Monday, June 16, 2014

The disconnect between taxes and services

Many would see me as a tax eccentric. I like paying taxes  (but not more than I legally have to pay) and frequently rejoice at what they give me: highways, air traffic control, emergency rooms, , abortion rights, traffic lights, schools, food safety, policing, regulating, licensing, autopsies, compassion, all the things that make us an organized and rational nation that is a pleasure to live in. I don’t trip over small corpses on the way home. It’s rather nice. 

Fiscal Conservatives, on the other hand, enjoy these services while abusing taxes as the necrotizing flesh disease of Canadian life.


I came across this recently and thought it was important to share. Alex Himelfarb has had an impressive career in public service. A former professor, author and diplomat, he is probably best known for his service as clerk of the Privy Council for Jean Chretien, Paul Martin, and, briefly, Stephen Harper.
His most recent accomplishment is “Tax is Not a Four Letter Word”, a collection of essays by various authors including the CCPA’s Trish Hennessy, Jim Stanford and Hugh Mackenzie. Alex co-edited the book with his son Jordan, Opinion Editor for the Toronto Star.
Taxing is more complicated than that, as essayist Jim Stanford says. “Governments decide, in the context of the conflicting and contradictory political pressures they face, what programs they will provide. Then they figure out how to fund those programs.” 

Neo-liberals cut taxes first, Stanford says, while the programs exist, thus creating a deficit that is used to justify further cuts. We are manipulated. For example, we are told that we can’t afford pensions. Neither can we raise payroll taxes to raise CPP benefits for the future. 

But we can pay them if we choose to.

We are more than just consumers and taxpayers. We are citizens with responsibilities for one another; we undertake to do some things together, things that we could never do alone or that we can do much better collectively. Taxes are the way we pay for those things. They’re the price of living in Canada and the opportunities that provides. Indeed, those opportunities exist because of the sacrifices and taxes of previous generations to build the Canada we inherited.


We demand of our leaders to explain how they are going to pay for new services but, equally, we need to demand that they explain the COSTS of their promised tax cuts ­–­­­ to our quality of life, to our democracy, to our economy.  Would we be so pleased with the next tax cuts if we knew they came with worsening traffic congestion, increased risks to food safety, longer wait times for health care, less help for the jobless and needy, rising inequality and environmental degradation?
We seem only to talk about what government costs and not about what it gives.  Too much is at stake to let our identities as “consumers” and “taxpayers” supplant our citizenship and commitment to the common good.
It’s become a political truism that politicians would have to be nuts to talk about taxes unless they’re promising more cuts. But that fear of taxes is limiting, dangerous. We need to shift the conversation, to recognize that the public services and goods we value have to be paid for and that tax cuts are not free. We cannot have Swedish levels of service and American levels of tax

Of course, a minority will never be convinced, and we will always have legitimate disputes about the right amount and mix of taxes. But the majority does value what their taxes buy. Nonetheless, they worry about how government spends, inevitably  circling back to the problem of waste. Why would I want to pay taxes when so much is wasted?

Yet perceptions of wasteful spending persist. In part, concern about government waste is a proxy for differences in values.  What we call waste is often spending we don’t much like  (say, the arts from the right, or military spending from the left).  That’s the stuff of elections as we try to choose a government that reflects our priorities.


In Canada, austerity has been implemented in the slowest of motion and so the consequences are less visible than, say, in parts of Europe.  But they are real nonetheless,  felt first by women and youth, and the most vulnerable. Austerity, it seems, makes us meaner.
Next in line are the politically easy targets – civil service, teachers, unions. It seems that bashing bureaucrats is always good politics whatever the consequences.
But of course in the end we all pay the price in rising inequality and the erosion of essential institutions, infrastructure and the environment. This erosion happens so slowly it’s hard to attribute to the tax cuts.  Government just slowly gets worse.  Ironically this is used to justify further tax cuts.  Witness recent proposals to eliminate EI because it now serves so few people so badly. The Post Office. What next?  When we lose trust we can’t solve problems together. We look at gridlock and instead of saying, ‘let’s build transit solutions’, we conclude, ‘government doesn’t work’.
Extreme inequality further undermines trust – those at the very top become increasingly effective at convincing us of the dangers of taxes – after all they don’t need many of the public services the rest depend on – and those at the bottom won’t want to pay if they think the game is rigged. Extreme inequality erodes our ability to come to a common view, to build a shared sense of the common good.
Perhaps the most enduring consequence of austerity is that it stunts the political imagination. Previous generations could imagine universal public health care, public pensions, the National Child Benefit.  But now our first response to the dreamers is ‘ya, but how would we ever pay for it?’  This breeds a kind of fatalism, declinism –growing doubt that we could make things better together, that we could ever hope to solve the big problems, inequality or climate change.
If I track the last fifteen years, all the tax cuts, federal taxes as percentage of GDP are four points lower, each point worth about $20 billion. Imagine what we could do with that, or even a portion.
The two cents of GST that the Conservative government cut in its first couple of years cost about $14 billion per year, slightly more than the surplus they inherited. Think about how much more resilient we would have been without those cuts when the recession hit, how much more we could have helped those hardest hit, without so much added debt and without turning to austerity as though it were inevitable.
We chose the path we are on.  We can choose something better.

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