Annual anti-tax report is still bogus after all these years

TheStar.com Opinion/Editorials – The Fraser Institute’s annual anti-tax litany was always bogus; now, thankfully, it’s starting to look out of touch.
Aug. 28, 2017.   By

There is no sweeter time of year for those perennially convinced of government’s greed and bloat than the release of the Fraser Institute’s annual Canadian Consumer Tax Index, which never lets the truth get in the way of a bit of anti-tax panic.

The numbers are again eye-popping. According to the authors, the tax bill of the average Canadian family has increased by a whopping 2,006 per cent since 1961. We now pay more in taxes than we do on housing, food and clothing combined, the report gasps, as it does every year.

As ever, however, the scandal the report purports to uncover would seem far less scandalous if only the numbers used were not so distorted and out of any context.

To take a few egregious examples: the report doesn’t account for inflation. It includes corporate taxes in the average family’s tax bill, though these are largely shouldered by richer Canadians. It presents the mean family as the typical one, though the median family, which earns less and thus pays less in taxes, would be more appropriate.

The report asserts that Canadians, on average, spend more than 40 per cent of their income on taxes. A recent study from the Broadbent Institute put the number at about half that. There are many ways to calculate these things; the Fraser Institute’s questionable methodology no doubt suits its dogmatic aversion to taxes and active government.

Nor does the report mention that Canada is increasingly a low-tax country compared to our peers. When it comes to taxes as a share of GDP, for instance, Canada is well below average among OECD nations. But saying that, we suppose, might dampen the outrage.

The study’s greatest failing, however – the omission that ultimately renders its statistics meaningless – is that it makes no mention whatsoever of what we get in return for our tax money. Nowhere does the report mention “public services” or “programs,” nowhere “roads” or “schools.” It’s true that taxes as a percentage of our income have risen over the last 56 years, by around 7 per cent, but consider what they have bought: medicare, for instance, and the Canada Pension Plan, to name just two programs established after their baseline year of 1961.

Not only are these and other aspects of our social safety net arguably central to our national identity – the civilization, you might say, for which taxes have been the price. But they have also yielded exceptional value for money.

A 2009 report from the Canadian Centre for Policy Alternatives found that middle-income Canadians enjoy public services, from education to health insurance to pensions, worth about $41,000 annually per family – or roughly 63 per cent of their income and more than they pay in taxes. Conversely, we have watched as decades of tax cuts have led to eroding public services, but also to rising inequality, persistent homelessness, traffic gridlock and crumbling schools.

By delinking taxes from the services they buy, the Fraser Institute has long fed into a false narrative that for decades was in the ascendancy: that any tax is a bad tax and any cut a free good. In recent years, however, that view has begun to fall out of favour, and not just on the left. The IMF, the OECD, and other past champions of austerity have all made the case that the costs of tax cuts often outweigh their benefits and taxes and the collective action they pay for are essential if we are to meet our biggest challenges.

A few years ago it was almost unthinkable that a Canadian politician could run successfully on the promise of raising any taxes ever. But in the last federal election, both the New Democrats and the Liberals promised tax hikes for at least some Canadians that would have seemed political suicide in recent elections past.

The Fraser Institute’s annual anti-tax litany was always bogus. Now, thankfully, it’s starting to look out of touch.

https://www.thestar.com/opinion/editorials/2017/08/28/annual-anti-tax-report-is-still-bogus-after-all-these-years-editor.html

Leave a Reply

Your email address will not be published. Required fields are marked *