Taxes: a topic that needs plenty of enlightenment

The campaigning toward the Oct. 10 Ontario election is already under way, with some clues emerging as to the main issues separating the three main parties.

Things got measurably clearer this month with John Tory's release of an outline of the PC platform and a series of announcements by Premier Dalton McGuinty and his Liberal cabinet ministers, among them Health Minister George Smitherman's detailed disclosure of planned grants to Ontario hospitals in the current fiscal year.

Not surprisingly, the Tory Tory platform takes particular aim at the current government's failings, and primarily its failing to live up to a promise of spending more on health and education without imposing any new taxes.

It would seem that McGuinty has finally conceded that the "health care premium" that's currently generating about $2.6 billion a year in new revenue was really a tax, and says the blame for the broken promise should lie with the Conservatives for having failed to disclose that they were running a huge budgetary deficit.

As for the new PC platform, it stands out in contrast to the last one that returned the Conservatives to power, Mike Harris's Common Sense Revolution.

Perhaps recognizing that the public eventually came to realize that Harris kept his promise to lower taxes only by ruthlessly cutting some services and dumping others on the municipalities, Tory is using a different sort of common sense.

The platform's major commitments include:

Capping annual property tax assessment increases at 5%; finding $1.5 billion in savings and efficiencies over the next four-year term; increasing health-care spending in the Golden Horseshoe Area; building an electronic health record system to cut down on paperwork; providing public funding for non-Catholic faith-based schools; relocating 10% of government jobs now in Toronto to communities with high unemployment rates; cleaning up coal-fired power plants while building more nuclear power plants; reducing greenhouse gas emissions 10% below 1990 levels by 2020; committing gasoline and fuel taxes exclusively to roads and transit systems within five years, pushing for tougher sentences for violent gang, gun and drug crimes.

The costliest areas of the platform appear to be the commitment to ditch the health premiums while actually spending billions more on health care and education. Rightly or wrongly, we see the PC promises as not unlike the pledges of Jean Chrétien in 1994, when he said a Liberal government at Ottawa would scrap the hated GST while attacking the huge deficits built up by successive Liberal and Conservative governments in the 1980s and 1990s.

Although a lot will depend on the state of the Ontario economy over the next four years, we think there's virtually no chance the provincial Conservatives could accomplish everything they're currently promising without returning the government to piling up massive budgetary deficits and effectively postponing all the misery involved in debt repayment to be handled by another generation.

Granted, everyone hates paying taxes of every type, be they on income, property or purchases or in the form of a user fee for government services. And that hatred makes it particularly tempting to make promises that realistically cannot be kept.

What's really needed is the fairest possible system of taxation by every level of government.

To this end, we'd love to see some political party promise only that on being elected they would immediately launch a public inquiry (likely a royal commission) into tax reform, with a mandate to devise the fairest possible system that would meet projected revenue requirements of the province and its municipalities while maintaining Ontario's competitiveness in the global economy.

One of the benefits of such an approach would be to "de-politicize" tax policy and allow our politicians to concentrate on seeing that the taxpayers get good value for their money.

One key area requiring investigation is the proper role of user fees.

Our suspicion is that an inquiry or the sort we propose would recommend greater use of the income tax and less reliance on both consumption taxes and user fees.