What Should Finance Minister Paul Martin Do with Federal Surplus: Cut Taxes, Reduce Debt, Spend on Social Programs? York U. Experts to Weigh in on Budget

TORONTO, February 23, 2000 -- With the federal budget surplus expected to land somewhere in the $10 billion range, pundits are expecting Finance Minister Paul Martin to target some of it to tax relief for middle-income families and single Canadians when he brings down his 7th budget next Monday, February 28. Others will be on the look-out for an increase in transfer payments to the provinces for health and post-secondary education, a hike in social spending on housing or the environment, aid to farmers, or a reduction in the country's estimated $575 billion debt.

The budget comes in the midst of a prolonged attack in Parliament on the financial management skills of the Minister of Human Resources Development Canada whose stewardship of the job creation grants program is being highly criticized. And it comes after the Government's planned -- then reneged upon -- NHL bailout, which caused many Canadians to question the government's use of taxpayers' dollars.

With opinion fractured over what Martin should do with the federal budget surplus, York University offers up the following faculty members who can answer such questions as:

Will lowering income tax rates stem brain drain and investment to the US, especially in high-tech jobs?

Are high taxes the cause of brain drain?

Who should get the tax cuts: the poor, middle-class families, or high-income earners?

Will tax cuts lead to higher inflation and higher interest rates?

How much can Martin afford to cut taxes without compromising health care and education?

Should we ignore the debt?

Neil Brooks, a professor of law at York University's Osgoode Hall Law School, specializes in taxation and fiscal policy. Brooks was the co-chair of the Ontario Fair Tax Commission established by the Ontario NDP government in 1991. He can be reached at: (416) 736-5047 or at home: (905) 880-4735.

Daniel Drache is a political scientist and the director of York University's Robarts Centre for Canadian Studies. Drache says deep tax relief will not necessarily make Canada more globally competitive. Foreign ownership of Canadian firms, labour market re-organization, and the continuing heath reform crisis also need to be addressed as part of Canada's economic well-being. Drache, co-editor of Health Reform: Public Success, Private Failure (Routledge, 1999), can be reached at: (416) 736-5415, or at home: (416) 921-3332.

Robert Drummond, a political science professor with extensive knowledge of public policy, says high taxes are not responsible for the brain drain of high-tech and IT professionals -- higher salaries and better employment opportunities in the US are. He expects Martin will cut taxes all the same, but will also increase social spending. Drummond can be reached at: (416) 736-2100, ext. 88843 or at home: (416) 494-3460.

Fred Fletcher, director of York's graduate program in Mass Communications Program and a professor of political science, says that Martin needs to take a balanced approach to tax cuts, debt reduction and renewed social spending. He adds that the budget initiatives will likely take into account the need for the Liberals to campaign for the hearts and minds of Canadians in the countdown towards the next election. Fletcher can be reached at: (416) 736-2100, ext. 88819 or at home: (416) 932-8453.

Jim Gillies, who served as a Conservative MP and finance critic under former Progressive Conservative Leader Robert Stanfield and Joe Clark, is a public policy professor specializing in business and government relations at York University's Schulich School of Business. Gillies says details of the budget are now routinely leaked to the media as a trial balloon to gauge the public and the financial community's reaction -- witness Martin's pre-budget speeches. He adds that this is a far cry from the secrecy rules surrounding budgets of previous governments. He says that Martin needs to cut taxes more deeply, more quickly, rather than phasing them in gradually. Gillies can be reached at: 736-2100, ext. 77901, or at home: (905) 881-5594.

Joanne Magee is associate dean at York University's Atkinson College and a professor of taxation in Atkinson's Department of Administrative Studies. Magee, an expert on Canadian income tax law, served as a member of the Women and Tax Working Group of the Ontario Fair Tax Commission. She recently co-authored Principles of Canadian Income Tax Law (Carswell, 1999), which is frequently quoted in tax cases before the Supreme Court of Canada. She can be reached at: (416) 736-2100, ext. 33368 or at home: (416) 483-3959.

Alan Middleton, a marketing professor in York's Schulich School of Business, is available to discuss the selling and presentation of the budget including pre-budget speeches to business and citizens groups, and the breakfasts and luncheons in the days that follow. Middleton can be reached at: (416) 736-2100, ext. 33180.

Moshe Milevsky is a finance professor who specializes in markets and global capital at York University's Schulich School of Business. He has written extensively on Registered Retirement Savings Plans and investing. He can discuss the budget from the stand-point of individual investors and the investment community. He says Martin should reduce the capital gains tax as well as the stock option tax and remove annual limits on RRSPs. He can be reached at (416) 736-2100, ext. 66014.

Patrick Monahan, a professor of law at York University's Osgoode Hall Law School, favours significant tax relief as an incentive to keep highly skilled professionals from leaving Canada. Monahan can be reached at: (416) 736-5568.

James Savary, Chair of Economics at York's Glendon College, will be in the budget lockup in Ottawa, representing the Consumers' Association of Canada. He says that Martin should reduce the GST because it would benefit consumers, especially lower and middle-income earners who do not qualify for the GST rebate, but admits this is unlikely to happen. He adds that Martin must examine whether proposed budget tax cuts would lead to higher inflation, and in turn to higher interest rates. Savary, who will check messages from Ottawa, can be reached at: (416) 736-2100, ext. 88150, or at home: (416) 480-0601.

Prof. H.T. Wilson, a professor in York's Public Administration Program, believes that the Finance Minister's first priority should be to increase health care and education spending, adding that tax cuts would result in further cuts to social programs. Wilson is author of Retreat from Governance (Voyageur, 1989) which examines the neo-conservative agenda to dismantle Canada's social safety net. He can be reached at: (416) 736-2100, ext. 77896, or by e-mail: htwilson@yorku.ca

Bernie Wolf, an economics professor at York's Schulich School of Business, says that Martin will likely seek a balanced approach to cutting taxes, new social spending, and debt reduction. He is also available to discuss how Martin's budget is received by the international and world banking community. Wolf can be reached at: (416) 736-2100, ext. 77933 or at home: (416) 223-2794.

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For more information, please contact:

Ken Turriff
Media Relations Officer
York University
(416) 736-2100, ext. 22086
kturriff@yorku.ca

Sine MacKinnon
Director, Media Relations
York University
(416) 736-2100, ext. 22087
sinem@yorku.ca
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