May, 1998

REVOLT OF THE RICH: TAX ABUSE AND EVASION

"There is enough wealth to meet everyone's need, but not everyone's greed." -- Mahatma Gandhi:

"...a buck is a buck is a buck." Royal Commission on Taxation, 1966 (Carter)

The Crime

Canadians are fighting in the streets to save our social programs. Medicare, unemployment insurance, and social assistance are well-known because they are directly funded by the government and taxpayers - and used by the majority. For some reason, that makes them vulnerable. But there are other social programs, equally expensive, but ignored by the slashers and choppers, which few of us are aware of. These are known as tax expenditures or "loopholes" - tax credits, deferrals, deductions, and exemptions. They are in large part social programs for wealthy individuals and powerful corporations. "Wealthfare" programs.

Here's how the Ministry of Finance puts it: "... in many ways these measures represent an alternative form of government assistance with financial implications similar to those of direct expenditures ..." According to the Finance Department, personal and corporate tax expenditures totalled $90 BILLION in one year alone. That's $18 billion more than the cost of our much-maligned programs, such as Medicare and pensions ...

It could be called the national Crime of the Century. A heartless Crime Against Society. No, it's not the work of one pathetic, delusional madman. This is much bigger. It involves plotting lawyers, scheming accountants, profit-obsessed corporate executives, compromised politicians, pliant government officials, along with plenty of human emotion (mainly greed), conspiracies, intrigue, scandal - and lots and lots of money.

What is this heinous deed? Tax abuse and evasion on a grand scale. Unbridled "wealthfare". Not that all the players commit illegal acts. Not necessarily. That's what makes this crime so perfect. It's a confusing and endless mix of the legal, the illegal, and the whatever-you-can-get-away-with or quasi-legal, making it almost impossible to define or detect.

"Canada's tax system is a disgrace to one of the most affluent countries in the world," says Neil Brooks, associate dean of Osgoode Hall Law School.

Tax abuse involves the withholding of billions of dollars from the public purse, the refusal of certain well-placed, well-compensated citizens to participate in the communal act of sharing the wealth of the land. It is this "revolt of the elite" - coupled with outrageously inflated interest rates - that lies behind our national debt and deficit.

Loopholes, shelters, havens - these are the social programs this country can no longer afford. For some reason (I'll let you guess), concerns about welfare fraud and abuse are not carried over to tax fraud and abuse. Instead, corporate and political leaders blame the weak and the powerless for the country's woes. At the same time, fortunes are being amassed in the form of record profits and obscene salaries (the CEO of the Royal Bank makes 88.5 times the average wage of his employees) - while subject to scandalously low tax rates or no tax at all. The hypocrisy is quite mind-boggling.

The Scene of the Crime

Canada's tax system became less fair and progressive over the past two decades as expenditures multiplied. Under Liberal and Tory governments, taxation was viewed more in the context of ensuring that business could compete in the global marketplace. The system was reformed to make life easier for corporations and wealthy individuals.

This had two major repercussions: It transferred the tax burden from businesses and the rich to the middle class and the poor, and it cut off a huge supply of money the country had depended on for its public revenues. (An estimated 44 per cent of the debt is due to dwindling revenues.)

"The policies of the government that led to these results did not simply happen. They are firmly based on a vision of a society in which self-interest is the sole guiding force of social organization and in which the creation of large fortunes is an end in itself," says Brooks.

David Perry, a senior research associate with the non-profit Canadian Tax Foundation has also watched the changes. ""I'm increasingly more uneasy about the tax system. The imbalances are quite disconcerting."

How have these "wealthfare" programs developed with so little opposition? They were hidden behind conservative mythology. One such myth is that Canadians are overtaxed. But figures show Canada's total taxes amounted to 36.1 per cent of GDP in 1993 while the average among the 24 industrialized members of the OECD (Organization for Economic Cooperation and Development) was 38.7 per cent.

