In order to reduce the amount of money that would be needed to be created,
hence helping reduce the potential amount of inflation, we could consider
the following. The total amount raised would only be a few billion at the
most, but every bit would help.
NATIONAL DEBT RETIREMENT TAXES
To reduce the amount of money that we need to create, lessening the amount of inflation, there should be some "national debt retirement" taxes levied. These also have the benefit that gives the public some involvement in the process as well as reduces buying power a little bit, helping keep inflation in check
It is important that these taxes be targeted specifically for debt reduction. The money raised must not be tossed into general revenue and they must be eliminated when the debt is gone or they must targeted to specific functions. While Canadians are taxed to the hilt already there is room for a little more in a few select areas.
Using the principle that every little bit helps, a nibble at the debt would include some additional consumption taxes on luxury goods. There are a few places that additional taxes may be levied without much fuss. If some new taxes were imposed as specific National Debt Reduction taxes, they would be followed with much less protest. These would include taxes on specific luxury goods, especially those that have had major price reductions in the recent past.
These are products that are essentially underpriced today. These taxes
will be a national debt levy on top of existing taxes and should include:
VCR's $100.00
Camcorders $200.00
Colour TV sets $2.00 per cm. of screen size
Video Cassette Tapes $0.01 per minute ($1.20 for T120's)
Compact Disc Players $50.00 ea.
Compact Discs/CD-ROMs $2.50 each
Blank Cassette Tapes $0.50 each
Prerecorded Cassette Tapes $2.50 each
Video rentals $1.00 ea.
Floppy Discs $.25 ea.
Computer Hard Drives $0.10/MByte
Digital Watches $10.00
32 bit & higher Microprocessors $50.00
Each of the above items cost as little or less than 10 years ago and
none of us lacked for any of them. If all brands and personal imports are
taxed evenly, the market will not be upset.
Other items assessed a National Debt Reduction Levy should include:
Cigarettes $0.10 ea.
Factory Brewed Beer $0.10/bottle
White Sugar $0.25/Kg.
New light vehicles(1) over 2.5L $0.50/CC over 2.5L.
New light vehicles over $20,000 20% of amount over $20,000.
(Both of these to be applied)
WHO BENEFITS
Since this approach makes it more economical to get some things repaired instead of replaced, it helps auto mechanics, TV repair people, etc. If electronic products cost more, it would create jobs in the electronic service industry, generating still more tax revenue to reduce the deficit. After all, if a TV or VCR cost more to replace, people would be more willing to have it serviced, which would create more jobs than selling them new imported sets. The levy on white sugar will also reduce consumption of junk food which will reduce health care costs by promoting healthier eating. Therefore, we are all helped a little in the long run. That heart attack will come a month later than it would have come otherwise.
Also, it will result in some smuggling from the USA. Recognize that some of this is necessary. It provides income for those who are somewhat dishonest and disinclined to do regular work. It supplements their welfare cheques and it keeps most of that sort of people out of more serious trouble. It also provides excellent bargains for the rest of us at police auctions for seized goods. The writer admits this is a bit of a spurious argument but hoods have to eat too. I'd rather have a bit of smuggling than B&E's or muggings any day.
Besides, if the smugglers are busy with the above,
they won't have to deal so much in illegal drugs to make a living. A few
untaxed VCR's is going to damage us a lot less than loads of heroin.
WHO SUFFERS
All of us as we will be able to afford to buy fewer luxury goods. The sellers of these goods will have lower sales. However, since most of the above items have actually gone down in true price over the past decade, their prices will, in effect, rise to the level of less than ten years ago. Since none of us suffered for lack of these luxury items then, we won't suffer now.
Also, since these are primarily luxury goods, the
cost will be mostly borne by those more able to pay. Those lower income
members of society who buy relatively few luxury goods will not be hit
as bad in proportion. If you cannot afford the bottled beer tax, go to
a U-Brew store.
FINES and PENALTIES
To help pay down the national debt, fines would be increased to a point where they really hurt. Most fines should be restated in per centage of gross assets and not in fixed dollar amounts. Alternately, a fine could be stated as an offender's entire assets less a fixed amount.
An example would be insider trading penalties. Those convicted would be fined their entire assets less $50,000. This would also include their spouse's and minor children's assets to prevent abuse of this possible loophole and those assets left would be controlled by the spouse afterwards. Other offenses treated this way could include embezzlement, computer crimes, and most other non-violent crimes.
Any second offense for impaired driving or motor
vehicle operation should include seizure of the vehicle involved to be
sold by the government as well as say 50% of the offender's gross assets.
SALE/LEASE OF ASSETS
Selling assets to pay off the operating deficit is stupid. It only delays the day of reckoning yet you have fewer resources to pay with in later years. Any assets sold have to go to the principal of the debt only.
For a government to sell assets and lease them back is also counterproductive. Yes, that helps this year but for each and every year in the future, lease payments will have to be made on those assets. This approach only makes sense for private companies that can deduct the lease payments from their taxes. For non-tax paying bodies, sale and lease back is far more costly in the long term. The amount paid out would grow with inflation as the lessor would want to preserve their buying power. Space in a government owned building is essentially free after 10 years or so as the original cost has been amortized and inflation has reduced the original cost to a lesser amount.
No government assets should be sold unless surplus
to requirements and will not be needed for at least 10 years. This applies
quadruple to selling only to lease back.
REAL ESTATE
In 1985, the federal government claimed it owned about $5 billion in land and $21 billion in buildings. I cannot believe that all the crown lands were worth only $5 billion in 1985. While none of the land should be actually sold, the government can reduce the debt a lot by selling 99 year leases on a lot of it or by simply leasing it out and collecting monthly rent on it.
