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Before You Complain About Taxes, Read This

04/24/2015 05:09 EDT | Updated 06/24/2015 05:59 EDT
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Open any newspaper and you'll find umpteen stories about taxes -- from Vancouver's ongoing transit tax referendum to Alberta's budget crisis to Toronto's property tax increase.

"It's probably safe to say that there was no golden age where everyone loved paying taxes," says Alex Himelfarb, co-editor of Tax Is Not a Four-Letter Word. "Then again, there's probably never been a time when paying the bill was our favourite part of shopping."

Case in point: the 40,513 responses the Alberta government received to its online budget survey. Citizens were evenly split between reducing spending, increasing revenue (i.e. increasing taxes) and running a deficit to make up for the government's $7 billion revenue shortfall.

Meantime in Metro Vancouver, voters are participating in a mail-in ballot until May 29 on a 0.5 per cent sales tax increase that would fund part of a $7.5 billion, 10-year transit plan. Yes, that's right, citizens are actually being asked to vote in favour of increasing taxes.

Himelfarb, who served as secretary to cabinet for three prime ministers and who is a member of DeSmog Canada's board of directors, has spent a lot of time thinking about what ties all of these debates about taxes together.

"What we've been missing in Canada is an honest conversation," Himelfarb told DeSmog Canada. "So everybody talks about the cost of a new idea but nobody talks about the cost of a tax cut."

Since 2006, Canada has cut federal taxes by $332 billion, he says.

"If we had kept even half of that, even 40 per cent of that, think of how much more resilient we would have been during the recession, how much more help we could have given the provinces and people who paid a huge price during that period of time, to help young people get into the workplace, to tackle climate change and to deal with infrastructure," Himelfarb says. "That's the cost of tax cuts."

Why People Hate Paying Taxes

People don't like paying their taxes in part because the connection between what we pay and the goods and services we receive has been broken, Himelfarb says.

"We get our public goods with no price attached," he says. "Probably most of us -- unlike my parents -- have never known or lived in a place that didn't have water we could trust or food we could trust. We take it for granted. Because there's no price and we've known no alternative, we take for granted the public goods. We devalue them."

Add to that a massive shift toward a consumer society in which people derive a lot of social standing from what they consume and it's an uphill battle for taxes.

"In a consumer society we tend to value these private purchases more than the public goods," Himelfarb says. "It's me as a private consumer versus me as a citizen. We don't get that kind of standing, that kind of competitive edge, with public good because by definition everybody benefits equally."

Tax Cuts and 'Magical Thinking'

That means taxes almost always get short shrift.

"You hear today that tax cuts are going to be paid for by cutting 'gravy trains,' by reducing waste, by cleaning up government. It's what the philosopher Joseph Heath calls 'magical thinking.' We so desperately want this bargain; we want it to be free," Himelfarb says. "We want Swedish-style services and American-style taxes so badly that we're ready to believe that we can have these tax cuts for free."

There's never enough gravy to pay for the tax cuts, Himelfarb says, and therefore cuts always have some impact on services.

"And the consequences of the extraordinary level of tax cuts we've had over the last 15 to 20 years is austerity forever," he says. "Cutting programs, forgoing investments, deferring the kind of maintenance we need on infrastructure. One of the reasons why we have unbelievable traffic gridlock in all the cities is because that big investment we should have been making has been cut."

Do Referendums on Taxes Make Sense?

David Moscrop, a political theorist who studies the psychology of political judgment, recently published a blog on Policy Options that lambasted the provincial government for putting Metro Vancouver's transit tax to a vote at all.

"By putting the plan to the people -- by making it a binary choice between a good but costly decision and no decision at all -- the government of British Columbia has forced citizens into the unenviable role of political self-representation: a job for which few of us are equipped when it comes to long-term, highly-technical issues," Moscrop wrote. "And while we battle it out in our crumbling streets and on our crowded buses, the government of the day remains insulated from the political costs of the burden of the decision."

Himelfarb also has concerns about referenda on taxes.

"I think more engaged participation by citizens is a good idea, important even, but referenda may not be the most effective way," he said. "What I worry about is to have a referendum without the honest conversation about the costs of the various options."

He continued: "Tax cuts are still talked about as though they are free. That means that people keep assuming that we can have what we want without new taxes. So changing the conversation is a prerequisite to democratic decision-making."

A study by the C.D. Howe Institute found the costs of congestion are higher than the cost of the proposed Vancouver transit tax. Congestions costs between $500 million and $1.2 billion per year for the Metro Vancouver area, the study found.

The Beginnings of a Tax Revolution

If the sentiment about taxes -- engrained during the neo-liberal, free-market ideology wave of the late 1970s and throughout the 1980s -- is going to turn around, it's going to happen at the municipal level, Himelfarb says.

"If there's going to be a tax revolution, it's going to start in the cities," he says. "It's because when senior governments cut taxes they often pass the burden of those cuts to lower levels of government. What the senior governments do is sometimes abstract and long term. Unfortunately for municipalities, they have nobody to pass the consequences to. People live with those consequences in a concrete way."

Emma Gilchrist, DeSmog Canada

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