The transportation industry is one of the most taxed and over-regulated industries in Canada bar none. There are many privately owned companies and self-employed broker operators in the system that are running their own show. They are entrepreneurs. These people risk their capital and for so doing thrive in the transportation or logistics business. The problem is that there are not enough owners and entrepreneurs in Canada.

So what do we need to do?

My solution is pushing to the fore a Motivational Tax System. Such a system would, in essence, eliminate the excessive bureaucratization of government while simultaneously returning responsibility of decision and action to the individual. Government administration has grown to such proportion that our tax base is no longer able to support its existence, let alone justify it. Remember, one manufacturing job drives three or four in the service industry. Currently, we are pushing this ratio to its limits and the crack in the foundation is becoming a gorge. The total number of manufacturing outsourced jobs (most sent to India and China) has been steadily increasing, while the number of service jobs has been marching steadily onward and upward. The ratio is falling out of whack.

There is a dire need to encourage individuals to spend, invest, and work instead of penalizing them when they do. By spending our tax dollars on various make-work projects, our governments are not creating new wealth. Indeed they often create larger debt.

Apart from specifically technical education, Canadians need an educational push towards the process of investing in the development and commercialization of Canadian science and technology. Included in this education is the information required to invest in purely start-up and growth companies.

There are countless suppliers to the transportation industry. These companies are progressive and depend on technology, special services or proprietary processes. On the other hand, many Canadian transportation companies still operate like they did over 20 years ago. These companies are dinosaurs.

If Canadian taxpayers realize the importance of their contributions and have a specific or active part in deciding where their money is to be allocated, investment takes on a whole new meaning. There exists a pride in knowing that you are in some way responsible for the growth of Canadian industry. Individuals become the rulers of their own destiny.

In addition, government must take a new approach to its “official” responsibilities. Another tenet of this new tax system relieves the responsibility of directly subsidizing projects, such as housing. Using public housing as an example, rather than directly subsidizing the construction or rental costs of these projects, government can subsidize the taxes of those who finance them, thereby relieving the government’s extensive and costly role of project manager, thus leaving it to the private sector to be responsible for the bottom line. Public Private Partnerships (P3’s) are the only way.

Several advantages become evident from this type of system. It motivates the taxpayer to work for more when he/she pays reasonable taxes. The ability to direct their funds as they see fit brings about sentiments of pride and responsibility that have been lacking in Canada for the better part of its existence. A motivational tax system also forces government to work within a budget. With a decrease in responsibility for various sectors of the industry, the focus of public attention becomes narrowed on government performance in those areas left for their undertaking.

The mechanics of such a system can be argued; some suggest a tax rate that changes based on income and others hold to a fixed rate for all taxpayers. In the end, however, the pivotal act requires a shift from government intervention to a more market-oriented society where the individual is the focus of attention. Historically, this individually oriented society has created the greatest advancements for society as a whole.

The time has passed for government to prove it is capable of running all sectors of the economy. Its operations are simply too lethargic to adapt to an ever-changing world of technology. Industries must be capable of surviving market conditions which force the rapid adaptation of new technology or face extinction. Government debt backing only prolongs the inevitable. Efficiency and ability is key to survival.

Mark Borkowski is president of Toronto based Mercantile Mergers & Acquisitions Corporation. Mercantile specializes in the sale of companies in the transportation industry. He can be contacted at mercant@interlog.com