
Left: Halifax Herald, 24 June 1942. Right: Dr. Ahmed Rabea via @DrLeanaWen, 20 March 2020.
By Shirley Tillotson
Imagine a 500% increase in business and a steady loss of your best staff, snaffled up by competing firms who double their salaries. It’s 1944. You’re the federal income tax department. Tens of thousands of unassessed returns pile up. By 1949, the backlog reaches 1.9 million.
The Canadian Emergency Relief Program (CERB) is today’s explosively expanded program. And, just as there was with the postwar income tax system, there will be a clean-up. In this post, I’ll sketch some parallels between the two cases and dive into some details about successes, failures, and lessons.
The creation of a mass income tax as an emergency measure during the Second World War was a remarkable accomplishment. In a few years, and especially during a few months in 1942, income taxation went from affecting 300,000 Canadians to more than 2 million. By 1951, income taxpayers numbered almost 3 million (about two-thirds of the labour force).[1] Organizing citizens to pay tax on that scale was a massive undertaking. Measures taken hastily during the crisis required clean-up, however, both quickly and later, as part of post-war changes.
Those circumstances should remind us of the conditions in March 2020, when again the federal government, under withering pressure of time, needed to devise a system that would involve millions of Canadians and their money. The various emergency programs that have been rolled out over the last few months – and especially the Canadian Emergency Relief Program (CERB) – have been by now a subject of worries and criticisms and hopes. Are they fair? Will they create problems after the crisis? Do they foreshadow good things or bad in some new normal? As I watch current events around COVID-19 unfold, I have been thinking that, as difficult as our current situation is, we are not yet anywhere near the kind of mess in public finance that unfolded after the new tax measures of the 1942 budget and during the early years of reconstruction. Among the similar problems, worries, and solutions, there are a few examples that might help us anticipate what comes next.
Continue reading →