It’s tax time in Canada and people across the country are crunching their numbers, filling out the forms, and crossing their fingers for a good tax return. Chances are, very little consideration is being given to the benefit of paying taxes, or to the services we receive in return.
The extent to which taxes have been disassociated from public services is astounding. Across the Canadian political spectrum, taxation is consistently presented in a negative light. Not only has the tax cut agenda dominated both federal and provincial politics in recent years, but viable alternatives that would result in much needed revenues (e.g. the carbon tax or increased corporate taxes) are being presented in such a way that they reinforce the notion that taxation – or that which is being taxed – is universally undesirable.
So when Liberal leader Michael Ignatieff told an April 14 breakfast meeting of the Cambridge Chamber of Commerce, “we will have to raise taxes,” alarms bells went off. The Conservative response? To simply to create a list of statements, made over the years, in which Ignatieff indicates that certain taxes in certain contexts are a good thing. They provided no recognition of the eventual challenge of paying off the federal deficit. And, there was certainly no explanation of why any of these statements are apparently outrageous.
The truth about taxes is that they finance the mechanisms by which the health, safety, and well-being of our society are promoted. They also provide us with tremendous personal benefits.
Universal health care and quality public education are key public services Canadians receive. However, government services encompass a much broader range of physical and social infrastructure, as well as important research and regulatory functions. These include roads, bridges and sewers; public parks and pathways; public libraries and transportation systems; environmental protection; police services, paramedics, and fire fighters. Public services support citizens in certain demographics and those who are facing a particular need through housing and childcare subsidies, benefits for children, seniors and people with disabilities, welfare and employment insurance. There are also many health and safety regulations that, while are not visible on a daily basis, are vitally important.
Together, this assembly of government services provides tremendous collective benefits. They go beyond providing the grids upon which our cities and towns are built, maintaining our personal health and safety, and encouraging the growth and development of our children. Public services also provide the supports that allow families and communities to flourish, preserve our democratic institutions, and help to promote the social and economic development of our society.
An important aspect of public services and the promotion of the common good is in their redistributive function. According to the Organisation for Economic Co-operation and Development (OECD), “this inequality-reducing effect results mainly from a relatively uniform distribution of these services across the population, which implies that they account for a larger share of the resources of people at the bottom of the distribution than at the top.” And by promoting equality, public services have the potential to improve social cohesion, limit the strains on effective democracy linked to significant gaps between the rich and poor, and limit the need for direct income-supports for poor Canadians.
New research also suggests that there are also significant personal benefits from public services. Canada’s Quiet Bargain, a recent study by the Canadian Centre for Policy Alternatives (CCPA) states that, “the average per capita benefit from public services in Canada in 2006 came to $16,952.” The study further articulates that “Even in the $80,000 to $90,000 household income range – just below the richest 20% – the benefit received from public services is equivalent to about half of the household’s private income. In other words, an upper-middle income Canadian household would have to devote half a year’s wages to pay for the public services their taxes provide.”
Unfortunately, trends towards a smaller state are not only resulting in increased inequality in Canada (see Growing Unequal?), but also in net negative outcomes for at least 75% of Canadians due to corresponding reductions in public services. According to the CCPA, the 1% cut in the GST in 2008 maxed out at a mere $50 per year in people’s pockets (for households with incomes between $110,000 and $200,000; those with incomes below $110,000 received no cash benefit). The trade-off? $5.7 billion in lost revenue and devastation for the low-income Canadians most heavily reliant on public services.
The failure to connect taxation and public services causes us to consider the kind of society that we want. The implications that the tax cut agenda has had for all Canadians, and particularly for poor Canadians, brings this questioning into even greater focus.
As Christians, we are called to seek justice and equality, to promote the common good, and to encourage all people, including the poor and the stranger, to participate as valued members of our communities. We desire a society in which public resources are used to provide individuals and families with the supports they need to thrive. We must therefore do all that we can to put in place policies that promote social and economic security. We must also make certain that there is sufficient government revenue to invest in the programs and services necessary to ensure dignity for all.