How Canada got a step closer to taming its big fiscal beast
TheGlobeandMail.com – ROB/Commentary
Mar. 08, 2016. Dylan Marando
Dylan Marando is a PhD student at the University of Toronto and a former adviser in the Office of the Premier of Ontario.
On Feb. 23, the Department of Finance made the unprecedented decision to release tax expenditure figures in database format. You may not have felt the tremor, but this liberation of hitherto cloistered information was earth-moving in the world of Canadian public finance. It has brought us one step closer to understanding and thus taming Canada’s most unwieldy fiscal beast – a hidden multibillion-dollar boondoggle born from an excessive politicization of public policy.
For years now, the government has been drifting toward the use of tax expenditure as a means of policy, and we have lacked the tools to analyze what’s happening. Colloquially known as boutique tax breaks, benefits, or loopholes, this policy instrument has generated programs such as the Public Transit Tax Credit and the Children’s Fitness Tax Credit. Measures such as these are thought to incentivize desired behaviours through targeted tax relief.
It sounds simple, almost like a tax cut. But, in fact, these budgetary boogeymen are subsidies to the select few, often conveniently benefiting the sorts of voters that form the support base of the political powers that be. Many tax expenditures, but thankfully not all, are disproportionately beneficial to the wealthy given their countervailing effect on the progressivity of the income tax system. Research by Ben Sand and Peter Taylor for the Frontier Centre For Public Policy notes that the top income quartile in Canada claims 43 per cent of the value for the aforementioned public transit credit and 71 per cent of the value for the children’s fitness credit.
As the Parliamentary Budget Office reported, already in 2009 there were 189 of these programs, costing the government more than $100-billion a year and representing an astounding 7.5 per cent of gross domestic product. The cost of tax expenditures is greater than the voted appropriations of the federal government.
More troubling, tax expenditures are invisible in the policy discourse. They are not reported in the budget. There is no statutory obligation to review them. As far back as 1976, those skeptical of the tool’s stubborn opacity and growing power asked the government to inform Parliament of costs and benefits. The parliamentary secretary to the minister of finance rose and said: “The information requested is not generated routinely in the regular processing of taxation data. To obtain this information would require special data processing the cost of which would be several thousand dollars. Answering the question would thus be prohibitively expensive.”
Amazingly, that answer was the standard for 40 years. The government did not start reporting on tax expenditures in any form until 1979. It was not until 1994 that the Department of Finance began publishing estimates; even then, the information that came was highly unusable.
In an analysis from the Macdonald-Laurier Institute, Canada’s former chief statistician said of the programs: “Taxpayers neither know accurately how much tax they are paying nor do they have any knowledge of the many ways their tax dollars are being spent, and with what effectiveness.” In the United States, critics have been sounding alarms for years. Cornell University professor Suzanne Mettler argues that tax expenditures create a “submerged state” that detaches the public from policy making, thus enabling governments of the right and left to pursue ideological agendas without public push-back. Prof. Mettler sees this phenomenon as a threat to democratic institutions and evidence-based policy making. My doctoral research seeks to test Prof. Mettler’s thesis in the Canadian context. But roadblocks abound, including access to coherent data.
The trend to hide these expenditures is beginning to change. To be sure, there is a long road ahead. The first step is accurately describing tax expenditures. Then, advocates need to call for the elimination of those programs not well aligned to the broad public interest. We must do more to grasp the political implications of a tax-expenditure-driven system of public policy. Thankfully, we are one step closer.
< http://www.theglobeandmail.com/report-on-business/rob-commentary/how-canada-got-a-step-closer-to-taming-its-big-fiscal-beast/article29056199/ >
Tags: budget, economy, featured, ideology, participation, tax
This entry was posted on Tuesday, March 8th, 2016 at 1:15 pm and is filed under Governance Policy Context. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.
336 Responses to “How Canada got a step closer to taming its big fiscal beast”
« Older Comments | Newer Comments »
Leave a Reply
Recent Comments
Regards for helping out, superb info.
You are a very smart person! 🙂
Thanks pertaining to discussing the following superb written content on your site. I ran into it on the search engines. I will check back again if you publish extra aricles.
Hello this is a wonderful write-up. I’m going to e mail this to my friends. I came on this while searching on yahoo I’ll be sure to come back. thanks for sharing.
Αν έχεις ήδη αποφασίσει να φύγεις από τις πλατφόρμες με ελληνική άδεια ΕΕΕΠ, η ερώτηση δεν είναι «αξίζει;» αλλά «ποια από αυτές αξίζει περισσότερο;». Ελέγξαμε 15 διεθνείς στοιχηματικές εταιρείες που λειτουργούν στην Ελλάδα το 2026: ανοίξαμε λογαριασμούς με ελληνικά στοιχεία, δοκιμάσαμε καταθέσεις με κάρτα και κρυπτονόμισμα, και μετρήσαμε τον πραγματικό χρόνο ανάληψης. Το βασικό κίνητρο για τους περισσότερους είναι πρακτικό: οι διεθνείς πλατφόρμες δεν εφαρμόζουν αυτόματη παρακράτηση φόρου επί των κερδών, δεν κόβουν λογαριασμούς που κερδίζουν συστηματικά και προσφέρουν ευρύτερη γραμμή με περισσότερα αθλήματα. Οι εταιρείες που ακολουθούν δέχονται εγγραφή από την Ελλάδα, η πρόσβαση στον ιστότοπο δεν απαιτεί VPN και κανένας από αυτούς δεν βρίσκεται στον κατάλογο αποκλεισμένων τοποθεσιών της ΕΕΕΠ κατά την τελευταία επικαιροποίηση.
Thank you a lot for sharing this with all folks you actually recognize what you’re speaking about! Bookmarked. Please additionally visit my site =). We can have a hyperlink trade contract among us!
This information is critically needed, thanks.
I Am Going To have to come back again when my course load lets up – however I am taking your Rss feed so i can go through your site offline. Thanks.
Nice piece of info! May I reference part of this on my blog if I post a backlink to this webpage? Thx.
The clarity in your post is just nice and I can tell you are an expert in the subject matter.
Aw, this was a very nice post. In idea I wish to put in writing like this moreover taking time and precise effort to make an excellent article! I procrastinate alot and by no means seem to get something done.
Good points – – it will make a difference with my parents.
Hi, possibly i’m being a little off topic here, but I was browsing your site and it looks stimulating. I’m writing a blog and trying to make it look neat, but everytime I touch it I mess something up. Did you design the blog yourself?
I’ve read several good stuff here. Definitely worth bookmarking for revisiting. I surprise how much effort you put to make such a magnificent informative site.
I loved your idea there, I tell you blogs are so exciting sometimes like looking into people’s private life’s and work. Every new remark wonderful in its own right.
Very often I go to see this blog. It very much is pleasant to me. Thanks the author
This is my first time i visit here. I found so many helpful stuff in your website especially its discussion. From the tons of responses on your posts, I guess I am not the only one having all the enjoyment here! keep up the excellent work
I’ll check back after you publish more articles.
Howdy! I simply wish to give a huge thumbs up for the great information you have here on this post. I will be coming again to your weblog for extra soon.
Thanks for your patience and sorry for the inconvenience!