Lorne Gunter
National Post
Friday, September 28, 2007
Broad-based tax cuts, now, Mr. Flaherty.
It's simple, sir. No hemming and hawing, please. No dithering. No equivocating. Just cut Canadians' taxes now.
Yesterday it was revealed that in the fiscal year that ended on March 31, your government racked up a staggering $14.2-billion surplus, despite an orgy of spending in the 2006-07 fiscal year that would make a Liberal blanch. And you are likely to run up another surplus of $12-billion or more this year, according to the Canadian Taxpayers Federation, despite a similar spending spree in 2007-08 -- a combined increase of 14% or 15% in program spending in just your first two years as Finance Minister.
Take, the hint, Mr. Flaherty: You're overtaxing Canadians. The simple, elegant solution, then, is to cut taxes. And no more "targeted" tax cuts. Lower personal income tax, or corporate income tax, or the GST or Employment Insurance premiums. Lower those taxes nearly everyone pays and which are the biggest brakes on economic growth.
A Conservative MP of my acquaintance splits lunch with me once or twice a year -- he pays one time, I pay the next.
The last time we ate together was just after this spring's federal budget and he pleaded with me to stop busting the government's chops over the lack of tax cuts.
"We've cut lots of taxes," he insisted. And, indeed, the Tories have cut taxes -- sort of.
They now let Canadians write off up to $500 a year for the cost of their kids' soccer or hockey registrations and part of the bus or subway passes they buy for their daily commutes -- provided they use a bus or subway rather than a car.
In the most recent budget, the Tories implemented a Working Income Tax Benefit that provides for an automatic deduction of up to $500 a year to cover employment-related expenses not normally reimbursed by employers.
They raised the spousal allowance for taxable income, implemented a $2,000 annual child credit (which actually works out to about a $310 benefit) and, my favourite, increased "the share of meal expenses that long-haul truck drivers can deduct."
There's nothing wrong with any of these, but truthfully, they're not tax cuts.
In officialese, they're "tax expenditures" -- money Ottawa could have collected but chose not to in order to achieve some public policy purpose, in this case raising the Conservative vote total among big-eating truckers with lots of kids and stay-at-home spouses whose employers are slow to pay them back for little extras they buy for work.
Think of most of these so-called cuts as tax give-backs.
What Ottawa taketh, it giveth back-- to some.
There are two problems with these give-backs: They're a horribly inefficient way to cut taxes and the philosophy behind them is all wrong.
With a true tax cut, the feds never levy the money in the first place. They never rummage around in your pocket
until they find the loonies they want and take them to the federal treasury.
With tax give-backs, first the money is collected, then a sufficient number of returns are audited each year to ensure the collection is more or less fair and complete.
Then there are armies of bureaucrats who manage the money, assess program needs, sift through funding proposals, calculate economic impacts, field telephone and online inquiries, cut cheques, mail cheques, investigate fraud and handle complaints.
For every dollar collected by government and eventually returned to taxpayers, at least another 40¢ is consumed by bureaucracy to handle the transaction.
(And politicians sometimes call payday-loan companies sharks for taking 3% to 12% of cheques in return for a cash advance.)
Far better to leave the money in everyone's pockets from the start than trying to decide which potential Tory voter demographic deserves the next give-back. Such "cuts" actually increase the size of government.
Equally troubling is the notion in the give-back mentality that all the money is the government's and we taxpayers should be grateful for whatever dribs and drabs politicians stoop to restore to us.
Individual Canadians are better suited to decide how their earnings should be spent than any 100 or even 1,000 central planners.
If Ottawa consistently has $10-billion to $15-billion more of our money than it needs, it has an obligation to stop taking so much in the first place.
Broad-based tax cuts, now.
© National Post 2007
National Post
Friday, September 28, 2007
Broad-based tax cuts, now, Mr. Flaherty.
It's simple, sir. No hemming and hawing, please. No dithering. No equivocating. Just cut Canadians' taxes now.
Yesterday it was revealed that in the fiscal year that ended on March 31, your government racked up a staggering $14.2-billion surplus, despite an orgy of spending in the 2006-07 fiscal year that would make a Liberal blanch. And you are likely to run up another surplus of $12-billion or more this year, according to the Canadian Taxpayers Federation, despite a similar spending spree in 2007-08 -- a combined increase of 14% or 15% in program spending in just your first two years as Finance Minister.
Take, the hint, Mr. Flaherty: You're overtaxing Canadians. The simple, elegant solution, then, is to cut taxes. And no more "targeted" tax cuts. Lower personal income tax, or corporate income tax, or the GST or Employment Insurance premiums. Lower those taxes nearly everyone pays and which are the biggest brakes on economic growth.
A Conservative MP of my acquaintance splits lunch with me once or twice a year -- he pays one time, I pay the next.
The last time we ate together was just after this spring's federal budget and he pleaded with me to stop busting the government's chops over the lack of tax cuts.
"We've cut lots of taxes," he insisted. And, indeed, the Tories have cut taxes -- sort of.
They now let Canadians write off up to $500 a year for the cost of their kids' soccer or hockey registrations and part of the bus or subway passes they buy for their daily commutes -- provided they use a bus or subway rather than a car.
In the most recent budget, the Tories implemented a Working Income Tax Benefit that provides for an automatic deduction of up to $500 a year to cover employment-related expenses not normally reimbursed by employers.
They raised the spousal allowance for taxable income, implemented a $2,000 annual child credit (which actually works out to about a $310 benefit) and, my favourite, increased "the share of meal expenses that long-haul truck drivers can deduct."
There's nothing wrong with any of these, but truthfully, they're not tax cuts.
In officialese, they're "tax expenditures" -- money Ottawa could have collected but chose not to in order to achieve some public policy purpose, in this case raising the Conservative vote total among big-eating truckers with lots of kids and stay-at-home spouses whose employers are slow to pay them back for little extras they buy for work.
Think of most of these so-called cuts as tax give-backs.
What Ottawa taketh, it giveth back-- to some.
There are two problems with these give-backs: They're a horribly inefficient way to cut taxes and the philosophy behind them is all wrong.
With a true tax cut, the feds never levy the money in the first place. They never rummage around in your pocket
until they find the loonies they want and take them to the federal treasury.
With tax give-backs, first the money is collected, then a sufficient number of returns are audited each year to ensure the collection is more or less fair and complete.
Then there are armies of bureaucrats who manage the money, assess program needs, sift through funding proposals, calculate economic impacts, field telephone and online inquiries, cut cheques, mail cheques, investigate fraud and handle complaints.
For every dollar collected by government and eventually returned to taxpayers, at least another 40¢ is consumed by bureaucracy to handle the transaction.
(And politicians sometimes call payday-loan companies sharks for taking 3% to 12% of cheques in return for a cash advance.)
Far better to leave the money in everyone's pockets from the start than trying to decide which potential Tory voter demographic deserves the next give-back. Such "cuts" actually increase the size of government.
Equally troubling is the notion in the give-back mentality that all the money is the government's and we taxpayers should be grateful for whatever dribs and drabs politicians stoop to restore to us.
Individual Canadians are better suited to decide how their earnings should be spent than any 100 or even 1,000 central planners.
If Ottawa consistently has $10-billion to $15-billion more of our money than it needs, it has an obligation to stop taking so much in the first place.
Broad-based tax cuts, now.
© National Post 2007
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