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John Carpay | Barrister and Solicitor

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Federal daycare program undermines parental choice

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The federal government's proposal to spend billions of taxpayers' money on government-run, unionized institutional daycare will do absolutely nothing to help Canada's overtaxed parents look after their own children.

Canada's high taxes make it impossible for many Canadian mothers and fathers to provide quality child care for their own children at home. Taxes are the largest item in the Canadian family's budget; the average Canadian family pays more in taxes each month than it does for rent or the mortgage. When you factor in all taxes paid by Canadians - including GST, income tax, property tax, business taxes - the average Canadian loses 49% of her earnings to support three levels of government.

When the Income War Tax Act was introduced in 1917 as a "temporary" measure to help pay for Canada's war efforts, families with children did not pay the 4% personal income tax on the first $3,000 earned. That doesn't sound like much, but $3,000 in 1917 is the same as $41,000 in 2005. If today's family could keep its first $41,000 of earnings free from federal income tax, as families did in 1917, then parents wouldn't feel nearly as much pressure to work long hours to earn enough after-tax dollars.

But unlike the $41,000 exemption enjoyed by families in 1917, today's Canadian family starts paying 16% federal income tax on earnings in excess of $14,815. How is a family with children supposed to pay for food, clothing, electricity, insurance, and rent (or mortgage) on $14,815 per year Yet Ottawa taxes all family income in excess of $14,815.

Financial unfairness aside, what is most frightening about this national daycare proposal is the assumption that unionized strangers will do a better job looking after children in institutions than will parents looking after their own children at home. Since when did parents become incapable of providing high-quality, affordable and accessible child care for their own children Common sense tells us that government cannot ensure that daycare workers - no matter how well paid - will give each child the affection and personal attention they would get from mom or dad or another family member. The Beatles said it well a few decades ago: Money can't buy love.

There are as many child care arrangements as there are families. In some families both parents work outside the home, but arrange their lives and schedules so that at least one parent is always home. Other parents 

need child care only on a part-time basis, or only in the evenings, or only on weekends. Other families rely on help from grandparents and other family members for some or all of their child care needs. Many families make the difficult financial choice of having one parent care for the children full-time at home.

Sadly, Ottawa's daycare plan doesn't empower parents to make their own child care choices. Instead, it forces all taxpayers to subsidize only one child care option: that of institutions run by government unions.

Instead of spending billions of our money on state-run daycare institutions, the federal government should raise the basic personal and spousal exemptions to $15,000 each, allowing a family to keep its first $30,000 of annual earnings free from federal income tax. Any further support for parents should come in the form of a per-child exemption, to empower all parents with choice on child care.

Last Updated on Sunday, 17 April 2011 20:20

What Premier Klein should have said instead

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Here is what many taxpayers would like to have heard in Premier Klein's annual televised address:

"Fellow Albertans, we have made tremendous progress in the past decade. We've repaid over twenty billion dollars of debt, and have reduced personal income tax and business taxes.

But we're not going to rest on our laurels.

In keeping a promise I made in 1997, this government will introduce taxpayer protection legislation, making it mandatory for all proposed new taxes and tax increases to be put to referendum for approval by Albertans. No longer will politicians be able to raise any tax at any time for any reason, as they are now.

This government will also introduce legislation giving Albertans the right to initiate and vote in referendums on issues important to them. No longer will politicians have complete, absolute and total control of the political process, but citizens will be able to participate actively and directly in democracy themselves.

We are going to introduce spending control legislation. On a per-person basis, Alberta's spending on government programs is already the highest in Canada. Program spending is up by 90% in eight years, in contrast to Alberta's 15% population growth and 23% inflation during the same time period.

We are going to reduce the size of cabinet back down to 17, like when I first became Premier in 1992. A large cabinet is both a symptom and a cause of large government.

We will penalize ministers who fail to meet their budgets. We will pass legislation like British Columbia's Balanced Budget and Ministerial Accountability Act, which promotes accountability by penalizing cabinet ministers if their ministries - or if the government as a whole - fail to adhere to budgetary targets.

We will limit growth in public sector salaries to the same rate of increases received by workers in the private sector. In contrast to large public sector wage increases, we will cut taxes to help all Albertans - including public sector workers.

We are going to abolish the health care premium tax for all Albertans, not just seniors. No longer will families have to pay $1,056 in health care premium taxes each year, because the Alberta government simply does not need this extra revenue.

We will abolish the 3% hidden sales tax on insurance. This will leave an extra $191 million per year in the pockets of Albertans - over $200 for a family of four - and will lower the cost of car insurance for everyone.