Another myth is that there is no privileged elite in this country. True? Try these figures: 20 per cent of Canadian families control more than 70 per cent of the wealth while 40 per cent have almost no wealth or assets are all. In 1993, approximately five million Canadians were living in poverty, almost 1.5 million were children - there were only 331,000 poor children in 1989. At the same time, we have more billionaires per capita than any other nation - Ken Thomson, the Irvings, Charles Bronfman, the Eatons. Shame

As you read on, picture the millions of conscientious Canadian taxpayers, mainly wage and salary earners, across the country wading through incomprehensible income-tax forms, doing their patriotic best to keep this country afloat. And, keep in mind that Canada is not a poor country. The World Bank estimates that each of us is worth $960,000 because of our precious public assets and natural resources - a figure that compares very favourably to our per-person debt of $24,000. We can afford our equitable, non-elitist social programs, and more.

The Evidence

Those who abuse and misuse Canada's tax system do so through the manipulation of tax expenditures, but they also have a variety of other strategies at their disposal. Some are legitimate, some are not. But the result remains the same - an impoverished and unequal society. Witness the following:

Taxing Corporations

Exhibit A: Corporate Tax Rates - Going, Going, Gone - When NDP leader David Lewis campaigned against "Corporate Welfare Bums" in the '70s, those bums were relatively well-behaved. Then, they accounted for 28 per cent of all tax revenues - down to a mere 7 per cent today. Since 1980, Canada's corporate tax revenue has declined faster than that of any developed nation. Our corporate taxes as a percentage of GDP are lower than those in 24 industrialized countries, including Britain and Japan, and lowest among the G-7 countries. Personal taxes making up the difference are now at 60 per cent of total revenues. It takes individuals about six months of work just to pay off their taxes; business taxes are paid in less than one month. (The GST also helped shift $4 billion in taxes a year from businesses to individuals.)

It is estimated that a compulsory 20 per cent corporate minimum tax - about the tax rate of a wage earner making $20,000 - could raise $2.4 billion a year in desperately needed revenue. Hugh Mackenzie, an author of the 1996 "Alternative Budget" prepared by a coalition of progressive groups and individuals, supports this idea. "It makes sense to have a corporate minimum tax, because, while we agree with some subsidies, companies shouldn't be able to accumulate them to the point where they don't pay any tax at all."

That's the problem. Statistics Canada reports that 77 corporations, each with more than $25 million in profits, paid no taxes in 1991; another 1,079 corporations with profits ranging from $1 million to $25 million and totalling $4.3 billion, also resisted Revenue Canada. Altogether, more than 62,000 profitable corporations paid absolutely nothing toward the upkeep of this country. One interesting example is that of the Thomson group which, in 1990, had almost $500 million in profits and paid tax at a rate of only 4.4 per cent. A billionaire's break.

Exhibit B: The Banks - Biggest is Best - In the 1980s, our six chartered banks were competing to see which one had the most impressive tower. In the 1990s, the race involves CEO salaries and profits. One of the main arguments the banks offer in defence of their enormous profits is that they pay their fair share of taxes. Liberal politicians have backed them on this. But nationalist Mel Hurtig points out that the banks' net profits from 1984 to 1993 totalled $39.471 billion - at an average of 19.2 per cent "well below the rate paid by most junior bank employees". Although their tax rates have risen, the top six hit a record $5.18 billion last year. This begs the question: What about a surtax on excessive profits?

Other financial institutions benefit from little-known tax breaks. For example, the overseas earnings of Canadian life insurance companies aren't taxed, meaning a revenue loss of $85 million a year.

Exhibit C: Scientific Research Credit - Deductible Modems - This credit was introduced to promote research and development, but has turned into another boondoggle. In one year, the top banks accumulated $300 million dollars in research and development tax credits for projects as cutting edge as: "developing an on-line system to validate credit information". Even the Auditor General has criticized Revenue Canada for its failure to monitor this R&D credit cow which cost the government $4.4 billion between 1988 and 1992. Finance Minister Paul Martin has promised to undertake a "thorough evaluation" of this particularly embarrassing social program, and has cut the banks off.