Some examples follow:
Vacant downtown lands. The government owns varying amounts of land in downtown areas, either itself or through crown corporations. Government agents, working on commission, with the opportunity to get stinking rich if successful, should be recruited from the real estate industry to look into possible projects with these.
To increase the value to developers of such lands,
permit the developer to build up to the height of the currently tallest
building downtown. They will pay dearly for it. Downtown Toronto has a
lot of land like this. The CN land alone is worth hundreds of millions
if developed.
Freeway Lands. Some freeways have big cloverleaf
intersections. Lease the loops to oil companies to build service stations,
rest stops and convenience stores. When entering or exiting the freeway
to go home, these locations could not be more convenient for fuel and food.
Not a big amount of money would be realized here but it would get gas stations
away from residential neighbourhoods. It would also be harder for teen-agers
to hang out at convenience stores if they cannot walk to it.
Downtown buildings. These is no reason to sort mail, to process tax data, etc. in the city core. Sell these buildings, build new ones in the suburbs and pay down the national debt with the profit. In addition, look at all the construction jobs this will create. People using government services can deal more by phone and the Internet. The FAX machine has cut local paper moving to the point that a downtown location now hinders the recruiting of good staff at decent wages. Just make sure that wherever the new building is it can be reached without having to call long distance.
After all, Vancouver functions quite well having
its provincial civil service largely in Victoria and if federal government
services were in Surrey or Aldergrove, it would hardly make any difference.
To finance this, just have the downtown building buyer pay up front and
not take occupancy until the new suburban building is ready. Use their
money interest free to build the new building and the profit goes to pay
down the debt. As a bonus, the construction wages are taxed and the construction
firms profits. This is creation of wealth by speeding the flow of an existing
supply of money. To set up such deals, give an agent the opportunity to
get stinking rich if a good deal is struck.
Offshore islands and hidden inlets. The B.C. coast
has hundreds of uninhabited islands and hidden inlets. These could be leased
for 99 years to hundreds of millionaires for hideaways with strict environmental
conditions placed on development. Besides the construction of their homes
this would create a lot of employment in the coastal community. Not a big
amount of land in relation to the total but, again every bit would help
if applied directly to the principal of the debt.
SALES OF SURPLUS ASSETS
The writer has been in the surplus business and have dealt with The Crown Assets Disposal Corporation (CADC) since the mid-1970's. The government is being robbed. The managers at CADC should be put on commission. The prices realized by the government under the current system are terrible. Most of what I bought I could easily resell for three times the price or more. Sure, a lot of it is junk but even the junk was treated to the whole expensive tendering process. The existing system is expensive for the sale of surplus merchandise yet realizes a fraction of the true worth of most the goods while lavishing expensive administration of the portion that is truly junk.
With the current "lot" system goods are placed in big lots with good merchandise and junk combined, as it arrives at the warehouse. When viewing such lots, I'm usually willing to bid as much on one item as I am on the entire lot. What happens is that I bid on the item I want and the rest is essentially given away for nothing. This occurs even if the other goods are quality items and not junk.
My interest is electronic equipment I find that at a lot sale there is some electronic gear in quite a few of the lots mixed in with boots, office equipment, mops, office dividers and once, even a sanitary napkin dispensing machine as well as anything else as you can think of. I point out that if the electronic gear was culled out and I would not be stuck with other junk, I'd actually bid more for it. I'm told that they just follow the rules Ottawa sets down.
Now, why does not Ottawa hire someone who has successfully run a surplus store to run the disposal operation and pay him 1% commission on everything sold. Revenue from this source would triple if he was any good at all. So what if the manager made more than civil service scale? The government would still be making a lot more and a few scandals are great news and distract the reporters from those really in power and who want to stay that way.
To sell old electronic gear the first person contacted should be the manufacturer. They may be able to use it to service older systems that other customers are still using. After that, there are many surplus brokers that should be contacted, both in Canada and the U.S.A. I bought a Hewlett Packard 608E signal generator at what ended up being $75.00 from Crown Assets in 1987. At the same time, surplus brokers in New Jersey were selling this same item for over $1,000. Equipment I bought for $1800, I sold what I did not want for over $4000 and I sold it cheap. In addition, I retained for myself equipment I would have gladly paid $2000 to get.
While this is small potatoes compared to the entire
national debt, every little bit helps. Put those disposal men on commission.
Let them get rich but also let the money pour in to pay down that debt.
CANADA DAYS
This plan is a bit radical for Canada and I doubt that our fine citizens would go for it, but unless you propose it, it won't ever get considered. Besides, by throwing away a radical idea you get the others through. To generate $1,000 per year per adult resident additional wealth to help pay the debt, we could ask each citizen to do extra duty for the nation. In the late but not unlamented USSR, the citizens often did free overtime in times of great need. I suggest by using our best propaganda er advertising people we ask everyone to voluntarily work one extra day, for most of us a Saturday, and our wages be used to pay down the debt. Alternately, one day a month would be taxed at 100%. In return the entire period between Christmas and New Years would be declared a national holiday. We don't do much useful work at that time as there are only 3 work days between most Christmas and New Years holidays anyway. Having a national 10 day bust out is well worth the extra 12 days on the job.
The boom in tourism and overtime pay for essential workers alone will generate huge government revenues. This would require a good PR campaign, but similar patriotic campaigns got our young men to march off to near certain death in the trenches of WW1 and again in WW2 and for nothing as rewarding as a 10 day annual holiday in addition to your regular holidays.
Maybe even just the 3 extra days holiday would be well worth our while.