Taxes for the Common Good: The High Cost of Low Taxes

time for taxes


The third in a seven-part series, “Taxes for the Common Good.”

Ask any parent – or grandparent, aunt or uncle – about their hopes for their children and they’ll likely mention health and happiness right away.  Some will express a hope that their children grow up to be good people.  Others might also wish for wealth or success.

In essence, we desire well-being.

In Canada, the foundation of our collective well-being is built on public services provided at the community level: infrastructure, health care, income supports, security services, parks and green space.  And how do we get all this?  Taxation.

As Alex Himelfarb has said, “We today reap the benefits of public services built by previous generations more willing to pay taxes.  But what will we be passing on to future generations?”

The prominent discourse about taxation in Canada today is that taxes are a burden.

That’s unfortunate, because paying taxes offers us all, as citizens, the opportunity to build the kind of Canada we want.

Lower taxes leads to fewer options.

According to the most recent Update of Economic and Fiscal Projections, federal government revenues as a share of Gross Domestic Product (GDP) have fallen to 14.3%, with federal tax revenues down to 11.6%.  These are the lowest rates in 70 years.

Tax cuts in recent decades have been sold to the public under the false pretense that lower taxes benefit everyone.  The truth is, cutting government spending has a detrimental impact in terms of lost programs and investments that will impact us all – both now and in the future.

Provincial and federal governments have made significant changes to Canada’s tax system over the past two decades, reducing the level of taxation on corporations and high income individuals.  Deep tax cuts have reduced the amount of revenue available to governments.  They also make the tax system itself less progressive, shifting the responsibility for financing public services onto middle and lower income families.

Canadians deserve to be told what spending cuts will cost them.  Reducing taxes without an open and honest debate about consequences does not meet the criteria of transparent and accountable decision-making.  And it hurts us all.

When government tells citizens that it can’t afford to invest in the programs and services that people in Canada need and rely on, we must remember that the tax policies of these same governments have put us in this predicament in the first place.  Every year since 2006, a range of tax cuts have resulted in foregone revenues of $45 billion.

And yet, millions of people in Canada continue to live in poverty, climate change and growing greenhouse gas emissions take a toll on our environment, and refugees are being turned away and denied essential healthcare.  So while some of us may have a few more dollars in our pockets, those on the margins of society pay with their well-being.

Taxes support the quality of life that we enjoy in Canada.

Countries that dedicate a larger share of GDP to public programs enjoy higher average incomes, levels of employment, and income equality.  These countries also enjoy higher levels of well-being as measured by the UNDP’s Human Development Index (which incorporates measures of longevity and health, knowledge, and standard of living).

Canada is slipping.  Here we’re seeing growing income inequality and social divisions.  This despite the fact that the majority of Canadians believe taxes are good.  A recent poll found that 75% of Canadians believe that taxes pay for important things that contribute to a positive quality of life.

Last week, in part two of this series, I explored the myriad of services we have available to us courtesy of the taxes we pay.  Life in Canada in still pretty darn good. But if we want to keep it this way – and improve it for those currently suffering the impacts of tax and service cuts in recent years – we need to ask our government for a different approach.

We need to tell them that we all want to pay our fair share of taxes so that we can contribute to building a better Canada today, and into the future.

Karri Munn-Venn is a policy analyst at Citizens for Public Justice, a national organization of members inspired by faith to act for justice in Canadian public policy.  Taxes for the Common Good: A Public Justice Primer on Taxation is available free at Karri and her colleagues on Twitter @karri.munnvenn and @publicjustice.


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