Four in 10 Canadians prefer socialism but not higher taxes to pay for it

Printer-friendly version
Appeared in the Financial Post, February 23, 2023
Four in 10 Canadians prefer socialism but not higher taxes to pay for it

According to a new poll, 42 per cent of Canadians believe socialism is the ideal economic system. That’s slightly lower than in the United Kingdom (43 per cent) but higher than in both the United States (31 per cent) and Australia (40 per cent). Just one problem: few Canadians want to pay higher taxes to fund it.

Younger Canadians’ support for “socialism” presumably is due in part to their lack of real-world experience with genuine socialism and the misery it imposed. The polling data bear that out. Support for socialism drops from 50 per cent among Canadians 18-24 years old to 38 per cent among Canadians over 55.

There’s also the question of what its 21st-century supporters actually mean by “socialism.” Unlike other polls on this subject, this one, which was conducted by Leger in the fall of 2022, included definitions of socialism. Only 25 per cent of Canadians polled define socialism as the government taking control of companies and industries, which is the classic definition (i.e., “owning the means of production”).

So what do Canadians mean by socialism? is the overwhelming majority of Canadians polled (65 per cent) define socialism as the government providing more services while 57 per cent define it as government providing a guaranteed minimum income.

The government providing more services is certainly consistent with the policies and aspirations of the federal government. The Trudeau government has increased transfers to the provinces to support health care, post-secondary education and social welfare. It has also introduced a new transfer to eligible families with children (the Canada Child Benefit) and created two new federal programs to collaborate with the provinces in supporting dental care and daycare, and it promises to introduce a new national pharmacare program.

Whether it’s called socialism or not, higher government spending on new and expanded services—not to mention a guaranteed minimum income—requires higher taxes. But the data are clear: most Canadians don’t want to pay higher taxes. According to the poll, which offered all respondents four tax options to help finance socialism, the two most popular options by far were a new wealth tax on the top 1 per cent, which got 72 per cent support, and an increase in personal income taxes for the top 10 per cent, which got 59 per cent support. The logic seems straightforward: most respondents assume these two taxes would not affect them. The other two tax options were far less popular. An across-the-board increase in personal income taxes garnered only 31 per cent support, while only 16 per cent of respondents supported a GST increase.

In its eight years in power, the Trudeau government has already increased the top personal income tax rate from 29 to 33 per cent and has mused repeatedly about introducing a new wealth tax and raising capital gains taxes. As things stand, the top 20 per cent of families already pay a disproportionate share of the total tax burden, earning 44.6 per cent of all income but paying 53.0 per cent of all taxes (federal, provincial and local).

The problem for Ottawa and the advocates of socialism is that these targeted tax hikes don’t raise enough revenue to cover the costs of new spending so the money has to be borrowed, which raises government debt and slows economic growth. Since the current federal government came to power Canada’s total national debt has increased from $1.1 trillion to an estimated $1.9 trillion this year.

Canada is on an unsustainable fiscal path as governments, particularly the federal government, expand existing programs while adding new ones without being honest with Canadians about the ultimate need for broad-based tax increases to pay for them. The Trudeau solution from day one has been to borrow, which simply defers the tax bill to the future.

And the bill is already starting to come due. Ottawa expects to spend $43.3 billion next year solely on interest costs on the national debt. That’s more than it spends on employment insurance, the Canada Child Benefit or the Canada Social Transfer, and almost as much as total health transfers to the provinces ($49.3 billion).

The financial pressures from new spending, coupled with increasing debt and interest costs, will eventually force a decision on governments and Canadians more broadly. If we want larger government, we’ll have to pay the price in the form of higher taxes. As Nobel laureate Milton Friedman often reminded us, there’s no such thing as a free lunch, even for advocates of socialism.

Subscribe to the Fraser Institute

Get the latest news from the Fraser Institute on the latest research studies, news and events.