If you’ve been reading the funnies lately, and by that I mean the political pages, you know that the Liberals and Conservatives have been squabbling over the issue of corporate tax cuts.
Finance Minister Jim Flaherty and his band of brothers set out Wednesday to peddle the merits of “tax relief for job creators,” while Liberal Leader Michael Ignatieff announced his pledge to roll back corporate tax breaks to 2010 levels if elected and instead invest in education. “We think the way to create jobs is invest in post-secondary education and help small and medium enterprises to become more competitive and take on more workers,” he said during a scrum.
If you ask the Conservatives, reducing corporate taxes will stimulate business investment, thereby encouraging growth and competition. According to Jack Mintz, head of the public policy school at the University of Calgary, the tax cut from 16.5 per cent to 15 per cent will generate an estimated $30-billion in investment funds and 102,500 new jobs over seven years. However, according to the Liberals and some labour economists, Canada’s corporate tax rates are already internationally competitive. They argue that the cut will hurt Ottawa’s bottom line and will not necessarily amount to real long term benefits–which is a fair point, in my opinion.
But while Ignatieff’s pledge might spawn warm fuzzies in the hearts of students and professors, it is misleading in several ways.
The idea that pumping more money into post-secondary education is a way to create more jobs ignores a fundamental condition of unemployment among new grads in Canada. While American president, Barack Obama pitched the same idea during his State of the Union address, the educational barriers in this country aren’t nearly as dire as they are the U.S. in terms of financial responsibility. Contrary to what some blue-in-the-face placard-pumpers might tell you, if you want a post-secondary education in Canada and you’re bright enough to pass a few tests, you can probably get one. The number of university enrollments has been steadily increasing over the past several years, meaning more and more individuals are getting post-secondary degrees. Therefore, the problem in Canada is not a poorly-funded system resulting in a lack of access, but rather, a surplus of educated people.
This surplus means that there is increased competition for jobs. A Statistics Canada study looked at university graduates in 2001 and found that nearly one in five worked a job that required a high school education at most. Many other grads nowadays still struggle to find work in their fields. Take teaching, for example. In 2010, the Globe and Mail reported that while about 6,500 new jobs for teachers becomes available in Ontario annually, the Ontario College of Teachers certified 12,774 new teachers in 2008, and another 9,100 in 2009. That’s a lot of competition for a few coveted positions.