Thoughts on a Tax Holiday (for the region)

Sunday, June 29, 2008 03:40 AM

-by John Grogan

I've been thinking... If indeed this is the “perfect storm” of economic failings caused be a combination of low lumber prices, high dollar, pine beetle gluttony, sub-prime housing crisis, NAFTA shortcomings, war in Afghanistan, and Olympic bread and circuses, where in the hell are the helmsman (government) and the first mate (Corporations) in making the call for “All hands on deck”? Or is government and industry previously preoccupied on the bridge with the navigation light turned down low... full speed ahead!

I've been thinking too of circumstances in the past where governments have been compelled to bail-out industry during periods of hard times. I remember in my own village where the provincial government of the day gave the working mill $5 million to retool, which resulted in greater production and a reduced workforce.

Do you remember the TV program “Flip This House”? Do you suppose it was a symptom of the greed which created the “perfect storm” in the housing crisis south of the border? Watch for any signs of a new TV program, “Flip This Sawmill” or has that program already played out? Must the ship go down with all hands before an inquest determines the scope and causes of the failings of accountability, transparency, and honest communications? What ever happened to the social contract? Is it time to renegotiate that social contract? I do not think we can or need to wait for an election to talk about social contracts. The ship is listing (to the right), and we are in crisis!Government and industry appear to be inextricably stuck like dogs and common decency demands that someone throw a bucket of cold water on them. I have a couple of buckets of cold water, if that is what it takes...

The concept of corporations began with a need to be able to exist beyond the lifetime of mere mortals. Fast-forward, the corporation is a “legal person” with all the rights and few of the responsibilities of a flesh and blood person. Once upon a time duty and honour were written into the Corporate Charters, agreements made with government to allow an enterprise to incorporate for a specific purpose in service to the public good. Government had the ability, or more correctly the duty to revoke a charter of a corporation which failed to serve the public good. Can someone please tell me when was the last time that a Corporate Charter was revoked? Revoking a corporate charter or two would send a clear message to industry to man the pumps, and empty the bilge.

The storm is still gale force, and folks on the lower decks are having a difficult time keeping their heads above water, while government rearanges the deck furniture... and the band played on. I'm not just talking of rank and file mill workers. The whole region is suffering. Government has been a silent partner in the de-industrialization of north america generally, turning a blind eye to the realities that people (unlike the “legal person”) have an essential need to contribute to the public good. The well being of children and community have not been safeguarded by the “corporate charters” or the empty election promises typical of the silly-season every few years.

Extending Employment Insurance is an essential lifeboat in this metaphor, but it is clearly not enough. Small business too is on the rocks, and a more urgent approach will help in the short term while all other strategies are explored, developed and implemented.

I propose that it is time for the provincial government to recognize that the north has been used as a bank machine from which it funded its urban wealth. To admit that this bank machine is “temporarily out of order” would be less than accurate, but none the less a good start. Government has for too long ignored goodwill to the “hinterland” or whatever it was they called us a while ago.

Enough of going around the bush (small “b” bush)... Extraordinary conditions demand extraordinary solution. The people in the north could collectively force governments hand and demand a tax holiday for the region. Declare an emergency if that is what it takes Mr. Premier, but for goodness sake, the region needs a boost, and a tax holiday might just fit the bill.

I'm thinking sales tax holiday... but that would be a bare minimum. There are other taxes which might well be considered for holiday status. I will not list them here because it is inevitable I will forget some, but while we are on it, how about some relief from provincial fees? A tax and fees holiday for the region would encourage tourism and business generally... keeping heads above water. Governments have a long history of offering tax holidays to industry. What is good for the goose is surely good for the gander.

One closing thought on social contracts and conventions. At a tender age I learned of the social contract of employment that provides that as an employee I had an obligation to give my employer (2 weeks) notice of intention to terminate employment. An employer locking it's gates without a similar notice is among the most vile and contemptible of all corporate behaviours, worthy of substantial administrative fines, sanctions on the Board of Directors and ultimate revocation of the corporate charter.

Hyperbole or not, that is my story and I'm sticking to it.

