Reading between the lines

The Ontario Chamber of Commerce complains that Ontario is at risk of becoming a have-not province, and demands federal money in response. But while the Chamber hints at a reasonable solution, it wants that solution on a completely unreasonable basis:

(T)he report warns that on a per-capita basis, Ontario will fall further behind other provinces in terms of funding for hospitals, nurses, college grants, university professors and other public services.

And the economic cost to Ontario, home to roughly 40 per cent of Canadians and traditionally the country's manufacturing heartland, could in turn have a disastrous economic impact on Canada as a whole, chamber president Len Crispino argued Wednesday...

The gap between what Ontario pays to Ottawa and what it gets back to fund social programs has in recent months been a favourite topic of Premier Dalton McGuinty, who claims the gap has reached a whopping $23 billion...

Unless the equalization formula is changed, Ontario would only be able to narrow the funding gap by raising taxes - a political nightmare that has little appeal, Crispino noted.

Let's sum up the Chamber of Commerce's position:

Taxes are now too low in Ontario to support the level of social funding deemed appropriate for Canadians in general. Therefore, the rest of Canada should pay more than its proper share under equalization (or, at least, receive less than appropriate) in order to subsidize artificially low tax rates in Ontario.

Now, there are probably some reasons why costs would be lower in Ontario to begin with - surely a business group has at least heard of the concept of "economies of scale". But let's assume for the moment that Ontario's current tax structure can't provide a sufficient level of service to its population. Might it then be time to re-examine just what a "nightmare" it would be to allow Ontario to tax sufficiently to fund its own programs?

In fairness, there is something to Ontario's concern over the equalization side deals. In my view, one of the top priorities for the next majority Parliament should be to completely rework the equalization system so that no exceptions to the rules are necessary. (A return to the 10-province standard would be a good start.) But the reason for that is based on the national interest in having a workable system, not based on a desire to allow Canada's wealthiest province to undertax its corporate base.