Recent moves by the Ford government in Ontario – freezing tuition hikes but also eliminating grants for low-income students and shortening the grace period for the repayment of loans under the Ontario Student Assistance Program – have been the subject of much controversy in the province. Despite the consternation that followed these moves, the Premier may have unwittingly done those of us in higher education a great favour. It is increasingly difficult to maintain faith in the expedients – tuition increases, larger first year intakes, emphasis on international students and graduate programs, and reliance on contract academic faculty – that have been employed to counterbalance plummeting government support for postsecondary education.
It is now time for a rethink about how we meet the financial needs of our educational institutions. One possibility that has not been widely discussed and yet offers hope is the implementation of a financial transaction tax or “Tobin Tax.” Such a levy – named for Nobel Laureate James Tobin, who developed the idea in the early 1970s – could be applied to various sorts of transactions, including stock and bond purchases and currency exchanges. The measure was first proposed by Tobin in order to stabilize volatile markets. In the wake of the 2008 financial crisis, the idea of an FTT gained impetus in light of the public bailouts necessitated by the recklessness of the financial community.
In some quarters, the idea of an FTT has aroused significant interest. The European Union began discussions regarding an FTT in 2011. The initial proposal involved “a harmonised minimum 0.1 percent tax rate for transactions in all types of financial instruments except derivatives (0.01 percent rate).” The measure failed to gain the support necessary for implementation across the EU. However, a group of members states – comprised of Austria, Belgium, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain – continues to work on implementing such a measure. As recently as December 2018, France (which already has a similar levy in place) and Germany were in negotiations to work out a joint FTT as a blueprint for the larger group. Support for a tax of this kind has not been confined to Europe either. During the U.S. presidential election in 2016, the campaigns of both Bernie Sanders and Hilary Clinton floated the idea.
It is time to seriously consider such a move in Canada. Despite the fact that our economy is a fraction of the size of the EU’s economy, a financial transaction tax in Canada would generate billions of dollars. These revenues could certainly be applied to other areas currently in dire need such as healthcare, social programming and infrastructure, in addition to higher education. They could also be disbursed in a manner similar to transfer payments allocated to healthcare so as not to jeopardize provincial jurisdiction in the realm of education.
The system as it currently stands is failing students and educators and placing administrators in exceedingly difficult positions. Organizations such as the Canadian Association of University Teachers and Universities Canada should explore this option and begin to lobby for the implementation of an FTT in order to generate the revenue that postsecondary educational institutions desperately need. The alternative is a system in which universities become more and more like corporations as they aggressively recruit prospective students, in which a lumpenprofessoriat of part-time faculty with little hope of gaining security assumes ever-more responsibility for teaching, and in which students, saddled with mounting debt loads, treat their education as a consumer good. Nobody wants to see that scenario play out.
Peter Farrugia is an associate professor in the history, and social and environmental justice, programs at Wilfrid Laurier’s Brantford campus.