John Grogan is a community activist living in the Robson Valley. He has been active in media community access, labour, environmental and peace movements. http://en.wikipedia.org/wiki/John_Grogan_(Canadian_politician)

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Posted on Sunday, June 29, 2008 03:40 AM in Views by Submitted Article

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Comments

Posted by: Eagleone on June 29 2008 7:04 AM

Yup, hyperbole, but if your sticking to it then the metaphor's may need some work IMO. Stuck like a dog lol... sounds kind of farmer'ish something the rest of us aren't so familiar with.

But I agree that the social contract is broken and that Northern BC is a peon tax payer. But who's to blame... the government... corporations, or both, or maybe its also us that needs the blame... everyone that owns mutual funds.

IMO the power of the mutual fund managers is the problem with corporate accountability and ethics. They have the voting power to regulate the ethics of many peoples retirement and investment capital that is invested in large quantities through the mutual fund pooling. The mutual fund holder does not have the corporate voting rights for their invested capital (the fund manager does, thus the right to elect the board of directors, who in turn are invested with the power of the corporation to affect society in any number of economic and political ways), and there is a high probability the average person is invested indirectly in companies they would prefer not to make their money associated with. I think if you want to regulate corporate ethics, then a place to start would be a democratic revolution of some kind in the mutual fund investment industry.

The Rothschild's family matriarch once said 'he cares not who has political power in a country, as long as he controls the money, then he controls the nation'. The same holds true on a smaller scale with mutual funds and their bankster managers with an eye on politics (through corporations) and government policy relating to money creation IMO.

That said about the investment side, what about the example of forest companies and their employees... I think they should have to pay a bond to use crown resources in the event of plant closures... so that all employees can be assured they would be paid out a severance package upon termination. The idea that the town of Mackenzie is laid off with 1500 forest workers, and 400 from Winton Global, and 300 from NCP, and not a single employee is getting severance pay honored by the big forest companies... (The UNBC policy is much different than the current forest industry and its workers). IMO that is a huge sign of the sickness in the relationship between corporations and the societies that feed them... (employees are no longer stakeholders in the corporate decision making process mostly because they have no value recognized by our current accounting and taxation systems).

And on the Northern BC issue I think we should call it Caledonia when it becomes a province. Caledonia was the area at the far edge of the Roman empire where the barbarians from the bushes of Northern Britain resided who were the only people the Romans never could subdue as subjects of Roman rule. IMO the province is the sovereign in Canada for citizens because the province has the power of social policy under the constitution, and thus a confederation IMO, as well as the rights to the natural resource royalties and development. IMO a Caledonia province within Canada may be the only thing that protects this part of the world from the 604 imperialism in the years to come.

Thats some return hyperbole to the extreme, but I'll stick to it....

Time Will Tell

Posted by: charles on June 29 2008 8:01 AM

I do not think a "tax holiday" is a good idea. A "tax holiday" for us just results in more debt for future generations to pay off. I think our generation has already sent future generations far too many of our bills to pay off.

I posted the following on this site on Dec. 1, 2007.

"I think the collapsing United States housing market and the resulting woes in B.C's forest industry are the first steps in the popping of a gigantic credit/debt bubble, a bubble that started to form in many countries in the world including Canada many decades ago.

The following paragraphs are taken from Peter Ewart's recent series of articles on Opinion250.com titled "Invasion of the Moneylenders".

"We are swamped with so much debt that it appears as if we have passed over into some kind of alternate universe."

"... and central banks grow dollar bills as plentiful as autumn leaves on some genetically modified tree."

"Reports leak out that financial institutions are refusing to honour lending and borrowing agreements with each other, fearful of acquiring �toxic� debt. To �increase liquidity,� central banks lower interest rates, print more money and inject billions of dollars to calm jittery credit markets."

"Others say that Greenspan himself is the culprit because he drastically cut interest rates for a number of years, thus paving the way for easy credit to be thrown around everywhere as if the mythical figure �Johnny Appleseed� had been reincarnated somehow and gone to work as a subprime mortgage broker."

"These �black holes� of debt exist at the personal level in abundance, even when the economy is in the midst of �good times.� But they also exist on a grand scale, at the level of government and corporation.

Today, there is only one way to describe the amount of debt in the world � absolutely frightening. Future generations will look back in amazement at the herds of politicians, bankers, corporate leaders and establishment economists who have refused to address or even acknowledge the extent of the problem, and who, in fact, have contributed greatly to it. Like Nero, they have their fiddles. And, yes, while Rome burns, they play, and play, and play."

