Of all the many questions raised by the Romanow Report, the one most often asked is "Where's the money coming from?"--and it's the one question that should not be asked at all.
The money needed to "fix" Medicare--whether it's the $15 billion over the next four years called for by Romanow, or even double that amount--is readily available.
Where will it come from? The answer may be found in the following statistics:
- The budget surpluses accumulated by the federal government since the late 1990s total more than $46.7 billion.
- The federal revenue voluntarily forgone through the many tax cuts made by Tory and Liberal governments since 1984 totals about $250 billion.
- The largest single set of tax cuts came in Paul Martin's budget in 2000, which will deprive Ottawa of about $100 billion by the time they all kick in by 2005.
- Most of this forgone tax money--64% of it--is going to the highest income earners. The capital gains tax exemption alone is giving about $12 billion extra to the most affluent Canadians.
- There was no rational economic reason for cutting taxes in Canada. The public wasn't clamoring for such cuts. According to the OECD, our effective personal average 18% tax rate is now lower than those of all other G-8 nations except Japan. In Britain it's 23.5%, in Germany and France about 22%, in Italy 25.5%.
- The claim that taxes in Canada needed to be cut to make our industries competitive with those in other countries has been refuted often, most effectively by the annual reports of the respected KPMG consulting firm. The KPMG has consistently found that business costs in Canada, including taxes, have been substantially lower than those in most other industrial countries.
- According to the compliance research directorate of the Canada Customs and Revenue Agency, four out of five of the largest and most profitable corporations in this country paid less than $25,000 annually in income tax from 1995 to 1998. The number of our largest corporations with revenues of more than $250 million that pay no tax at all in any given year ranges from 29% to 41% of them. In addition, close to 40% of the subsidiaries of these corporations, along with other smaller firms--as many as 700,000 of them--pay not a single cent in income taxes.
- Although tax officials never report or even estimate the amount of corporate tax revenue that is lost through avoidance or evasion, we know that, in the 1998-99 tax year, the total corporate income tax that was actually collected--including the $3.2 billion recovered by the compliance division through audits and reassessments--was $21.6 billion. If every corporation, big and little, paid its fair share of taxes, it's safe to assume that this amount would at least be doubled, if not tripled.
- There are many billions of dollars in taxes that the federal government could collect, but doesn't. It calls these vast amounts "tax expenditures," and they're listed by the Finance Department under the headings of "exemptions, deductions, rate reductions, rebates, credits, deferrals, and carry-overs." The amount in taxes that the government opted not to collect in the 2000-01 tax year from the corporations that benefited from "tax expenditures" was in the range of $22 billion (which is a billion or so more than the total corporate income tax that was actually collected).
Still not convinced that the extra money required to repair and improve Medicare can be found, or made available? Then this last set of statistics should remove any lingering doubt:
Back in 1970, when Medicare was at its peak (no financial crisis, no long waiting lists, no shortage of doctors and nurses), Canada's Gross Domestic Product (GDP) stood at a per capita level of $16,481 (in constant 1992 dollars). By 1999, our per capita GDP (also in '92 dollars) had soared to $28,869, an increase of 75%.
So we now have a country that is far wealthier than it was in 1970, in terms of the total income the economy generates, but one that somehow allegedly can't afford to maintain our health care system at a level we managed to fund without any difficulty 32 years ago--with far less national per-person income.
Clearly the problem is not one of revenue insufficiency, but of revenue maldistribution. Thanks to needless tax breaks and various government handouts to our richest individuals and companies, we now live in a country where Statistics Canada tells us that the wealthiest 10% of family units hold 53% of the personal wealth, and the top 50% control a shocking 94.4% of the wealth.
The underfunding of Medicare is one of the consequences of this skewed distribution of wealth, and it has been a matter of political choice, not necessity. No one, for example, asked "where's the money coming from?" when Ottawa allocated an extra $5 billion or more to beef up our airport and border security and send Canadian troops to Afghanistan. The money was made available immediately. Why? Because the federal government believed it was an essential Canadian contribution to the U.S. "war on terrorism."
By the same token, if our federal and provincial governments really believed that a war on sickness or poverty or homelessness, or any other social problem, was a priority, the money for such an initiative would also be quickly found or raised--and without increasing taxes or taking money away from other needed services.
It's simply a matter of political preference. The question, "Where's the money coming from?" is as silly as it is spurious.
(Ed Finn is an editor with the Canadian Centre for Policy Alternatives. He obtained the statistics cited above from Statistics Canada, the Finance Department, the OECD, KPMG, the Auditor-General's reports, and internal reports of Revenue Canada's Compliance Research Directorate.)