The race to nowhere

Following up on in the Saskatchewan Party's budget plan to benefit the rich with tax cuts (with the explicit aim of making corporate taxes lower than any other province) while soaking everybody else, it's worth offering a reminder what happened to the last Canadian province to try the exact same gambit.

New Brunswick's 2009 budget included both severe cuts to the public sector, and a much-trumpeted intention to undercut other provinces on corporate taxes. And of course, the latter were supposedly justified by the claim that lower corporate taxes would lead to more growth and jobs.

So how did that work out?

Well, neither the offer of immediate tax slashing nor the promise of more to come actually did anything to improve the province's economy. In fact, within a few years, even the New Brunswick Business Council - a group consisting effectively of the corporations who gained the most from the cuts - publicly admonished the province to raise corporate taxes back to a more sensible level. (That's exactly what it eventually did.)

And that wasn't even the worst-case scenario. At least the fact that nobody else followed New Brunswick's reckless lead meant that there was no particular fallout when the province went back to a more typical rate. But if other provinces had felt compelled to implement the same cuts, the result would have been less revenue for all of the affected provinces in perpetuity.

Of course, providing less for people and more for corporate donors seems to be the primary goal of the Wall government. And we shouldn't believe for a second that slashing corporate taxes will have any other effect.