"In this strange world of derivatives, with its �collateral debt obligations� and �asset backed commercial paper�, a �single dollar of �real� capital supports $20 to $30 of loans.� As a result, on world markets, these risky derivatives stand at about $485 trillion, which is about �eight times global gross domestic product of $60 trillion.� Describing such a situation as a �house of cards�, as Joseph E. Stiglitz does, could be misleading in that we may be giving a bit too much credit to its stability."

"But you have to give the moneylenders credit for audacity. After pulling off one of the biggest swindles in world history that will have disastrous economic fallout for years to come, they are currently negotiating with government to bail them out with taxpayers� money. They have put on those ragged hobo clothes they keep in the closet for just such occasions, and will be going to Congress to sing that old Depression era song �Hey buddy can you spare me a dime?� Except, of course, they don�t want a dime; they want billions. Otherwise, they croon, �we will all suffer.�

The following is the link to Peter Ewart's series of articles on Opinion250.com in case anyone wishes to read them to get the full context of my quoted paragraphs.

http://www.opinion250.com/blog/view/7396/7/invasion+of+the+moneylenders+%96+part+5+%96+%93a+pound+of+hamburger%94?id=38&st=10

I think the NDP (and every other government in this country for that matter) should be concentrating on the "big picture" and dealing with the "excesses in our system" that I have quoted above.

As a society we have a complete lack of respect for money, and we are living way beyond our means. These actions are simply not sustainable over the long term."

Posted by: owl on June 29 2008 10:11 AM

"As a society we have a complete lack of respect for money, and we are living way beyond our means. These actions are simply not sustainable over the long term."

Agreed ... so let's just call what is happening now "tough love". At least it is an attempt to wean us off "more, more, more .... and then some more" .....

So, tax holiday??? no way Jose!!! learn to live with it and get off the addiction.

Posted by: NMG on June 29 2008 11:17 AM

I agree with charles and owl.

As an aside, where was it ever written or determined that The Province of BC doesn't have control over ALL of their crown resources AND the ability to determine where the riches generated from those resources are spent?

In specific terms, why do we think that we are getting the shaft when it comes to Provincial attention? Do we have significantly less attention paid to us than similar sized towns in the Province? Or, is it just that we feel somehow slighted given the amount of wealth that we perceive is contributed to Provincial coffers from our area (even though those resources are still owned by the Province . . . NOT us as individuals)?

The article above has this blurb in it:

"I propose that it is time for the provincial government to recognize that the north has been used as a bank machine from which it funded its urban wealth"

I would ask why that is an issue? Does it not make logical sense to leverage Provincial resources to reinvest them primarily into the areas of the Province where the VAST MAJORITY of people choose to live?

Is not the real problem the fact that the majority of people don't yet want to live in our cities in the "north"? Is that not our responsibility to work towards improving?

Posted by: diplomat on June 29 2008 7:32 PM

I agree with Charles, Owl and NMG. I want my taxes to be used responsibly and with better results. I don't want any tax holiday. The well known adage says: "You can pay now or you can pay later. But pay you will."

Besides, if you don't pay taxes you can't demand and expect services.

Posted by: Eagleone on June 30 2008 2:46 AM

NMG 70% of the Vancouver population was born outside of BC, where as in northern towns 70% of the people were born in the town they live in. Yet we see all the wealth generated from provincial resources used to finance mega project designed to put our interest secondary to the interest of Vancouver. An example is the sale of BC Rail to facilitate a 2-week highway for the Olympics, or privatizing hydro transmission so they can pay lower urban rates while the rural payer pays.

I'd say try to explain to a community like Mackenzie that has spent decades filling up the provincial treasury through hard work creating value out of the provincial resources. Very little was ever returned to the community and now they will be left to find employment in other communities. Why are all the government administration jobs in the Lower Mainland? What about technical training schools, or so many other things that could be spread around a little to diversify all sorts of different places in the province for the people that call those places home?

IMO provincial economic policy is designed like an economic empire policy for the city state of Vancouver. Living 800km away I don't think that's in our northern interests long term. Resource management should have a connection politically to the community that is closest and that is not our current state as recent redistribution proves. Therefore we export raw logs because it keeps the provincial treasury funded, but the politically irrelevant backwaters can always find a new home with a new job that will support their families.

