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Tax brake: In his 31 years at the Fraser Institute’s helm, Michael Walker helped raise awareness of such key economic issues as government spending and the onerous tax burden borne by Canadians
Mission: To stimulate free-enterprise discussion Assets: A PhD in econometric modelling and 31 years’ experience leading the Fraser Institute Yield: An international reputation for cultivating and promoting free-enterprise principles
 Glen Korstrom Sitting comfortably in one of his Fraser Institute office’s several chairs, the free enterprise think-tank’s co-founder, Michael Walker, sips Coke Zero and argues that, contrary to popular belief, social services such as health and education are hurt when governments boost those budgets. That’s because, he believes, all government taxation and spending hurts the economy and diminishes wealth. It shrinks the potential tax base and yields fewer dollars for each per cent that the government taxes. Walker ended his 31-year stint as the Fraser Institute’s executive director in December 2005, but the 64-year-old is only semi-retired. He oversees real estate investments, sits on the Canaccord Capital Inc. (TSX:CCI) board and contributes time to speak at Fraser Institute events. The research organization provides him an office that overlooks the Molson Brewery clock and Burrard Bridge. As the eminence grise for free enterprise thought in B.C., Walker walks through the Fraser Institute’s halls and is regularly urged by staff to stop to chat about ideas. It’s a role he loves. Walker will have a say in who is hired to lead the Fraser Institute following Mark Mullins’ departure in early July from its executive director post. The decision will influence the direction of a research organization that has morphed into one that parents rely on for annual report cards on public secondary school performance in B.C. and the Yukon. Many Canadians also know the institute for annually calculating Tax Freedom Day, which has been christened thus by the institute because up until that day all money earned by Canadian taxpayers goes to pay off the various taxes levied on them by government. In 2009, the institute calculated that the day fell on June 6 or 34 days later than it was in 1961. Throughout its history, the institute has been known for other things, such as libertarian commentary from controversial former senior research fellow Walter Block and media analysis at its National Media Archive. Walker’s favourite maxim: “if it matters, measure it.” So it was natural for the institute under his tenure to focus on government policies and institutions such as schools and hospitals. “[Walker] was one of the leading intellectual and research people who got on to the necessity of balancing budgets,” longtime friend and current Manning Centre for Building Democracy head Preston Manning told Business in Vancouver. “People don’t appreciate that, in this economic downturn, Canada is in a relatively better position than a lot of countries. This is, to a large extent, due to Michael Walker and the Fraser Institute’s crusade to get the books balanced.” Walker has written or edited more than 50 books and is passionate when discussing policy and ideas. Between sips of soda, he stresses that increased spending only saps strength from the economy. He believes governments should finance roads, insure health services, police society, defend sovereignty and provide a social safety net for those who can’t look after themselves. Were he in charge of the public purse, he would first cut spending. Gone would be Prime Minister Stephen Harper’s: •$9.5 billion federal government bailout of General Motors Corp.; and •$1 billion bailout of Canada’s pulp and paper industry. Walker would also spend less in areas where consumers would otherwise spend: arts, culture and education. Then he would ask two questions: •How much should a government tax? •Which tax will hurt the economy least? A lifetime of reading his vast library of free enterprise books has convinced Walker that the optimum tax rate levied by government is between 30% and 35%. British Columbians currently pay about 43% of their income to various levels of government. Walker prefers consumption taxes over income and capital taxes. At a recent British Columbia Business Council seminar, CN Rail chairman David MacLean urged governments to eliminate corporate capital taxes – a suggestion that former federal cabinet minister David Emerson called “radical.” But it’s something that Walker clearly likes. “Think about the gross national product as a pile of goods in the middle of a town square. You want to tax people when they’re taking stuff off the pile rather than when they’re putting stuff on the pile,” he said. “Consumption activity is taking goods off the pile. When you eat an apple, it’s gone.” That leaves provincial sales taxes and the GST as the least destructive taxes, he said. To keep from distorting prices, Walker would institute as flat a consumption tax as possible. That means the same tax rate on an apple as on a cigarette, a beer or a litre of gasoline. He accepts that hiking taxes on specific consumer goods helps governments steer public behaviour in ways it desires. But Walker is not paternalistic.He opposes “sin” taxes on cigarettes and booze as well as taxes, such as the carbon tax, that encourage environmentally sustainable behaviour. He is in a book club and loves his Sony Electronics Inc. (NYSE:SNE) digital book reader because it allows him to shrink column widths so he can read faster – a trick he learned from Canaccord chairman Peter Brown. Walker has recently accumulated flying hours toward his commercial pilot’s licence. He jokes that he may eventually start a business that offers tours combining a flight with free enterprise discussion. After achieving a BA from Nova Scotia’s St. Francis Xavier University, he completed a PhD in econometrics at the University of Western Ontario. He conducted economic model research at the Bank of Canada and then in the federal finance ministry. Pat Boyle conceived the idea for the Fraser Institute and encouraged Walker to provide its intellectual infrastructure. Other cofounders were Csaba Hajdu, John Raybold and Sally Pipes. Today, the institute has five offices across Canada, 77 staff, 26 senior fellows and a balanced 2008 budget of $13.8 million, which is about 9% more than in 2007. Most of its revenue comes from foundations (52%), although corporations (36%) and individuals (12%) provide significant sums. All get charitable donation tax receipts for their contributions. •
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This article from Business in Vancouver July 28-August 3, 2009; issue 1031 Photograph: Dominic Schaefer |