Exhibit D: Tax Write-Offs - The Canary Wharf Connection - You and I helped cover the cost of those bad loans to the over-extended Reichmanns. (And not just with increased service charges.) Corporations are allowed to write off bad loans against their profits. This means unwitting taxpayers have indirectly subsidized 44 per cent of the big banks' mistakes. A $6 billion write-off in 1992 cost each taxpayer $90.

Also, when the Reichmann's wanted to take over Gulf Oil, the government let them depreciate Gulf's assets a second time for tax purposes. This cost about $500 million in lost revenue, about $30 per taxpayer.

There's more. Taxpayers helped subsidize the takeover and merger mania of the late 1980s because the interest on money borrowed for these often-unproductive and job-destroying activities is tax deductible.

Exhibit E: Tax Deferrals - Dodging the Bullet - When you have the best accountants money can buy, there's an endless array of tax-avoidance techniques available. One of the most popular is tax deferrals - which some say are nothing more than interest-free government loans. Quite simply, the government lets companies depreciate equipment and infrastructure faster for tax purposes than for their own books. This results in a huge backlog of "deferred taxes". But the real kicker is that, with clever bookkeeping, these deferrals can be extended endlessly. No payment necessary.

"This is a very unusual government subsidy because the corporation gets to determine whether it qualifies and for how much," says Mackenzie. "It's virtually a blank cheque." The "Alternative Budget" calls for more "disclosure, accountability, annual approval, regular review, and value-for-money audit - the same standard that applies to other areas of public spending."

In 1972, tax deferrals totalled $2 billion; they have now reached more than $40 billion. Shell Canada alone has successfully deferred $891 million. If the federal government began to charge eight per cent interest on this tax debt, it would bring in more than $3 billion a year.

One final irony: In 1994, eight large corporations sponsored a Fraser Institute conference on the debt, advocating deeper budget cuts to get the country "out of the deficit jungle". Since these companies collectively have $1.170 billion in deferred taxes, perhaps they were talking about a credibility deficit.

Exhibit F: Meals and Entertainment Deduction - Wining for Profits - As the Liberals were preparing their second Deficit-Fighting budget, one of their feistier members, George Baker of Newfoundland, asked Revenue Canada if a company entertaining a foreign client could claim an 80 per cent tax deduction for hotel expenses, massages, dinner at a posh restaurant, escort services, nightclubs, a cruise, and a $200 bottle of champagne. The answer was yes, with a couple of conditions.

Paul Martin lowered the deduction to 50 per cent after Baker went public with his findings, but the deduction still costs about $245 million annually. Even this amount appals Brooks: "At a time when half a million Canadians are lining up at food banks, the government should not be subsidizing lavish meals and expensive entertainment for Canada's wealthy elite."

Exhibit G: Lobbying Deduction - It's In the Bag - Corporations can hire legions of high-priced lobbyists to pressure the government to pass pro-business laws which, for example, extend drug patents (as the Tories did twice) or greatly weaken government regulations (as the Liberals are doing now). Then, they can write the whole thing off as a business expense - costs incurred to earn income. The total annual cost of this ludicrous social program is $50 million.

Exhibit H: Political Contribution Deduction - Paying the Piper - Even though they don't actually have a vote, corporations, especially the banks, securities dealers, and other financial institutions have been huge donors to our major political parties. In 1993, a federal election year, businesses gave $22 million to the Tories and $14.5 million to Liberals - all written off as a business expense. Based on the performances of both parties over the past decade, I'd say businesses are getting real bang for their bucks, but the real question is: Why should businesses qualify in the first place? Total cost unknown.

Exhibit I: Developers' Subsidy - Concrete Loopholes - If you want to know why the big developers of the real estate boom in the 1980s - Bramalea, Cadillac Fairview - paid little or no taxes, here it is. Revenue Canada lets them depreciate the value of their property at a rate of four per cent a year - even though the value is actually increasing! At the same time, they can secure loans based on the appreciated value of the same buildings. Cost: Unknown.

