Tuesday, June 8, 2010

Forget English- Quebeckers Should Learn Greek

Watching the sad financial fiasco occurring in Greece, one has to ask if it is a portent of things to come, here in Quebec. While Greece is Greece and Quebec is Quebec, there are certain parallels to be drawn, especially when it comes to the attitude of the public in regard to fiscal responsibility.
The Greeks are living the cruel repercussions of decades of financial mismanagement and overspending. Lavish entitlements, early retirement and widespread tax evasion has finally caught up with them as the country finally ran out of money and credit.

The EEC which backstops the Euro, is demanding corrective action in order to authorize a bailout.
If implemented, these measures represent a debilitating and painful cut in expenditures and an unprecedented increase in taxes. For the average Greek, it means a 30% drop in relative income. 

Athens radio personality Georgios Trangasis is typical of Greek deniers, oblivious to the country's economic situation. For him, blame lies outside Greece, "What did European governments really know about Greece's indebtedness, and why did they allow it?"

And so the Greek financial crisis is the fault of the German and French banks as well as the IMF, controlled by the Americans. Hostility towards Germany for having the audacity to tell the Greeks that they have been living too high on the hog is particularly galling, with the deputy prime minister Theodoros Pangalos, telling Germany that it had no right to reproach Greece for anything, considering that it devastated the country under the Nazi occupation. (65 years ago.)

Quebec is not Greece, at least when it comes to  tax compliance. Greece is a country where cheating the government out of taxes is a national sport. The attitude can best be highlighted by the revelation that 75 of the country's tax inspectors have never filed a personal tax return. Wealthy Athenians cover their swimming pools with camouflage, lest it be a signal to the tax inspectors that they are rich.

While there is a robust under the table economy in Quebec, it pales by comparison to the dishonesty that is pervasive in Greece, but when it comes to lavish government spending, the Greeks can learn a thing or two from Quebec.

Parental leave, universal subsidized daycare, ridiculously low education fees and generous welfare payments are the envy of citizens of every other province, even those who are substantially richer than Quebec. Finance ministers across the country cannot fathom how Quebec can continue to pay for these types of programs in good conscious and some have injudiciously voiced concern. Recently Alberta's finance Minister Ted Morton told university students;
"You and your parents are spending a bunch of money to help Quebec, and they're paying half the tuition you are.

Not only do Quebecers pay less tuition, they also pay far less for electricity, drugs and daycare. Quebec offers a more generous parental leave program than elsewhere, and higher corporate subsidies. LINK

The truth is that Quebec has been financing it all with smoke and mirrors à la Greque, paying for it all with a rising provincial debt, coupled with welfare payments (equalization) passed on from Ottawa, but paid for by wealthier provinces.

With the provincial debt load approaching dangerous levels, it seems that Quebec may be facing a Greek tragedy of its very own.

And so, Quebec Finance Minister Raymond Bachand's latest budget finally attempted to come to grips with reality (at least on the revenue side) and implemented increased taxes and user fees across the board.

Like the Greeks, these new measures went over like the proverbial lead balloon with the majority of Quebeckers protesting.

Most Quebeckers are fed up with being the most highly taxed citizens in all of North America, with the government now taxing and spending over 41% of the province's wealth. But over 40% of Quebeckers pay no provincial tax at all and strangely it is they who are complaining the loudest.

The new user fees, which are universal and hit all Quebeckers, has the freeloaders up in arms.

"Together for Free- Quality- Universal Services!! " 
"Let Big Companies Pay!"            




And so to the streets they take, to protest the outrageous proposition that they help pay for the services they consume, with child-like remedies as highlighted in the placards above.

The signs  above would be humorous enough would they not reflect the sentiments of a great deal of Quebeckers.
It is likely that these protesters are just about the last group in the entire world that believes public services can be provided for free. (even the Greeks have come to terms with that reality.)

According to  Jean-Jacques Samson taxing the rich can't resolve the problem because in Quebec, there aren't that many rich people. In fact just 3% of the population make over $100,000 and they already contribute 25% of the personal taxes collected by the government.

The richest 20% of  taxpayers contribute 70% of personal taxes, so there isn't much wiggle room.

Quebec is rapidly approaching the point where it cannot tax anymore. The only choice is to tax those who pay nothing already and user fees are the only means available.

At any rate, taxes will not solve the Quebec problem, the lavish social programs provided by the government are beyond the scope of taxpayers to handle.

The next battle in Quebec will come when governments realize that they cannot fund these programs anymore and that they are out of borrowing options.

At that point, programs will have to be re-jigged to be less generous and it is likely that Quebeckers will react as the Greeks.

Blame someone else......