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CAUT Bulletin Archives

January 2000

Federal Finance Committee Says 'No' to Education

The federal Finance Committee tabled its final report in early December, calling on the government to devote the looming fiscal surplus almost entirely to tax cuts and debt reduction rather than repairing the damage done to Canada's social programs, including post-secondary education.

"We are all shocked by how unbalanced and extreme these recommendations are," said CAUT president Bill Graham. "This was not the message most groups delivered to the committee."

Graham noted the committee's recommendations would take away the federal government's ability to repair the damage done by years of budget cuts to Canada's universities and colleges.

"Spent wisely, the federal surplus gives us the chance to restore core funding for post-secondary education before the damage is irreversible," Graham said. "But the committee seems unconcerned about skyrocketing tuition, large classes, outdated labs, declining serials collections, and uncompetitive salaries."

The Finance Committee is recommending a $46 billion cut in income taxes over five years. The key measures include: a 15 per cent increase in the basic personal credit and spousal credit; a 15 per cent increase in tax thresholds; a 3 per cent cut in the middle income tax rate; elimination of the 5 per cent high income surtax; a lower inclusion rate for capital gains, from 75 per cent to 65 per cent; a 5 per cent reduction in corporate income tax rates; and a $2,000 increase in RRSP limits.

A rough calculation of the combined federal and provincial impact of the proposed changes reveals that upper income earners will be the biggest beneficiaries. For a single taxpayer earning between $100,000 and $150,000, estimated average savings will amount to about $4,500 or 4.5 per cent of taxable income. By contrast, for those earning $20,000 to $25,000, total savings will be just $277 or 1.4 per cent of taxable income.

"Diverting all our resources to tax cuts is completely wrong-headed," added Graham. "Whatever savings for most people will be offset by higher user fees. Meanwhile, universities, colleges and other public institutions will be starved of needed public funds."

Graham noted that for most families with a child attending college or university, the proposed tax cuts will be more than wiped out by the added cost of just one year's tuition fees.

CAUT has urged local faculty associations to write to Finance Minister Paul Martin, calling on him to reject the Finance Committee's recommendations in favour of a more balanced approach.

CAUT is recommending that Ottawa restore funding for post-secondary education so that it constitutes 0.5 per cent of the Gross Domestic Product (as was the case in the late 1970s and early 1980s). This would mean an increase of about $2.7 billion.

As Graham noted, "Surely, the federal government can spend one-half of 1 per cent of Canada's yearly wealth on post-secondary education. It's a modest investment in our future."

CAUT is also asking the federal government, in cooperation with the provinces, to establish a new funding mechanism ensuring that transfers are clearly earmarked for post-secondary education.