Last week, I idly speculated what a new Yukon political party might put in its platform, if it tried a bit harder to get past the vague bafflegab that fills most political platforms. To help, I asked a few veterans of Yukon public life what would be in the platform of their dream party, which for shorthand I’m calling the “Fireweed Party.”
So, as a service to readers who are sick of our current parties and may be plotting new political movements in their basements, here is the second instalment. The overall objective is to make the Yukon the top choice in Canada for people to live, work, start a business and raise a family. This week we’ll look at some of the basics that the Yukon government fully controls: taxes and government debt. Next week we’ll move on to some other things that are important to Yukoners, as well as being high on most people’s lists when they think about where they want to live or invest, such as housing, power, health and education.
Promise 1. No increases in taxes of any kind. In fact, taxes should be slowly but steadily lowered until we have the lowest personal, small business and corporate income tax in Canada, and also the lowest taxes on gasoline, diesel and home-heating fuel. A few million dollars from each year’s increase in our transfer payment should be used to finance these steady reductions.
We need to attract more people to build our economy and tax base. Lower taxes aren’t a panacea, but they help. We certainly want to avoid the sorry examples of Nova Scotia and New Brunswick, where politicians talk about growing the economy but in practice discourage it through their tax policies. Every time someone chooses to live in Canmore or Nelson instead of the Yukon because of the cost of living, we have lost an opportunity.
Yukon tax revenue only provides nine per cent of the Yukon government’s total revenue. This means you could cut taxes by a quarter, and it would affect the Yukon’s total revenue by less than 2.5 per cent. That’s not much. Senior officials would hate the idea of letting Yukoners keep their money instead of having assistant deputy ministers spend it, but the objective here is to grow the Yukon population and economy, not bureaucratic empires.
Even if tax cuts have a minor effect on future federal transfer payments, the main point is luring more people to the Yukon to further strengthen our society and tax base.
Promise 2. No carbon tax, except on some strict conditions. The first condition is that it be revenue-neutral, with this confirmed by an independent auditor each year. If a Yukon carbon tax brings in $25 million, for example, then other taxes must be reduced an equivalent amount. A new carbon tax would be an exception to Promise 1 above, but would be acceptable if revenue-neutral. Some sneaky politicians try to define “revenue-neutral” as meaning they’ll only spend the new tax money on nice-sounding green programs. So let’s be clear: revenue-neutral means that other taxes are decreased by at least as much as the carbon tax brings in.
The second condition is that the other twelve provinces and territories in Canada also bring in carbon taxes at the same time. We should not weigh down our energy-intensive mining industry with a carbon tax if our competitors in Saskatchewan and the Northwest Territories are not doing the same thing.
It would be good to work productively with the rest of Canada on climate change and a future national carbon-tax regime, but one should not be implemented in the Yukon before the rest of the country.
Promise 3. The Yukon government will not go into debt. More specifically, the Yukon government will not go into net debt, excluding Yukon Energy and Yukon Housing. I exclude these two government corporations since they borrow for projects that generate revenue that pays off the debt, like electricity plants that we eventually pay for with our electricity bills, or mortgages that tenants pay off. Borrowing by other parts of government, whether the hospital or the government in general, has to be paid back by future transfer payment revenue at the expense of future programs for Yukoners.
The rest of the government must stay out of debt. This is going to be important over the next five years. The current Yukon government financial projections show government spending falling two per cent in 2017-18, and our cash in the bank going down to just $35 million.
Yukon government spending has not gone down on a year-to-year basis in a very long time, and our cash in the bank has not been so low in many years. The next government (of whatever colour) will be sorely tempted to borrow to avoid having to make unpopular cuts. Many provinces borrow, so this might seem like a good idea. However, the Yukon is different from most places in that most of our revenue comes from Ottawa, not our own economy. This means that debt repayments have to come from future transfer payments.
Essentially, Yukon government debt means paying interest to move transfer payments from the future so we can spend them now. Our children will therefore have less with which to pay for health, education and other programs in the future.
Some find these tax and debt topics boring. However, managing the public purse is one of the most fundamental duties of our legislature. There is a reason why it was fiscal issues that were at the top of the agenda as our Westminster system of government developed, as you’ll recall if you were lucky enough to ever take a history class on the English Civil War. A lot of platforms have a blurb about “sound fiscal management” at the start and then spend most of their time talking about how to buy your vote with your own money.
Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon series of historical children’s adventure novels. He won last year’s Ma Murray award for best columnist.