PermanentTaxOnEverything: If you're going to get beaten up, you might as well fight - Macleans.ca

PermanentTaxOnEverything: If you’re going to get beaten up, you might as well fight

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I went camping with my brother and his hilarious kids a couple of weekends ago in Algonquin Park. We got eaten alive by blackflies. It was fun. In the gas-guzzling SUV on the way back to Mark’s home in Oshawa (Liam: “Dad, when are we gonna get there….”), I noticed the acre on acre of new housing developments, eerily Truman Show-esque subdivisions of truly immense new homes. Yes, Mark said, people are flocking to Oshawa, even though property taxes there are roughly double what people pay in Toronto, because Oshawa’s municipal council has decided to build up local infrastructure and try to make the place more livable. Incidentally, the mayor who made that call was re-elected in 2006 with nearly three-quarters of the vote.

This is only the umpty-dump-jillionth demonstration that people don’t build their whole lives around their tax bills. If you like a place, you are willing to take a tax hit to live in it. If you like a policy, you are not likely to fuss too much about its tax cost. This may be some consolation to the Liberals, because like Andrew Coyne, I don’t see anything revenue-neutral about their PermanentTaxOnEverything™. Nor do the Liberals even put much effort into pretending otherwise. Their pamphlet (which is easily three times longer than it should be; the Liberals must hand it over to an elementary-school grammar teacher, chosen at random, for the basic edit it should have received long before today) handily divides fiscal measures into “Personal tax reductions,” “Business tax reductions,” and “Additional support.” Hmm. Additional support. Government programs.

The Liberals will take serious criticism for this. They could have avoided it by arguing frankly, from the outset, that their scheme shouldn’t be revenue-neutral because the federal government exists to do things and it needs revenue for the job.

Courtesy of the Fraser Institute, here’s that think tank’s Tax Freedom Day over the years: the day on which Canadians stop working to pay thee median federal, provincial and municipal tax bill for a double-income, two-child family. (No link because I asked the Fraser Institute to do the time series for me.)

1992   1 June
1993   4 June
1994   9 June
1995   11 June
1996   16 June
1997   19 June
1998   20 June
1999   23 June
2000   24 June
2001   18 June
2002   22 June
2003   22 June
2004   22 June
2005   25 June
2006   23 June
2007   18 June
2008   14 June

So since the Harper Conservatives took office, Tax Freedom Day has moved forward 11 days in 3 years, its fastest forward move ever. Other data provided to me by the Fraser Institute suggest the federal share of the tax burden, used to calculate Tax Freedom Day, is now at its lowest since 1995. That GST cut imposed a significant hit on federal revenues. Stéphane Dion used to argue — at the first Liberal leadership debate in 2006 in Winnipeg — that the second cent of GST cut should be cancelled and used to pay for an enhanced National Child Benefit. A version of that proposal has survived to become part of today’s PermanentTaxOnEverything™. The difference is that the Dion who used to argue for a larger federal state now plans for a larger federal state while denying he’s doing so. I fail to see how that is “smart politics,” but I have rarely understood what makes the advocates of “smart politics” so smart.

No matter. The Conservatives’ interest now lies in narrowing the debate to two questions: Dion’s consistency, now that he has pinned his party’s fortunes to a policy he used to decry when its most prominent proponent was Michael Ignatieff; and this question of revenue neutrality.

The Liberals’ interest, then, lies in broadening the debate. If this turns into an argument about whether Dion’s numbers sum to zero, he will lose and deserve to lose. Liberals need to argue that what they are doing is worthy policy as such. On one hand, that it is important to quickly put a price on carbon because too much Tory inaction has followed too much Liberal inaction. On the other hand, that the Liberals are not interested in apologizing for income-tax cuts or for the other measures they will propound for seniors and families with children.

On that second note, something truly extraordinary got buried in the mounds of Liberal verbiage today.

That’s the “new, universal child tax benefit worth $350 per child, per year, on top of all existing child benefits. This will provide direct financial assistance to Canadian families whether or not they pay significant income taxes.”

Sound familiar? It should. Under Paul Martin, the Liberals expended considerable resources, including the credibility of one communications director, fighting against just such a universal benefit in 2006. (See “beer and popcorn.”)

This Universal Child Tax Benefit, worth $2.9 billion when the program reaches maturity in four years, will probably be accompanied, in the next campaign, by some Liberal proposal to increase the number of state-supervised daycare spaces in the country. But so what. It represents a formidable attempt to grab back the political centre and to acknowledge that three years of Harper government cannot simply be erased if a Liberal government replaces it. Or it could, if the Liberals would admit (first to themselves, then to Canadians) what they are doing.