Exhibit L: Capital Gains Exemption for Farms and Small Businesses - Poor Excuse - What amounts to a half-million-dollar lifetime capital gains exemption for the rich was preserved by Martin in his 1995 Deficit-Fighting budget. In this case, the first $500,000 of profit from the sale of a farm or business is not taxed. Sounds like a good idea - supporting struggling farmers and small businesses, but even the Finance Ministry admits the exemption benefits mainly the rich. And farmers only benefit when they sell - often to developers. Cost of exemption: $1.3 billion a year.

(It should also be noted that the $100,000 Capital Gains Exemption for individuals, introduced by the Tories in 1985 and dropped by Martin in 1994, cost the country up to $3 billion annually. The richest 10 per cent took 80 per cent of this subsidy.)

Taxing Individuals

Exhibit A: Individual Tax Rates - Make The Poor Pay - The redistribution of tax responsibility is one reason why the share of income paid by the poorest 20 per cent of families has doubled since 1984. Families with an income between $45 - $50,000 have experienced a 6.7 per cent increase; those in the $150,000-and-over range have only had to pay a 3 per cent higher percentage. In spite of the huge range of incomes in this country, there are only three federal tax brackets: the bottom 60 per cent with taxable incomes below $29,591 pay 17 per cent; the middle 30 per between $29,591 and $59,181 pay 26 per cent, and the top 10 per cent who earn more than $59,181 pay 29 per cent.

The top rate - which covers everyone from middle-income earners to billionaires - is far too flat, and low by international standards. If more upper-income brackets were added at progressively increased rates, as in Europe, hundreds of millions of dollars could be raised. "It's more the optics than the money," says Perry. "If we make the system more progressive, it enhances the appearance of equity."

(Warning: Some politicians and academics want to move in the opposite direction with a Flat Tax, which is regressive because everyone pays the same rate. The GST is also regressive. It takes proportionately more from the poor than from the rich - rebates notwithstanding - costing the average family more than $2,000 a year.)

Exhibit B: Individual Tax Abuse - Make the Rich Play - Last year, 250 Canadians earning $250,000 or more managed to reduce their taxable income to zero and avoid paying taxes. They used a variety of tax tricks - claiming the carrying charges for interest on money borrowed to earn investment income, the capital gains tax exemption, and allowable business investment losses. Perhaps that's how as many as 17,600 people with incomes over $100,000 received the GST tax rebate one year!

But the best tax break for the rich is the Harris Hand-Out from the Deficit-Fighting premier of Ontario. With a flat 30 per cent tax cut, Harris will give a millionaire's family (spouse and two children) more than $60,000. A poor family of four making $30,000 will get $496. The money for the millionaire is equivalent to the welfare cuts to 17 single-parent families (mother and two children)! Breathtaking, isn't it?

Here's another tax irony: Those same low-income citizens indirectly cover the enormous salaries of corporate executives, written-off by companies as business costs. Andrew Jackson, senior researcher for the Canadian Labour Congress finds this particularly "galling" when workers' real wages are stagnant or falling. "It adds insult to injury when the cost of inflated salaries and generous perks is shared by all taxpayers."

Exhibit C: Dividend Tax Credit - Double Dipping? - This tax credit is designed to compensate shareholders for some of the taxes paid by the corporation they have invested in - even though, in some cases, the company hasn't paid taxes on the earnings from which the dividend was paid. Got that? This credit was developed to encourage Canadians to buy more shares, so corporations wouldn't have to raise new funds. But there is little evidence the price of Canadian securities has been affected.

More important, one-fifth of one per cent of all tax filers - those earning more than $250,000 - receive 20 per cent of this subsidy, which added up to $640 million in lost revenue in 1992. Add to this the fact that owners of employee stock options (mainly executives) can deduct 25 per cent of their stock earnings before they are taxed - a loss of $25 million in taxes.

