BCNI: Still ain't satisfied

Despite a federal budget that gave them virtually everything they asked for, top business leaders come begging for more - more tax cuts for the wealthy, more program cuts for the poor

By: Linda McQuaig

  It's not among their worst sins, but I would at least accuse Canada's top business leaders of bad manners. Did nobody ever teach these guys that when someone gives you virtually everything you ask for, you say thank you. Apparently not.
  The federal budget last month was an abject capitulation to the demands of the business and financial elite for tax cuts, ignoring popular cries for re-investment in health care and education.
  Yet instead of saying thank you, the nation's most powerful business leaders have responded with a scathing report and demands for MORE. They calling the cuts "more insult than enticement." and said they were particularly inadequate to high income earners and entrepreneurs.
  What do these guys want? The budget delivered on practically all business requests. It reduced the corporate tax rate, eliminated the high income surtax, reduced the tax on capital gains, provided new tax incentives for stock options, increased the foreign content limit for RRSP contributions.
  Indeed, one of the authors of the BCNI report, Jean Monty, CEO of BCE, is sure to benefit handsomely. Tax cuts announced in the budget would have saved him $1.9 million in taxes on his last round of stock options. Next time he cashes in stock options, he'll be looking at ample savings.
  The budget also slashed the corporate tax rate for banks from 28 per cent to 21 per cent, despite their hefty profit margins.
  Yet this substantial reduction wasn't enough to satisfy two bank chairmen who also co-authored the BCNI report - John Cleghorn from the Royal Bank and Al Flood from the CIBC.
  Oddly enough, the BCNI report provides data that seems to contradict the business argument that we need lower taxes to stimulate economic growth. As the numbers in the report show, growth has been strong in the '90s, not just in low-tax countries like the U.S. and Ireland, but also in high-tax counties like Holland, Norway and France.
  One could certainly say something about the extent of greed on Bay Street these days. But more importantly, this BCNI report highlights a change in strategy on the part of the business elite - a new aggressiveness.
  Now, the business elite in Canada has never been shy about putting forward its demands. And certainly business has protested vigorously, on the rare occasion when governments have moved to take away corporate tax breaks - such as in the 1981 budget of Allan MacEachen or Edgar Benson's 1971 tax reform.
  But usually business goes away quietly triumphant when it gets its way, such as in the Michael Wilson's 1987 tax overhaul or Paul Martin's deficit-slashing 1995 budget. This time we're seeing something different - a business elite, having gotten virtually everything it asked for, now aggressively demands more, and renews threats about taking their capital leaving the country.
  Perhaps this shouldn't be surprising. Governments have shown less and less backbone in recent years in standing up to business, and this has only emboldened business to demand more.
  Like the schoolyard bully who meets no opposition, business has learned that the harder it pushes, the more governments in Canada cave in. Having tasted blood, business is now in a frenzy for more.
  What we need is a government that will stop tossing them juicy steaks. I'm sure they've already had their fill at Bay Street steakhouses this week. And written it off.

Linda McQuaig is an economic journalist and author of many books, including Shooting the Hippo and The Wealthy Banker's Wife. She currently writes a biweekly column for the National Post. This commentary used by permission of Linda McQuaig and CBC radio.

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