Canada could learn from the EU
The announcement yesterday that Manitoba was imposing Retail Sales Tax (RST) on protection products is a backward step in the drive to get Canadians to take responsibility for their own futures. The RST will apply to individual disability insurance, critical illness insurance and group disability insurance coverage.
The logic behind the move is highly questionable. The purchasers of these products are the prudent and farsighted part of the population that all provincial governments are anxious to encourage. Who will pick up the tab when disaster strikes? The very same provincial governments will have to deal with the extra health-care costs that will arise in the event of uninsured people requiring support.
For a short-term revenue gain, the Manitoba government appears to be risking very heavy liabilities in future years. This is the type of liability that governments everywhere are trying to mitigate by moving responsibility back to the population.
The message that this sends out to the families trying to protect themselves is a very negative one. It appears that the Manitoban government regard prudent protection policies as a luxury while at the same time encouraging people to protect themselves rather than rely on the government. This public policy contradiction could well come back to haunt them.
Aside from discouraging the sale of protection products and potentially storing up problems for future governments, this move differentiates Manitoba from the other provinces. In an age where consumer freedom is important, Manitoba can only get away with this when inter-provincial trade is inhibited.
These days, when people move between jobs and provinces far more frequently than ever before, differing rules concerning the purchase of long-term financial instruments cause unnecessary difficulties for individual Canadians.
In the EU over the last decade a lot of time has been spent producing continent-wide regulations and directives in the area of financial products in order to ensure that all consumers across the giant Union can purchase products across borders. This is despite huge difficulties in terms of the history and culture of the different nations in question.
Canada could learn something from this. Provincial self-rule is important but consumer freedom is also important and individual Canadians should not be disadvantaged based on which Province they live and work in.
Perhaps it is worth looking at the areas of competence of the provinces to ensure fairness for consumers across the nation and so that the policies agreed as a whole by the nation are not undermined by one province’s need for quick revenue.
If even the nations of the EU, who spent so much time at war over the last few centuries can cede, control centrally in areas that benefit society, surely Canadian provinces can move towards the same and standardise the policies across a single nation.
Let us know what you think in the comments below!
— Ciara Ryan (@Ciara1Ryan) June 14, 2012
— Tom Murray (@TomMurrayDublin) June 14, 2012