Exhibit D: RRSPs - Gimme Shelter - Former Revenue Minister Garth Turner, one of the front-line Deficit-Fighters in the Mulroney government, is now flogging RRSPs. He refers to them as "North America's Best Tax Shelter". He's probably right. (But what happened to all that concern about government finances, Garth?) After all, in 1994, five million Canadians put aside $19 billion in RRSPs - all of it temporarily tax-free.

But this is far from an equitable social program. In 1991, 81 per cent of those earning $80,000 or more bought RRSPs, while only 25 per cent of those below $20,000 benefitted from the plan. Incredibly, those earning more qualify for larger annual tax savings. But the real inequality and tragedy behind this shelter were revealed by Statistics Canada recently. In 1993, a record 650,000 below retirement age and desperate for funds cashed in their RRSPs. Martin lowered the top level slightly last year. Will he be more courageous this year?

Exhibit E: Family Trusts - In Government We Trust - This well-hidden social program is more of historical interest, because it will be coming to an end finally in 1999. When the Trudeau government eliminated estate taxes and introduced a capital gains tax in the early '70s, it allowed wealthy families to hide their money in trust tax-free for 21 years. However, when that period was up, the Mulroney government, somewhat characteristically, extended the trusts until the death of the last family heir. This has since been changed by the Chretien government, and the trusts must be liquidated and taxed by the end of the decade. It is estimated that this deal has cost the government billions of dollars in deferred taxes. Brooks has described the whole episode as "immoral".

Exhibit F: Bill S-9 - Hands Across the Border - The kudos the Chretien government won for its actions on family trusts soon died with S-9. The potentially controversial bill was smuggled through the back door of Parliament via the Senate and quickly passed by the House of Commons last October. Given the Deficit-Fighting rhetoric of the Liberals, it is difficult to believe only a couple of government members rebelled against S-9.

For one thing, the government cuts the taxes paid by U.S. investors in Canada from 10 to 5 per cent at an estimated loss of about $150 million a year. Also, it has agreed to compensate Canadians for estate taxes paid in the U.S. on assets of more than $600,000 by giving a Canadian tax credit worth the same amount. Because this law is retroactive, it could drain up to $2 billion from the treasury. Liberal George Baker, who opposed the bill, had this comment: "What a marvellous deal for those wealthy Canadians ... but what a lousy deal for the taxpayers of Canada." That's not all. The law - obviously one of the many negative spin-offs of free trade - increases the tax credit to people donating to U.S. universities and colleges. Mulroney: This bill's for you!

Exhibit G: Non-taxation of Lottery Winnings - Mine All Mine! - A word must be said about the mentality of those who feel lottery and gambling winnings should be tax-free. This isn't just found money. It is accumulated because millions of Canadians believe they have only one way out of poverty and insecurity - Lotto 649. For this reason, some of the blood money should be returned to desperate ticket buyers through social programs supported by our tax system. Money lost because of non-taxation: $810 million.

 

Accessories to the Crime

The Crime of the Century involves sins of omission as well as commission. There are potential pools of tax revenue being rejected or ignored by the government. Take the idea of a Financial Transaction Tax - a GST on Greed? - developed by the Nobel-winning U.S. economist James Tobin. The concept is simple: Tax the speculators as they buy and sell stocks and bonds at a global rate of a trillion dollars a day.

If Canadian stock sales had been subject to the GST in 1993, the federal government could have raised $10 billion. If both stock and bond sales had been taxed at the very low rate of 0.5 per cent, the revenue gained would have been as high as $15 billion. Sounds like manna from heaven. Manna that could keep hospitals open, and pull kids out of poverty. But the Liberals balked at the idea saying it was unworkable in today's global economy.

Another area where the government is not flexing its muscles and losing needed funds is in its dealings with multinational corporations. These giants can artificially reduce their Canadian taxes by billions of dollars because Revenue Canada hasn't got its global act together. One corporate trick involves the establishment of a subsidiary in one of the many tax havens around the world - Irving Oil is in Bermuda - and shipping goods from the subsidiary to Canada at an inflated price. This artificially raises the company's costs and cuts its taxable profits.

