Social Policy in Ontario

Some months ago, we published a collection of essays designed to promote a discussion of taxes in Canada. The book’s premise is that the current tax conversation is distorted. While we rightly ask of any new policy or program proposal, “what will it cost and how will we pay,” we do not ask of proposed tax cuts, “what will we lose?”

Politicians of every stripe have long been wary of the political costs of raising taxes. And there will always be arguments about how much tax and what mix is best, arguments between those with a restrictive view of the state and those with an expansive one, and arguments between those who view redistribution as essential and those who see it as illegitimate.

The danger of our current conversation is that it sidesteps these debates and allows us to sleepwalk into a future we haven’t chosen.

In the book we do try to counter the view that taxes are simply a burden from which people must be relieved. Simply, they are the way we pay for things we have decided to do together because we cannot do them at all or as well alone. Our approach has yielded reactions both positive and negative.

Among the latter are predictable ideological cranks who see tax as an illegitimate intrusion in our individual freedoms, or argue that the rich deserve everything they have and the poor deserve their poverty, so why interfere? But others raise a number of serious issues that merit response.

Some claim our approach implies that people are stupid. Canadians know, the argument goes, exactly what they are doing when they vote for tax cuts; they know their taxes buy important things but they want more efficient government and smarter choices, less waste or just less state.

Of course people know that their taxes buy things they value. In fact, data in the book indicate that many would agree to some mix of tax increases to strengthen valued services. But the notion that any of us, in this country, at this time, understand the link between taxes and what they buy with sufficient clarity to make informed decisions — well, that’s either naive or just plain pandering.

Two successive parliamentary budget officers, whose job it is to know, admit they cannot get the information they need to determine the costs and consequences of tax and spending cuts. So how are we expected to know? And without information about the trade-offs, how do we make informed democratic decisions?

As for government waste, clearly we see too many shameful and troubling examples in the news. These stories do a double disservice: besides frittering public funds, they also fuel the false claims that we can pay for tax cuts simply through efficiencies and ending the gravy train.

Of course we should applaud any attempt to reduce costly layers of bureaucracy and to find cheaper, better ways to deliver services. But however much the stories of waste may dominate the headlines, the numbers never add up. Again, our parliamentary budget officers have compellingly made this case: efficiencies alone won’t get us to our spending targets. There’s never enough gravy to pay for the cuts.

We also often conflate waste with spending we disagree with. Governments inevitably do some things we personally don’t value and this may lead us to conclude that there’s always plenty of room to cut taxes. But some of what’s waste to you may be essential to others. More prisons? Stealth jets? Pharmacare? Arts? We are not likely to agree. But we don’t get to disentangle government the way we propose to disentangle cable services or personalize it the way we do our smart phone.

A commitment to collective action means sometimes putting aside our personal preferences. We can face our major challenges collectively or individually. Tax cuts favour consumer choice over shared citizenship.

The tax debate is often muddied by disagreement about whether taxes have actually gone up or down. As the economy grows, so too do tax revenues and spending, which is why many (though not all) prefer to measure tax as a percentage of the economy (GDP). The only good data on this come from StatsCan in a survey discontinued in 2008. These numbers show a decline in the scale of tax and spending over the last several decades, as do international comparisons. And using the federal government’s own projections, the scale of federal tax and spending will, over the next years, fall to lows not seen for seven decades.

Whether we’re taxed too much or too little is a perennial debate that now needs rebalancing. It’s all well and good to say that many Canadians want smaller government but that means nothing unless it’s based on some understanding of how this will affect our ability to pursue our shared goals. We ought to know what we’re giving up before we celebrate the next round of tax cuts.

It’s time we restored the tax debate to its rightful place within a larger conversation, which has all but vanished, about the kind of country we want and are willing to pay for.

Alex Himelfarb is the director of the Glendon School of International and Public Affairs and a former Clerk of the Privy Council. Jordan Himelfarb is the Star’s opinion page editor. They are co-editors of Tax Is Not a Four-Letter Word.

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