The Tories’ ballooning tax code
In 2009, Prime Minister Stephen Harper took some heat for telling the Globe and Mail, “I don’t believe that any taxes are good taxes.” Judging by his time in office, he was grossly exaggerating.
Since the Conservatives first won a minority government in 2006, the length of the Canadian Income Tax Act has expanded by nearly a quarter. This country’s tax laws now tower above Canadians at a whopping 3,134 pages. According to the Canadian Taxpayers Federation, it has grown by 3.4 per cent over the last year alone.
Now, the Conservatives have not increased taxes per se, some have been eliminated and decreased. But their preferred method of tax relief comes from tax expenditures like tax credits, which unlike actual cuts, have the adverse effect of pil- ing on new clauses and conditions to an already confusing system. You still initially owe the same amount, but checking off more boxes on your growing tax form entitles you to get bigger reimbursements.
This is nothing new. Governments have used tax expenditures as a vehicle for social policy since the postwar period. Some have been justified, and many were used as temporary measures to fix one problem or another. During the last recession, the Conservative government introduced new tax credits as part of its stimulus program, but many of those stayed permanent. There’s the Family Caregiver Tax Credit, the First-Time Home Buyers’ Tax Credit, the Children’s Fitness Tax Credit, the Children’s Arts Tax Credit, the Textbook Tax Credit, the Tuition Tax Credit and the Tradesperson’s Tools Deduction. Forget all the incentives that were already there from previous governments and before the recession, like the Public Transit Tax Credit.
This complicated system means more headaches for Canadians families come April, more money lost to accountants and a ballooning government bureaucracy to manage the red tape.
Some may think that this is a lot about nothing — tax credits and tax cuts, tomayto tomahto. People still get their money back.
And yet tax credits essentially amount to a redistribution of wealth without making anything more equal.
Take the recently dispensed Universal Child Care Benefit, for example. This tax benefit redistributed $3 billion of public funds towards child-rearing couples, at the expense of childless adults.
On day two of his bid for reelection, Conservative Leader Stephen Harper promised to reinstate the home renovation tax credit, but as a permanent measure. While those who rent their homes and still pay a hefty amount into the system won’t see a dime, Joe down the street will be able to save 15 per cent off his new porch, courtesy of his neighbours.
Electorally, tax credits make sense. Parties can propose these benefits and dangle them in front of voters like candy. General tax cuts would mean everyone can keep their own money, but it lacks the visual appeal of a cheque in the mail in the middle of July, or brand-new heated floors to wake up to.
Were a party looking to ignore all populist instincts and seek a solution to our bloating tax code, the answer is obvious: remove tax credits — whether for corporations or citizens — and cut actual tax rates. More Canadians will be able to keep the fruit of their labour, without the subjective decision of governments to decide what worthy causes Canadians should be reimbursed for. At the same time, the Tax Act would shrink, decreasing the size of the bureaucracy at the Canadian Revenue Agency.
No doubt, this plea will fall on deaf ears — bribing the electorate with its own money is much more beneficial for parties than proposing actual, substantial change.
Tax credits essentially amount to a redistribution of wealth without making anything more equal