Canada is losing billions because we have yet to develop a method of dealing with this ruse. One way, already adopted by some countries, involves assessing a corporation's worldwide net income and taxing a fraction of that based on national employment, assets, and sales.

It seems absurd, especially in this time of economic "crisis" that Canada is one of only three countries in the industrialized world - the others are New Zealand and Australia - without an Inheritance or Wealth Transfer Tax (money transferred by gift or death). If we levied this tax at the average rate of many other jurisdictions, such as the U.S., $3 -$5 billion a year could be raised.

It has been estimated that approximately $20 billion of potential revenue has been lost since the government cancelled the tax in 1972 - which mainly affects the wealthiest 5 to 10 per cent of the population. As well, Canada has no Net Wealth Tax, based on assets - property, stocks, art - rather than income. If levied at the average OECD rate, this tax could raise up to $2 billion annually.

Also out of the reach of Revenue Canada: Wealthy Canadians are hiding their money in tax havens, usually in the Caribbean. These havens have no tax treaties with other countries and no exchange controls or restrictions on the movement of funds in or out of the country. There are several Canadian lawyers and companies eager to help wealthy clients transfer their money to these havens. It takes at least $250,000 to make the move worthwhile, but that covers thousands of upper-middle class Canadians.

It is estimated that tens of billions of dollars avoid taxes this way. But Perry isn't optimistic about stopping the outflow of this money. The reality is that the rich have options, he says: "They try to get tax relief domestically or they go abroad." Is this why the poor are so vulnerable?

This leads to the question of compliance. In a highly cynical move, the Mulroney government weakened the effectiveness and credibility of tax officials. It made tax audits less likely, and it restricted the activities of the auditors. This resulted in yet another drop in government funds. The Auditor General estimates that every dollar spent on enforcement brings in up to $22 dollars in revenue.

Finally, one of the greatest areas of lost revenue is at once the most obvious and the least appreciated: the billions of tax dollars no longer generated because of the present high levels of unemployment. A study done for the Canadian Centre for Policy Alternatives put the amount at $39.1 billion in 1993 alone. In spite of this finding, the government is "Fighting the Deficit"" by laying off thousands of taxpayers.

Closing Arguments

Canada's tax system, like the country itself, is in danger of being pulled apart. A 1994 survey of more than 4,000 federal tax auditors revealed that more than 60 per cent of respondents felt Revenue Canada wasn't serious about compliance by corporations.

It is common knowledge that a growing number of Canadians, feeling overtaxed and underpaid, are willing to beat the tax system - hence the growing underground economy. They, too, feel it is no longer fair. However, surveys also show many people would pay more taxes, if they knew the money was targetted for needed services, such as schooling and benefits for the elderly. In spite of everything, Canadians still want to care. Adding to the confusion, the right-wing, especially the Reform Party with its opportunistic "Taxpayers' Budget", has manipulated Canadians' concerns about taxation, promising to cut taxes when they really plan to weaken government, privatize public services, cut social programs, and introduce new forms of hidden taxation, such as user fees.

The taxpayers' revolt, backed by the Reform Party, the Fraser Institute, and other corporate-sponsored organizations, has been quite successful in diverting taxpayers' attention from the real source of their grief - the fact that average Canadians are carrying more than their fair share of the load.

Canada needs what Perry calls "a grand sweeping review" of the system to restore taxpayer confidence and a fairer supply of much-needed revenue. (Arguments for the Defence of the present system can be found in various conservative outlets.)

The Verdict and the Punishment

Those who do not pay their fair share of taxes, while advocating deep cuts in government funding for social programs, our health and education systems, national infrastructure, and public institutions, such as the CBC, are guilty of crimes against society.

Some are all the more culpable because, as they blame the rest of us for the debt and deficit (we demanded too much!), these "conscientious" Canadians continue to line up "at the trough" - accepting government hand-outs.

Ian Howcroft, president of the Canadian Manufacturers' Association (which represents many untaxed companies) says the country needs a Ralph Klein at the federal level ""who will be more severe and make the necessary cuts, no matter how hard they are for Canadians to swallow." In 1994, the CMA received a $2.2 million government subsidy.

