Tom Mueller: Economic course leading toward calamity

Article content

After eight years of economic decline, most Canadians could take comfort that economic prospects couldn’t get worse and that the bottom of the fiscal pork barrel had been scraped clean.

Hopes were dashed with the release of the 2024 federal budget. With her move to increase capital gains taxes, Finance Minister Freeland has declared war on Canadians’ savings.

As if scripted for a House of Commons drinking game, the text robotically repeats various iterations of “fair” some 283 times, together with some phrasing of “affordable” no less than 240 times. The budget document reeks of desperation: Despite repeated assurances that less than one per cent of our citizens would see any tax increases, and that the middle class would escape unscathed, harsh realities indicate a very different outcome.

Sheaves of verbiage conceal the direct hits inflicted upon our financial institutions’ profit lines, which in turn will reduce payouts to shareholders. Many of these payouts are disbursed to retirement savings, including RRSP-held mutual funds as well as employer-sponsored pension plans. Thus, the new tax policy indeed delivers an indirect hit to the retirement savings of the middle class.

We no longer debate some discredited “trickle-down effect.” These measures will inflict serious damage.

Money is required to make money. Servicing the growing federal debt continues to bleed money (aka capital) from our anemic economy, stifling investment and productivity.

Any reduction in profits and savings amounts to a further reduction in the nation’s capital. This tax grab will segue into an accelerating flight of capital as foreign and domestic investors seek more profitable opportunities elsewhere.

Already on March 6, almost 100 current and former Canadian business executives penned a panicked open letter to Ottawa and the provinces, pleading for amendments to pension fund legislation restricting investment options to Canadian shores. Retirement savings of the middle class are to be sacrificed to shore up stock options for the elite.

Some fear the Loonie will sink further, even as low as 50 cents US. Faced with this hyperinflationary scenario, the Bank of Canada will be left with no option but to raise interest rates – if necessary, into the double-digit ranges of the 80s.

It is patently clear that our current economic course leads not to prosperity but rather toward calamity. A radical sea change is imperative – with a new hand on the tiller – to reverse course and steer away from the treacherous shoals threatening to capsize us all.

Tom Mueller is a former biomedical researcher, retired teacher and columnist for Brunswick News.