Western Standard
email print

Big spending means little tax cuts

There's a chance that the Feds might actually deliver tax cuts. But parties have to be careful about their spending promises. How do the three stack up?

Mark Milke - May 31, 2004

The French philosopher Voltaire once remarked: "The art of government is to make two-thirds of a nation pay all it possibly can for the benefit of the other third." In Canada, after equalization, transfer payments, lax employment insurance rules and other silliness, we might well reverse that ratio. Moreover, it's the campaign season, so we can expect further pressure on taxpayers to give up extra cash soon.

But let's be optimistic. This isn't 1900, when government receipts amounted to 9.5 per cent of the nation's economy. Back then there was an arguable case for expanding the state. But 104 years later when government's share of the economy is 42 per cent, there's a natural resistance to higher taxes. And, nowadays, there's always a chance (though it's rare) that a government might actually deliver tax cuts if there's enough pressure to do so. But for that to happen, parties have to be careful about their spending promises. So how do the three parties stack up?

The Conservatives:

The Conservatives promise "deep, broad-based tax relief" by reducing personal taxes for middle- income Canadians by 25 per cent, reducing business taxes by $4 billion and capital gains rates, eliminating the "marriage penalty," and introducing a $2,000 tax deduction for children.

That said, Stephen Harper and Co. also promise to spend more on the military than the Liberals and match their spending on health care. The Conservatives also want to buy you drugs. While covering catastrophic drug costs for poor and middle-income Canadians makes some sense, the Conservative plan will crowd out private insurers and thus transfer costs from insurance companies and businesses to taxpayers. Policy-wise, that's dumb. Since when did nationalization by stealth become a key plank of conservatism? And since new social programs are always more expensive than first estimated, the drug-plan idea could prove to be a kink in the tax-cut plan.

The Liberals:

On spending, the Grits promise to "work to further secure the social foundation upon which Canadians rely." Sigh. This sounds too much like Orwellian newspeak for expanding government as a share of your wallet.

For most people, "social foundations" are our family, friends and co-workers who voluntarily cooperate to create community, far away from government. To Liberals, it usually means another pork program a la the $250-million Adscam scandal. By the way, according to the Canadian Taxpayers Federation, the Grits have added 34,000 bureaucrats to the government payroll over the last four years.

More articles by Mark Milke