Fairness for taxpayers a key campaign issue

If any single issue is likely to dominate the campaign leading up to the Oct. 10 Ontario election, it's the one the Progressive Conservatives have labelled "fairness for taxpayers."

It's an interesting label, in that most of the opposition parties' attention in the last four years has been directed at the Liberals' failure to keep a pledge not to raise taxes, and specifically at the health care premium that was really an increase in income taxes.

The PCs' campaign document, Plan for Ontario's Future, has this to say under the heading:

"Income tax can be a fair, progressive form of taxation when it's based on how much money people earn, instead of their savings or the value of their home. However, income tax is also the single biggest government burden on people and their families. While governments need tax revenue to deliver services, every dollar taken by government is one that families cannot spend or save for their own needs and priorities. Higher income taxes also can prevent businesses from investing, employers from hiring, and consumers from spending. So, income taxes should be kept to a fair level - enough to fund our shared priorities. Unfortunately, Ontario saw the biggest income tax hike in history in 2004, when Dalton McGuinty broke his 'no new taxes' promise. Not only did he increase our taxes by $2.6 billion a year, but he did so with an unfair, regressive tax that places a disproportionate burden on lower-income people. ..."

Another Tory theme has been a call for "truth in taxes," including a pledge to spend all the revenue from motor vehicle fuel taxes on improving our roads and transit systems.

That pledge, which Tory recently spelled out to reporters led to a Toronto Star editorial which suggested the promise involves "false simplicity."

"On the surface of it, the idea has considerable appeal. Ontarians would see more of their money devoted to clogged roads and badly needed public transit without having to pay any more tax," the Star editorialist wrote. "The only problem is that any gas tax money not currently spent on roads and transit is obviously spent on something else. Like health care. Or education. Or to fight climate change. What would happen to those areas if some of the money in their budgets were diverted to roads and transit? Tory doesn't say."

The Star asserted that dedicating the $8 billion a year in provincial revenue that comes from cars, trucks and fuel to roads and transit alone would mean taking a lot of money away from other key areas that also need the funds.

To date, only the Tory Conservatives have spelled out their platform, and as we see it, its main problem lies in the same area that led to problems for the McGuinty Liberals: promises that are undoubtedly attractive but will be difficult, if not impossible, to keep.

For example, voters are told a John Tory government will phase out the health tax "gradually and responsibly," and "replace high taxes by finding savings and efficiencies" while investing more than the Liberals in health care and education and yet continue to balance the provincial budget.

As we see it, the plan will work only if Ontario experiences an economic boom instead of continuing job losses in a manufacturing sector that has been so hard hit by the strong Canadian dollar and the export of jobs to Mexico and the Far East.

Although it certainly wouldn't be nearly as attractive a campaign pledge as either "fairness for taxpayers" or "truth in taxes," what we'd like to see one of the parties promise is tax reform - an arms-length inquiry aimed at recommending long-term tax policies that would give the provincial government and Ontario municipalities the revenue they need to finance their services while spreading the tax burden as fairly as possible.

The reform should extend beyond revenues that have a tax label and include sound policies on what are loosely termed user fees. As we see it, successive provincial governments of all political stripes have consistently increased fees for every type of service, far beyond the general level of inflation. Reforms in this area should include a rule that the fees imposed must never exceed the demonstrated actual cost of providing the service.

Of course, reforms at the provincial and municipal level could easily wind up being ineffective if the federal government adopted counter-productive taxation policies or simply cut back on promised grants and taxsharing. Hopefully that won't happen.