Hugh MacKenzie writes that we should have had an adult conversation about taxes and public services long ago. But that conversation has never happened, despite the obvious connection between the two:
Tax cuts reduce fiscal capacity, driving reductions in public services and that if you want better public services, you need to increase the government’s fiscal capacity to generate revenue.
The alternative, from a 4-year-old’s perspective: if you go to the corner store with less money, you are going to come home with less candy.
In Ontario, the Wynne government began such a conversation -- then quickly gave up:
The closest we came in Ontario was the debate fostered by former premier Kathleen Wynne over how to pay for the massive investments in public transit infrastructure required in the Greater Toronto and Hamilton Area.
That got as far as a backgrounder prepared by Toronto’s city manager in 2012, followed by a formal options paper released by the transit agency Metrolinx in May 2013, which analyzed the revenue potential and impacts of a short list of options to raise money for transit funding.
It did not go well right out of the gate. Everybody wanted better transit. But everybody wanted someone else to pay for it.
And then the provincial government threw in the towel. The provincial government called a byelection in Scarborough and, all of a sudden, transit planning went out the window: the promise was promising Scarborough a three-stop subway instead of light rail at double the cost. And all of it for free.
Our other politicians have refused to go there:
Massive tax cuts were introduced by Paul Martin’s Liberals in the early-2000s coupled with a retreat by the federal government from public services in areas of jurisdiction shared with the provinces.
A cut in the GST rate by the Stephen Harper’s Conservatives led directly to the current federal deficit.
And we're living with the consequences:
The aggregate impact has been stunning. In 1992, the five-year average of total government expenditures as a share of GDP was 48.6 per cent. In 2016, the five-year average was 40.1 per cent — in the context of today’s $2 trillion economy, that’s worth $170 billion in lost spending on public services.
We see clear crisis indicators of decline everywhere we look:
Crumbling public infrastructure.
An elementary and secondary education system whose funding cannot meet the needs of today’s students.
Post-secondary tuition that is now more than triple what it was 25 years ago.
The lack affordable housing and the rise in homelessness.
A public health insurance system that excludes the fastest growing component of health care costs (pharmaceutical drugs) and that is straining to meet the needs of an aging population.
It's the age old conundrum: Everybody wants to get to heaven, but nobody wants to die. We have to pay for what we want.
Image: Canadian Centre For Policy Alternatives