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Fair Tax

United States

new internationalist
issue 220 - June 1991

Fair tax
Anti-tax sentiment has long been part of the Right's campaign
to defend social privilege in North America. But the battle cry for the
1990s is changing from less tax to fair tax. Murray Dobbin reports.

At about 11.30 on a Tuesday morning a dozen mostly young people gathered in front of the Guarantee Trust Company in a mall in Waterloo, Ontario. They briefly handed out fliers to the customers walking through the mall. The fliers detailed the fact that Guarantee Trust was one of the 118,162 profitable corporations - one third of all profitable organizations in Canada - which paid no income tax. To add insult to injury, the Government had actually given Guarantee Trustco a tax credit of $2.86 million. Not surprisingly, the company had made a contribution of $30,934 to the governing Conservative Party.

The television cameras arrived just ahead of the police and just in time to film the demonstrators presenting an oversize invoice for $21 million in unpaid taxes to the local manager. It was a quick piece of guerilla theatre action aimed at a small company in a small city but it underlined a new phenomenon in the country: progressive tax revolt.

Tax revolt has generally been the prerogative of the Right and the middle class as they rail against government spending and intervention in the 'market.' They have never had notable success in Canada, where political culture accepts a major role for government in income redistribution and corporate regulation. But this time the revolt was different.

The indirect focus of the demonstration, and dozens like it across the country, was the Goods and Services Tax (GST), a value-added sales tax which would add seven per cent to the cost of virtually everything except groceries. Like most consumption taxes it is extremely regressive, hitting the poor who spend every cent they earn and are thus taxed on every cent. The rich meanwhile can afford to save much of their income.

The action against the corporate tax-dodgers was just part of a huge campaign organized by the Canadian Labour Congress and a broad-based national coalition called the Pro-Canada Network. Their Campaign for Fair Taxes hit the streets in dozens of cities across the country in April 1990. Over just one weekend they collected over 2.5 million 'ballots' opposing the Goods and Services Tax and calling for higher taxes for 'corporations and wealthy Canadians' - no mean feat in a country of just 16 million voters. This revealed not only the strength of opposition to the tax but also a visceral hatred of a government bent on reversing decades of progressive social programs and poli- cies designed to defend jobs and living standards.

Underlying the campaign for fair taxes is the knowledge that Canada's social and economic agenda is being shaped not by Parliament but by a shadowy corporate think-tank called the Business Council on National Issues (BCNI). This is the political voice of Very Big Business in the country, consisting of the 500 largest corporations. It has written the book on Conservative tax reform which has rapidly shifted the tax burden from corporations to individuals and from rich individuals to the middle and working class. Endless tax breaks and loop-holes for a wide variety of industries has crippled the Government's ability to raise revenue. And now the resulting deficit of $400 billion is trumpeted as the reason Canadians can no longer afford a civilized level of public services.

In November, six weeks before the tax was implemented, demonstrators took to the streets in over 60 communities, denouncing the Government's contempt for democracy. Opponents used every legal and institutional tactic available. The Liberal-dominated Senate, an unelected body, has long been ridiculed as a repository for old political hacks and bagmen. But, with the support of the vast majority of the population, it stalled the bill right to the end.

'Inequitable tax... is the
major contributor to
the (US) fiscal crisis.'

The outrage increased when the Government used an archaic law to appoint eight extra Conservative Senators. That gave them the majority it needed to force the bill through, a move widely denounced as an abuse of democracy. Ultimately the fight was lost, but the progressive tax-reformers effectively placed the issue of government accountability on the political agenda and drove the Tories to historic lows in the polls.

The message was clear: people are prepared to pay fair taxes if they have confidence that governments are able and willing to provide programs and services which strengthen the community. This was demonstrated dramatically in a civic election in Regina, a medium-sized western city. When Conservatives petitioned for a referendum on a 10 per cent across-the-board tax cut, the measure was defeated by a two-to-one margin.

The shift away from middle-class tax revolt to a more pro-tax movement focussing on the fair sharing of the tax burden is even gaining ground in the US. As services deteriorate and the social infrastructure collapses, the traditionally individualistic American voter is beginning to appreciate the need for public services. As in Canada, the market-driven New Right agenda has been so punitive to poor and working people that fair taxes are essential to support desperately needed services.

In California, polls show people are still opposed to tax increases. Yet there is a strong fight for increased taxes on the wealthy to deal with what even Wells Fargo bank economist Robert Shinkle admits is a 'fiscal crisis'.

Further east, the fair tax movement has taken a different tack, with considerable success. The Tax Equity Alliance for Massachusetts (TEAM) has campaigned on the theme that 'the inequitable tax base from which revenues are raised is the major contributor to the fiscal crisis'.

There are other fair tax movements in the US. Most, like movements in New York and Maryland, are either fighting roll-backs of business taxes or promoting tax justice. Another long-term fight has been brewing in Kentucky led by that state's Fair Tax Coalition. In 1982 they launched a campaign to force coal and other resource companies to pay fair taxes on the land they leased for mineral rights. Since that time it has developed into what other tax reformers hope their movements will become: a broad movement for social justice. 'Our members seek to address the long-standing problems of land and mineral use and ownership, as well as immediate issues such as water quality, toxic wastes,' says Mary Jane Adams, former chair of the group. With locals in over a dozen counties, the Coalition is already a pro-democracy movement, 'directed at statewide changes while fostering the development of local groups to participate in community affairs'.

The fight for fair taxes, in Canada at least, has become an integral part of the struggle against international capital's efforts at global restructuring. As that agenda unfolds, the workers it impoverishes through de-industrialization begin to see government services in a different light. When the 'market economy' actually held out some hope for a secure and decent life, there was some attraction to the anti-government, tax-revolt bandwagon. But impoverishment and insecurity has led ordinary folk not only to appreciate the necessity of public services but also to see the connections between tax breaks for the wealthy and cuts in services for working people. While the final outcome is a long way off, those promoting the corporate agenda may yet be credited with unleashing a fundamental rebirth of grassroots democracy.

Murray Dobbin is an activist and writer from Saskatoon.

[image, unknown]

Illustration: Alan Hughes

ROGER BOWLES. The British poll-tax revolt leader. Born in the slums of Liverpool, Bowles had been a local activist and advocate for the poor in his city. For him the poll tax had been the final indignity in the decade-long Thatcherite assault on the poor. He saw it as an attempt not just to shift the tax burden from the rich to the poor but as an effort to dismantle the last bastion of social services - local government. He had broken with the Labour Party for what he regarded as their lukewarm attitude towards direct action in opposition to the unlust tax.

He had paid his own way to 'Taxes in the Twenty-First Century' and was crashing in some co-operative dive full of local anarchists. Bowles' fiery interventions at this sedate policy conference had seemed out of place. Rakowski as chair of the session on indirect tax had cut him off several times. They had had an angry disagreement during question period about whether or not you could base an entire tax system on socking it to the super-rich. Had the row been resumed on the balcony?

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New Internationalist issue 220 magazine cover This article is from the June 1991 issue of New Internationalist.
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