Score one for the Se­nate — and tax­pay­ers

The Compass - - Editorial - Rus­sell Wanger­sky East­ern Pas­sages Rus­sell Wanger­sky’s col­umn ap­pears in 30 SaltWire news­pa­pers and web­sites in At­lantic Canada. He can be reached at rwanger@thetele­ — Twit­ter: @wanger­sky.

I think I agree with Con­ser­va­tive sen­a­tors. There. That wasn’t so hard to say af­ter all.

Last week, a com­mit­tee of the Se­nate, lead by Con­ser­va­tive Sen. El­iz­a­beth Mar­shall from New­found­land and Labrador, voted to halt a small but sig­nif­i­cant part of the Lib­eral bud­get.

It was a tax mea­sure that only means pen­nies of new taxes, but it has a cu­ri­ous struc­ture. The move was to in­crease the ex­cise tax on al­co­hol by two per cent, and then tie fu­ture in­creases to the rate of in­fla­tion.

With ev­ery an­nual in­fla­tion­ary rise, the tax would in­crease, too — but the fed­eral min­is­ter of fi­nance would never have to come back and fight for that in­crease. The min­is­ter would never even have to dis­close that an in­crease ap­plied. He or she could stand up and say, “My bud­get has no new taxes,” while taxes in­creased in lock­step, hid­den from public view.

Fi­nance Min­is­ter Bill Morneau had ar­gued be­fore a Se­nate com­mit­tee that gov­ern­ment costs in­crease by the rate of in­fla­tion, so an in­fla­tion­ary tax was jus­ti­fied — ex­cept, of course, for the fact that the amount of tax col­lected is go­ing to rise by the in­fla­tion­ary in­crease in the value of al­co­hol as well. It’s hav­ing your tax, and col­lect­ing it again, too.

The sen­a­tors on the com­mit­tee OK’d this year’s two per cent in­crease, but balked at fu­ture in­creases.

And they’re right. Be­cause they are vot­ing on this year’s bud­get — not bud­get mea­sures ev­ery year into the fu­ture in per­pe­tu­ity.

The move by Morneau also moves taxes — and tax in­creases — well into the fraud­u­lent world of gov­ern­ments pre­tend­ing to do multi-year plans, of­ten multi-year plans that ex­tend well beyond their leg­isla­tive man­date.

Multi-year ar­range­ments al­low gov­ern­ments to duck and blather; they would be able to es­cape public scru­tiny late in their man­dates by front-load­ing tax in­creases early in their ad­min­is­tra­tions.

It’s bad enough that many gov­ern­ments have jumped on the fraud­u­lent multi-year bud­get­ing of things like in­fra­struc­ture and road works.

Multi-year plans — plans that ac­tu­ally have no more le­git­i­macy than a campaign prom­ise — al­low gov­ern­ments to an­nounce claims like their “un­prece­dented in­vest­ment in our roads” by lump­ing three or four years of work into a sin­gle bud­get, and then re-an­nounc­ing it again ev­ery year af­ter­wards as if it was all new money again. Ev­ery­thing is “record-break­ing” and “un­par­al­leled” — ex­cept, of course, that it isn’t.

The bud­getary process works the way it does for a good rea­son: we get to see what gov­ern­ments plan for their fis­cal year, ev­ery fis­cal year, and we get to de­cide if what they’re propos­ing is what vot­ers want. We get to see any tax in­creases — pe­riod.

Hid­ing tax in­creases by ty­ing them to eco­nomic mark­ers may sound like rea­son­able public pol­icy, but only if you don’t bother to look at the fine print.

Ty­ing a tax rate to the rate of in­fla­tion sim­ply means that a gov­ern­ment gets the ben­e­fit of con­stantly in­creas­ing taxes with­out hav­ing to carry any of the po­lit­i­cal freight of its ac­tions.

Put it this way: if we al­low our politi­cians to plant an in­fla­tion­ary money tree out of sight in our tax sys­tem, you can be sure that they will plant more and more of them. A ver­i­ta­ble for­est of tax-in­crease money trees.

Be­cause, politically, they’ll only take what­ever pain there is once, prob­a­bly early in their man­date. Then, they’ll hope the short at­ten­tion span of the elec­torate moves on to the next is­sue.

But those same politi­cians will har­vest the ben­e­fits, sight un­seen, for years and years — and pat them­selves on the back for com­ing up with the idea.

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