The Northern BC situation is like arguing that Newfoundland and Labrador should be part of Quebec with their economy and resources managed from Quebec City. Most people would agree that makes no sense for the same reason it makes no sense for Northern BC to have its future managed by the Lower Mainland. IMHO

Posted by: woodchipper on June 30 2008 1:45 PM

Why don't we set up a new government department to colect taxes for pencils and have another department to give us tax rebates for erasers?

This 100 dollar carbon tax rebate drives me nuts. It was masterminded in BC and printed in Quebec and mailed in a federal envelope--across canada.

Skyrocketing revenues from increases to all forms of energy and royalties and taxes aren't enough?... and we need to set up another system to make sure we not only squeeze the last drop of blood from consumers---but it also has to be the most inefficently collected tax possible.
Government needs to be an efficent operation just as a consumer or business does.
The working person is in for a wild ride as the costs for everything is going to rise while decent paying jobs are going to be scarce.

Our northern MLA's have to stand up for us and tell gordo that dissention to the ideals and agendas of southerners is just part of what makes this province a democratic state.

Posted by: NMG on June 30 2008 2:46 PM

"NMG 70% of the Vancouver population was born outside of BC, where as in northern towns 70% of the people were born in the town they live in"

So what? Are they still not BC residents paying BC taxes? How exactly would you manage a system whereby people in the LML are considered 75% BC Residents while people in the "North" are considered 100% BC Residents. Maybe folks in Mackenzie/Fort St. James would be 115% BC Residents, even though some of those folks may have nothing to do with the resource economy?

It would be a nightmare to try and adopt and it still wouldn't get around the fact that the resources are owned and managed by the Province, not the general population, and the powers that be will decide how the revenues from those resources will be managed. That's one of the roles of government and I can't see it changing anytime soon.

Regarding Northern BC being managed by the LML, I would disagree. I'd say it's more a case of Northern BC doing a pretty good job of helping itself get hooked on the resource sector gravy train for decades and not looking to anything else for diversification or for ways to make our communities more attractive to people wanting to move and invest here. Truth be told, people get ridiculed everyday on this site for even talking about other options. That isn't the LML speaking out, it's generally our good northern folks. How ironic that it's us, in resource rich BC, that oftentimes can't see the forest for the trees :)

Posted by: Eagleone on June 30 2008 5:21 PM

NMG my argument isn't about hording resource revenues, but rather having the power to invest the profits from the resource revenues to strengthen the foundation of our economy and diversify its prospects. You know things like a ring road for PG, and passing lanes throughout the north that make a transportation based economy possible, or energy security through finding ways with the tax system to make co-gen use of hog fuel possible throughout the north, investments in local health care, maybe having crown corps like BC hydro doing more of its work in the rural regions, recognizing the higher cost of home heating and transportation is a necessity in the north and one size does not fit all... and the list could go on.

Its not about the pillage of resources, but rather a return on investment for those that are doing the work to create value from those resources so that we can also have a secure future living in sustainable and diversified communities of our own. Our hard work should be abused for the political convenience of a population that has done nothing to secure the value creation cycle.

I'll admit that I resent living in a province that rules the north like a empire from a Vancouver base that is made up mostly of out of province born people that have never even been to the north, yet their political power makes our aspirations and future irrelevant when they make the decisions that effect all of us.

I do not buy the argument that the north should be a source of resource revenue for the south. I see no reason why the north should not be its own province with a balanced population that can see infrastructure investments that produce a common prosperity for all regions of the north, and social and tax policies that fit our unique circumstances of a rural northern economy dealing with vast distances between towns and economic centers.

Posted by: NMG on June 30 2008 9:58 PM

I agree with many of your points Eagleone. I also think that dough should be reinvested in the north and I do think that has been hapenning with some degree of frequency, although the specific projects may differ from those that you have mentioned. If you add up the price tags for stuff like UNBC, PGRH expansion (and future Cancer care facility), the port at Rupert, the twinning of bridges, etc., it does total a VERY large amount. Is there more that could be done? Indeed! However, I don't feel as though we've been forgotten about given our population relative to the rest of the Province.

It's actually funny when you get out to some of the smaller communities, they feel the same way about PG getting "all" of the attention, while "they" get nothing. At some point in time though, the population of your city or region will have a definite impact on your ability to attract investment, be it from the public or private sector.