Tom D'Aquino and the Business Council on National Issues have called for deeper cuts to social programs, even though they once told Canadians these programs would flourish under free trade. In 1994, BCNI members were among the many corporations divvying up a total of $3.3 billion in corporate government subsidies.

The most effective punishment for those who wreak havoc on society for their own gain is to be continually exposed by the most damning of facts and figures. A full review of the tax system would be one way of doing this. As long as these powerful Canadians can flourish in relative obscurity, they'll continue to use and abuse not only the tax system, but the country itself.

September 1997

Book Review -- "Money to Burn"

by Kathleen O'Hara

I volunteered to review this book on the strength of its dramatic subtitle: "Trudeau, Mulroney and the Bankruptcy of Canada." As an unofficial member of the know-thine-enemy school of thought, I recognized immediately that this hysterical anti-deficit tome was a must-read -- and an excellent opportunity to engage in some ideological target practice.

My sense that this book was nothing more than a long-winded apology for right-wing madness and meanness was confirmed almost immediately by the author's use of alarmist quotes from the corporate-sponsored Fraser Institute -- on the second and third pages. In other words, Jenish, a journalist with Maclean's magazine, doesn't even offer a chapter's worth of calm, objective analysis before hauling out the big, conservative think-tank guns for his rhetorical onslaught.

The anti-debt/deficit bombardment begins with the first line of Chapter One, which bears the evocative title: "The Storm At Our Door": "We are living in a period of high anxiety and diminished expectations." It continues with fire-and-brimstone phrases such as "debt is the scourge of our day" and a comparison of the debt and deficit to "cancerous cells in the human body." Our fiscally reprehensible governments, we are told, "came to resemble freight trains without brakes ..."

Nor is Jenish's evangelical energy sapped by the end of the book: "If we fail to solve the debt crisis, and it is far from certain that we will ... We will have evaded the central challenge of our day and damaged one of the most blessed nations on earth." Believe me, these continuous ravings are enough to bring the most hard-core opponents of the neo-con/neo-liberal (your choice) agenda -- which hides behind deficit fighting -- to their knees begging for forgiveness. How have we been so blind? So profligate?

But perhaps I've been affected by the author's hyper-style in my own desire to rant. It would be better to deal with the arguments he puts forward, along with some interesting facts and statistics. For example, Jenish quotes Paul Martin's October, 1994 statistics on debt accumulation and the fact that the interest on the debt is snowballing at $85,000 a minute or $5.1 million an hour or $122 million a day. Very dramatic indeed.

However, Jenish does not get into the politics of our high-interest rates and how the Bank of Canada has chosen (with the support of those same corporate leaders who rail against the debt) to push up these rates in order to maintain a ridiculously low inflation rate (and increase bank profits) -- thus snuffing out economic growth and maintaining high unemployment. Even the Dominion Bond Rating Service has attributed 93 per cent of the debt since 1984 to compound interest rates.

Jenish is jubilant because the debt "brought the Chretien Liberals back to earth" and forced them to renege on their job creation promises. However, again he fails to mention that even mainstream economists have pointed a finger at government job cuts as a drain on the economy and the fact that an independent study estimated that high unemployment cost the economy more than $100 billion annually in 1992-93 alone -- thus contributing to the debt. (High unemployment is then used to create low-wage jobs and anti-worker sentiments.)

To his credit, Jenish has done his homework on the multitude of tax expenditures (loopholes) introduced by the Trudeau government in the late seventies, mainly for corporations, which cost the country a total of $60 billion dollars in lost revenue between 1976 and 1982 alone. And yet, he describes progressive groups as uncreative for suggesting that corporate tax loopholes be closed as a debt-fighting measure. (It has been estimated that in 1991 these loopholes cost the government about $90 billion, compared to the $60 billion for social programs.) Like me, most readers might ask what is so uncreative about making profitable corporations pay their taxes? Are welfare cuts the product of fertile imaginations?