We will empower parents with choice on child care. In addition to the personal and spousal exemptions, there will be an income tax exemption of $6,000 per child. This will save parents up to $600 per child per year in provincial income tax, keeping more of their own earnings to pay the cost of child care. This will empower Alberta parents with choice, in contrast to Ottawa's plan to help only those parents who choose institutional childcare over home-care.

Last but not least, we are going to use this year's $5.7 billion surplus to refund Albertans the $4.8 billion they paid in provincial income tax in 2004. It's your money - not ours. I know that you will spend your money with more wisdom and greater care than any politician ever can or will.

May God continue to bless Alberta. Thank you, and good-night."

Last Updated on Sunday, 17 April 2011 20:22

Income tax refund cheques in July of 2005

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This July, every Albertan should get a refund of provincial income taxes he or she paid in 2004.

Albertans paid $4.8 billion in provincial income tax in 2004.

But politicians now find themselves with $5.7 billion in extra revenues for the 2004-05 fiscal year.

During this current fiscal year which ends March 31, 2005, the Alberta government is receiving $28.6 billion in revenues, which is $5.7 billion more than expected. That $28.6 billion works out to about $9,000 in provincial taxes for every man, woman and child in the province. No government in Canada receives more revenues, per person, than Alberta's government.

About one third of this $9,000-per-person in provincial taxes goes to the government in the form of oil and gas royalties. It's a tax we don't feel directly in our pockets - unlike property tax and the health care premium tax, for example. But Alberta's oil and gas belong to Albertans, and so do the royalties when they are sold.

Why should politicians and bureaucrats have the right to spend 100% of this money Are their choices better than choices made by millions of Albertans when they decide how to spend, save and invest their own money If we, the people, own the resources - and we do - then why can't we, the people, benefit from these resources ourselves 

Alberta is practically debt-free. Alberta's spending on government programs, per person, is already the highest in Canada. Politicians have already increased their spending of our money by 90% in the past eight years, while Alberta's population grew only 15% and inflation was 23%. But now, with billions and billions from oil and gas flowing into general revenues, should politicians increase their spending even more 

It's time for Albertans to benefit directly from the oil and gas resources we own. With a projected surplus of $5.7 billion, why not refund Albertans the $4.8 billion we paid in provincial income tax in 2004 By the end of June 2005 the government's Annual Report will indicate how much money it collected from Albertans during the fiscal year ending in March of 2005. And by June of 2005, Albertans will have completed their 2004 income tax returns, and the government will know how much provincial income tax each Albertan paid in 2004. In July of 2005, the Alberta government should mail out provincial income tax refund cheques.

For some people it will be hundreds of dollars, for others it will be thousands. This isn't money which politicians and bureaucrats earned, but money first earned by Albertans. It's not a gift, but simply getting back what was yours to begin with. It's enjoying the freedom to use your own earnings to save for your children's education, take a vacation, give more money to worthwhile causes, pay off debt, or buy new furniture.

Those who want to see the $5.7 billion surplus spent by politicians should remember that no one spends someone else's money as wisely as he spends his own. With an extra $5.7 billion now in their hands, there is no excuse for politicians to keep the $4.8 billion they took from us last year through provincial income tax.

Last Updated on Sunday, 17 April 2011 20:22

Thanks Mr. Klein: Alberta's prosperity is no accident

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Occasionally, Tory MLAs and Ministers tell me I'm too negative, not recognizing the good things which Premier Klein's government has accomplished. In years past, the Canadian Taxpayers Federation (CTF) has praised Premier Klein loudly, publicly and unequivocally.

The CTF recognizes that Alberta's economic success is no accident. During his first term from 1993 to 1997, Premier Klein reduced spending on government programs by 30% in real terms, taking Alberta's population growth and inflation into account. From 1994 to 2004, over $20 billion in debt was repaid. Debt servicing costs once consumed 12% of provincial tax revenues. But in Budget 2005-06, 100% of provincial tax revenues will be available for roads, bridges, policing, schools, hospitals, etc.

In 2001, Albertans' personal income tax burden was reduced by 25%. The new 10% single-rate personal income tax system, with generous personal and spousal exemptions, is the most family-friendly in Canada. No other province can claim that an individual pays no provincial income tax on the first $14,526 of earnings, or that a family pays nothing on its first $29,052 of earnings.

The general corporate income tax rate has been cut from 15.5% to 11.5%, 

and the small business rate from 6% to 3%. Reducing business tax rates helps all Albertans because, at the end of the day, taxes are always paid by people, as consumers or employees or investors. Alberta's low corporate taxes attract investment and new businesses, which create jobs for Albertans. Since the best social program is a job, Alberta's thriving economy produces far more wealth to help disadvantaged people than do the weaker economies of other provinces with higher taxes.

