Beware the HST Revolt

Image by: Antony Hare

Tax revolts are popular, but look what they did to California.

It’s easy to get people worked up over paying taxes, and some people are working hard to do that. The Canadian Taxpayers Federation is hostile to taxes in general. Catalyst Paper has been attacking resource communities over its taxes in ways even the provincial forests minister Pat Bell has described as “bullying.” And then there is the HST.


There are those who would abolish certain taxes altogether and others simply advocate a greater degree of tax fairness, but there’s no denying that a popular anti-tax sentiment is in the air. For more than 30 years, we have been inundated with messages that government is wasteful and taxes are too high. Today’s demand for tax cuts just continues the same message.


Before we just assume taxes are too high, it would be better to ask if we are getting value for our tax dollars and what the consequences would be if the taxes were slashed. The real issue is how to design a system that taxes us fairly for the services we want and need.


At the municipal level, property taxes have not risen significantly compared to incomes. The public routinely supports the fastest-rising municipal costs: police and fire services. Recent polling by the Federation of Canadian Municipalities has shown that most Canadians would have preferred to see increased federal funding for local infrastructure rather than a cut in the GST.


For a broader perspective, last year the Canadian Centre for Policy Alternatives published a report titled Canada’s Quiet Bargain: The Benefits of Public Spending. It weighs the benefits of public services against the benefits of tax cuts at all levels of government, and it shows that, on average, Canadians get $17,000 annually worth of benefit from their taxes for such things as education, health care, pensions and social services. Buying these services privately would cost much more. Just compare the cost of public schools and hospitals in Canada with the cost of private schools here and private hospitals in the U.S. As the report concludes, “For the vast majority of Canada’s population, public services are, to put it bluntly, the best deal they are ever going to get.”


What about the claims by business that property taxes are driving them out of B.C.? The consulting firm KPMG’s Competitive Alternatives report looks at the tax competitiveness of 95 cities around the world. In North America’s Pacific region, Vancouver is the second-best place to do business.


To see the result of a successful tax revolt, just look at California. In 1978 Proposition 13 lowered property taxes and imposed a requirement for two-thirds majority approval for increased state taxes. California’s school system, which used to be among the best in the nation, is now among the worst. Infrastructure is deteriorating. In 1978 California had 65 county hospitals to provide acute care for the indigent. By 1991 34 of those hospitals had closed. Today California’s financial position is so bad there is talk of a bailout.


The campaign against the HST is a very different matter. People didn’t sign petitions because they thought their taxes were too high. For a decade, they had seen income-tax cuts that favour high-income earners. Fees and premiums were increased for things that we all have to pay regardless of income, such as the Medical Services Plan. Needed services were cut. Now we have a tax that shifts nearly $2 billion from corporations to individual taxpayers. People feel like the system is being stacked against them. The way the HST was introduced made them doubly suspicious. 


The American jurist Oliver Wendell Holmes Jr. was once asked whether he hated paying taxes. He replied, “I like paying taxes. With them I buy civilization.’’


British Columbians understand taxes are the price we pay for a civilized society. We value the services we receive, such as health care and recreation facilities in our communities. But we also expect our tax system to be fair. A struggle for tax fairness is a very different issue than a thoughtless demand to slash taxes regardless of the consequences. n

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