COLUMN: Finance committee chair Wayne Easter defends the privileged, undermines modest tax reforms
By Murray Dobbin
What is it about progressive politicians going to Ottawa only to end up as arrogant and nasty conservatives? My old friend Pam Wallin was one of the kindest people I knew in Regina in the 1970s when she was a member of the Waffle group in the NDP. She turned into one of the nastiest Conservative senators.
And the last encounter I had with Wayne Easter, Liberal finance committee chair, was in 1991 when he (as head of the National Farmers’ Union) and I joined other social activists to demonstrate in front of the Reform Party’s policy convention in Saskatoon.
Now it seems Mr. Easter is mostly in the news when defending wealthy individuals and big companies who are getting away with blatant tax avoidance — or advising others how to do so. He is currently doing his best to undermine his own government’s modest tax reforms by calling for it to “step back” from the reforms.
As head of the finance committee Easter has a lot of clout, which was demonstrated in June 2016 when he suddenly and with the flimsiest of excuses, banned the testimony of critical tax experts called to testify in hearings into KPMG’s role in a major tax avoidance scheme.
Almost everyone is familiar with the KPMG case. The huge accounting firm created shell companies in the Isle of Man for wealthy clients to help them avoid (and possibly evade) taxes. It went on for 10 years before it was finally discovered by the Canada Revenue Agency (CRA) in 2012.
And while the CRA officially concluded that KPMG “intended to deceive” it, the agency then offered secret amnesties to those caught using the scheme. The sleazy scheme was also promoted as a way for clients to avoid expensive divorce settlements.
But when the several expert witnesses on the scheme showed up to testify at committee hearings — as they were invited to do — Easter summarily implemented a gag order. Caving in to threats from KPMG’s lawyers, he warned the witnesses that if they mentioned the Isle of Man scheme and KPMG they could be in contempt of Parliament. The witnesses were furious but Easter was unmoved, stating the matter was before the court and could not be discussed — a position contradicted by numerous Canadian precedents. Later in a TV interview he oozed arrogance and self-importance. He didn’t need to explain it. He was the chair. He could do what he wanted.
Fast forward to today and we find Easter once again stepping up for the privileged amongst us and undermining what are actually very modest tax reforms affecting a small number of Canadians eager to manipulate the system for private gain. Instead of passionately defending these long overdue reforms as just the beginning of fair tax reform, Easter chickened out: “Maybe do a couple of the simpler things that were proposed, like ensuring that there isn’t sprinkling of income to take undue advantage of the tax system.” The rest he would send to an “expert committee” — for a private execution.
Instead of busting the myths surrounding these proposals, Easter promotes them. He knows that only those earning over $150,000 (the wealthiest seven per cent of Canadians) will be affected. He also knows that two-thirds of genuine small businesses earn under $74,000. Small businesses pay only half the lowest personal income rate (about 12-13 per cent) already — a $3.6 billion subsidy from the rest of us. And they have access to 550 different grants, contributions, financial assistance, loans and cash advances, loan guarantees, tax refunds and credits, and wage subsidies. Canada’s small business tax is the lowest in the G7. In fact, it is the gap between this low tax and individual income tax rates that has helped drive people to set up private corporations.
And as for the impact on farmers, there is none: they retain their $1 million capital gains exemption (another huge public subsidy) so they can transfer their farms to their children.
The reforms claw back a mere $1 billion from the tens of billions given away through tax cuts by finance ministers Paul Martin and Jim Flaherty. Those cuts, the vast bulk to the wealthy and large corporations, vaporized $50 billion in government revenue. It is this deliberate starving of government that has smothered child care, pharmacare and other programs in their cribs. If these programs were available, high-income earners would not be so motivated to revert to tax avoidance schemes. What will Mr. Easter do if and when his government introduces substantive reforms like bringing back a sane level of corporate taxes?
It is notable that the same week that Easter was bad-mouthing the mild reforms of Bill Morneau, people were mourning the death of Allan MacEachen. MacEachen was finance minister in 1981 when he brought in some of the most progressive tax reforms ever presented in the Commons. They were met by ferocious opposition from developers, insurance companies and others who were determined to hang on to their lucrative loopholes. Pierre Trudeau caved and demoted MacEachen — one of the most decent and progressive MPs ever to set foot in the Commons.
What a contrast of Maritimers: one a smug defender of the wealthy and the other a man dedicated to equality and fairness. The question does arise: what will Trudeau junior do with Wayne Easter? Will he remove him as finance chair or promote him to cabinet?