Premier Klein's government - along with previous Tory and Social Credit governments - can also take credit for pro-business and pro-development policies which allow Albertans to benefit from our natural resources. Albertans aren't "lucky," as some would have you believe. Rather, we've chosen to develop the gifts which the earth has given us. Saskatchewan, B.C. and numerous jurisdictions throughout the world have also been blessed with abundant natural resources. But people don't prosper when anti-business regimes implement policies which repel investment, deter business, and prevent job creation.

The Alberta government's involvement in business - also known as corporate welfare - has been ended for the most part. This is good news for taxpayers, because when it comes 

to corporate welfare, government lacks the ability to pick winners, but losers always know how to pick government.

Alberta's school boards can't raise property taxes without taxpayers' consent in a referendum. This puts the onus on politicians to explain and justify why a tax increase is necessary. Without this taxpayer protection legislation, the onus is on taxpayers to explain and justify why they should be able to keep their own earnings. Taxpayer protection legislation doesn't exist yet at the federal, provincial and municipal levels, but having it for school boards is a good start.

Thanks to liquor privatization, Albertans enjoy more choice and better prices, without long line-ups.

When revenues from oil and gas are taken out of the equation, Alberta's provincial taxes are the lowest in Canada. In short, Alberta's economy is doing well, and Albertans are enjoying unprecedented prosperity, thanks to the policies of Premier Klein's government. Past policies have been deservedly praised by taxpayers. Taxpayer-friendly policies in the future will also receive the praise they deserve.

Last Updated on Sunday, 17 April 2011 20:23

Don't waste $85,000 on another televised speech

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There are several reasons why Premier Klein should not spend $85,000 of taxpayers' money in 2005 for another province-wide televised speech. Since 1994, Premier Klein has broadcast a speech in late January or early February. The most famous speech was in 2001, when the premier promised Albertans that "the only way taxes are going in this province is down." But then he raised our taxes in 2002. 

Why end this eleven-year tradition of an annual televised speech 

First, Premier Klein already had a wonderful opportunity during the 2004 election to articulate a vision and policies for Alberta's future. He chose not to. Instead, the premier deliberately ran a boring campaign with little substance, in which "spend more tax dollars" was the PC-Liberal-NDP policy on almost every issue. Premier Klein has often stated that politics is about discovering a parade and then getting in front of it, leading people where they want to go. There were (and are) a lot of "parades" in Alberta that the premier could lead. For example, 79% of Albertans want a law giving them the right to initiate and vote in referendums on issues of their choice. Also, 83% of Albertans support taxpayer protection legislation, whereby proposed new taxes and tax increases would need approval from taxpayers in a referendum before going into effect. Further, most Albertans support merit pay for teachers, in contrast to the current seniority system which pays excellent teachers the same as mediocre ones. But Klein didn't want to lead these parades, or any others. Without any particular reason, he called an early election just like Jean Chretien and Paul Martin have done federally. Why spend our hard-earned tax dollars on a televised speech in 2005 when Premier Klein was unable to articulate a vision during the 2004 election 

Second, if Premier Klein has a new policy to announce, he can call a news conference and be guaranteed huge radio, television and newspaper coverage. Reporters eagerly await his every word. Even without a news conference, his informal thinking-out-loud musings will easily make it to the front page of the next day's papers. The premier can communicate directly with Albertans 365 days per year, without spending $85,000 of our money on a promotional commercial.

Third, Premier Klein already controls the $15-million-per-year, 131-employee Public Affairs Bureau, which is used every day to design and to communicate the government's messages to Albertans.

Fourth, if Premier Klein's government has a bold new vision for Alberta's future, it should be articulated in the Throne Speech when the Legislative Assembly reconvenes in February. If he wants to announce new policies or legislation, here is the time and the place to do it, without additional costs to taxpayers.

Fifth, it's a waste of taxpayers' money to spend $85,000 on a speech which consists of vague generalities that nobody can disagree with. Each year we hear the same thing: the government has done a great job getting Alberta out of debt, and now we're going to spend more tax dollars on health, infrastructure and education. The rest is bland platitudes about wealth, prosperity, opportunity, and a wonderful future for our children and grandchildren.

If Premier Klein has something to say, he can call a press conference, put it in the Throne Speech, or have the Public Affairs Bureau send out a news release. Any of these methods will produce the same result: the media will gladly report on his announcement - without costing taxpayers a penny.

Last Updated on Sunday, 17 April 2011 20:23

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