"Money To Burn" reads like a right-wing mythmaker's guide to the gallaxy. Early in the book, Jenish states uncategorically that: "Unemployment insurance creates unemployment." An interesting concept considering UI payments have been decreasing over the past decade and unemployment has steadily risen. In 1971, when UI was almost universally available at a rate of 75 per cent of income, unemployment was 6.2 per cent. Now, UI is more difficult to get, and the benefit rate hovers around 50 per cent while the official jobless rate is ten per cent. Am I missing something?

Like most on the right, the author also attacks "special interest" groups such as the elderly for their greed and self-centredness, even comparing them to "angry rottweilers." Ironically, during one such attack, he quotes blithely from a paper sponsored by the C.D. Howe Institute, apparently unaware that the institute is nothing more than a glorified, corporate-funded interest group!

Also typically, Jenish mocks the futile protests against cuts to rural post offices, Via Rail passenger service, and the privatization of Air Canada and Petro-Canada: "To hear the howls of outrage ... an innocent bystander might have concluded that the Mulroney government had dismantled our most beloved institutions, stripped us of our most vital public services, and systematically destroyed the nation." I often wonder what those of Jenish's ilk consider "beloved" and "vital" if modes of transportation and communication don't qualify. What do these people think creates a community and binds a nation? Shopping?

True to form, he points out that "Anti-tax rallies draw big crowds," failing, of course, to mention that these rallies (and the Canadian Taxpayers Federation) are funded and fomented by large corporations which pay little or no taxes because they have lobbied -- successfully -- to have their share of the tax burden pushed onto the backs of middle- and lower-class taxpayers (in the name of economic stimulation, of course). Corporations and their many front groups then use these bewildered citizens as pawns in the right-wing war on government. It's cynical but effective.

Jenish quotes Edward Newell, CEO of Calgary-based Nova Corporation, on his concern about the debt load being left to his grandson, but fails to mention that resource industries are among the most subsidized (note Chretien's recent hand-out) and owe billions of dollars in deferred taxes, thus robbing the public purse of needed funds and increasing the debt/deficit. At the same time, these companies are making record profits by pumping our depleting oil and gas resources to the U.S. Some concern. Speaking of patriotism, Jenish worries about Canada losing its economic sovereignty "because we now depend upon the patience and goodwill of foreign lenders to finance the operations of our governments." Again this seasoned journalist fails to recognize that those who moan the loudest about our loss of economic sovereignty (politicians and their corporate sponsors) are the ones who have pushed us into wide-reaching free-trade agreements which have compromised completely our economic and political independence.

Jenish also stoops to misrepresentation. He quotes writer Rick Salutin in a "Globe and Mail" column complaining that once politicians of any stripe (including Bob Rae) get into power "they turn to the same policies as Brian Mulroney." According to Jenish, this is Salutin's acceptance of "the tyrannical quality of our debt problem." From my reading, Salutin was actually commenting on the "tyrannical quality" of the debt-mongers and the fact that few politicans can be trusted or have the guts to maintain their political integrity in the face of these well-placed and high-pressured fiscal terrorists.

There is no doubt Canada is in a precarious position in terms of its debt and deficit. But there has been no real assessment made in this book of how corporations and wealthy Canadians have helped to create the problem (read the Auditor-General's report on corporate tax avoidance and family trusts), how they have benefitted from the crisis, and how it is being used to destroy the power of government and nationhood. We are a wealthy country and there is something very wrong if we can't have basic social programs (modest by European standards) and a reasonable quality of life. It's a matter of sharing and co-operation, two sadly-neglected words in the nineties.

At the same time, no one denies there is government waste. Many groups on the front lines of the cuts, representing hospitals and school boards, for example, have offered to help rationalize costs. But that isn't enough for the debt-fighters. They don't want to save money; they want to destroy a way of life and a way of organizing society.

Jenish's book adds one more layer of misinformation over the facts honest Canadians need to know if they are going to save this country.