinion
Published On Thu Sep 15 2011.   By Carol Goar Editorial Board

We’re closing the gap — and it’s nothing to be proud of.

For generations, we have taken comfort in the belief that we live in a more equitable country than the United States. Globally, Canada might be in the middle of the pack, but compared to our American neighbours, we are a compassionate people. Our rich-poor divide might be widening, but it is modest relative to theirs.

A new report from the Conference Board of Canada shatters that myth. Since the mid-1990s, income inequality has been rising faster in Canada than the U.S. They’re still in top spot, but we’re catching up. Our Gini index, which measures income equality, rose by 9 per cent over the last decade. Theirs increased by 4.7 per cent.

The board lowered our grade from B to C in its annual report card, How Canada Performs.

The analysis is already out of date. It is based on six-year-old statistics. But all of the indicators suggest the trend is accelerating. Since 2005, our tax system has become more regressive, our social services have shrunk, our manufacturing base has deteriorated and we’ve gone through a painful recession that hit the poor hardest.

The budget debate now taking place in Toronto — Do we sacrifice dental care for the poor? Reduce child-care funding? Stop building affordable housing? Pare public transit? — is a stark illustration of today’s reality.

Yet no one in government — or aspiring to be — is willing to discuss this issue.

It was scarcely mentioned in last spring’s federal election. Prime Minister Stephen Harper defended his policy of cutting corporate income taxes, saying it would strengthen the economy.

Although both opposition leaders opposed this plan, they did not go to bat for those losing ground. Then-Liberal leader Michael Ignatieff proposed a few new benefits targeted at the middle class. His NDP counterpart, Jack Layton, championed “working Canadians” — those with jobs and in many cases, union protection. The subject of wealth distribution was too risky to touch.

It certainly hasn’t surfaced in Ontario’s 10-day-old election campaign. The party leaders are consumed with small-stakes partisan skirmishes.

And it wasn’t part of last fall’s municipal election. Forsaking their tradition of caring for the vulnerable, Torontonians turned to a mayor who promised to “stop the gravy train.” The fact that Rob Ford’s numbers didn’t add up and his grasp of city finances was shaky didn’t deter voters. Nor did multiple warnings that he would slash social services, creating a more callous, inequitable city.

There are two policy levers Canada could use to counter the trend of the last decade:

We could make our tax system more progressive. Until 1988, we had had 10 income brackets. Then the government of Brian Mulroney “flattened” the tax system, leaving three brackets. It was a welcome change for the rich whose marginal tax rate dropped from 34 per cent to 29 per cent. Everybody else got tax credits to ease the transition. Subsequent prime ministers made the system more regressive by reducing the taxation of capital gains, cutting corporate taxes, offering tax breaks to the wealthy and creating lucrative investment incentives.

We could strengthen our social programs. What differentiated Canada from the U.S. for most of our history was our sturdy safety nets. They protected us in times of adversity, caught people before they fell into destitution and gave everyone a measure of security against the risk of illness and a precipitous drop in income. But over the last 30 years Ottawa has switched to narrowly targeted benefits and the provinces have become tight-fisted. The wealthy are largely unaffected; the poor are more exposed to market forces.

But both options are non-starters in Ottawa. The Harper government is calling on low- and middle-income Canadians to tighten their belts while it lowers corporate tax rates.

The provinces are dismantling their disparity-fighting mechanisms. And there is no public pressure for a change of direction.

Canada was never a land of equal opportunity, although we clung to that self-image. Now we can’t escape the truth: We’re galloping in the opposite direction, outpacing even the U.S.

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