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GM-Chrysler bailout is a $14,705 tax on new car purchases

Mark Milke with the Frontier Centre for Public Policy takes on the auto bailouts and the political class.

Mark Milke - June 16, 2009

Now suppose that instead of billing the public treasuries of Ottawa and Ontario $13 billion for a GM-Chrysler bailout, every consumer who purchases a new automobile in 2009 was billed directly for their "share" of the bailout.

In other words, suppose governments, in a rare moment of taxation honesty, added a "GM-Chrysler bailout tax" to every automobile customer's invoice. This year, a $13-billion bailout billed to non-Chrysler-GM purchases, i.e., to just over 884,000 new auto-mobiles, means each buyer would each face an additional auto tax of $14,705 (and 47 cents, for those who like to be precise).

In a recent interview, a reporter half-objected to my standard reply on corporate welfare: it is lousy policy, unfair to competitors and their employees, costly to taxpayers, and as such is as dumb as the proverbial sack of hammers.

"Yes" he replied, "but given the reality of politics, what options would you suggest?" His question assumed a lot, not least of which is that politicians have no control over policy.

Politicians can't control the weather and many other events in and outside of politics; they can decide whether to spend public cash, the equivalent of $14,700-plus for every new, non-GM/Chrysler vehicle sold in 2009.

Because of an inability to say no to another bailout, the political class in Ottawa, to say nothing of the worse problem in Washington, have indeed created that $14,705 reality. It is the rest of us who will pay for it.

More articles by Mark Milke