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A critique of gas tax honesty day
Michael Hlinka
Wednesday May 14th marked the 10th anniversary of Gas Tax Honesty Day. This event is the creation of the Canadian Taxpayers Federation (CTF). The organization made two requests/demands: It wants the federal government to lower excise taxes on gasoline to five cents per litre from the current 10 cents.
More significantly (we'd all agree that a nickel a litre isn't going to change anyone's life) it also called for taxes on gasoline to be targeted--100 per cent--to the maintenance and construction of roads and highways. The CTF claims about half gas tax revenues are spent on these types of projects; the other half goes towards other government programs.
Should there be direct, explicit linkage between the taxes we pay and program spending? This is an important question. The implications are profound, for how our lives are conducted, how businesses are run, you name it. It would clearly upset the status quo applecart.
This fiscal year, most federal government revenues--between 55 per cent to 60 per cent--will be derived from income taxes. At the same time, the majority of government spending at all levels will be for two tems: healthcare and education.
And there is virtually no correlation whatsoever between how much income tax an individual pays and the healthcare and education benefits he or she receives!
If we were going to extend the logic of targeted gas taxes to the income tax system, it seems to me we would have to introduce a series of different rates. Do you have children in the public school system?
Okay, you're paying a higher tax rate than I would, since I'm not in that position.
How old are you? We know there is a very direct relationship between age and the use of the medical system. Doesn't it stand to reason that the older you are, the more tax you should be paying? Remember, folks, this isn't my argument. It's the logical extension of the CTF's gas tax proposal.
Generally, I avoid the slippery slope argument, and I won't use it now. Rather, I'd like to talk about how to more effectively use the tax code to strengthen the Canadian economy and improve the standard of living and qualify of life of everyone in this country. We should embrace targeted consumption based taxes and reject income based taxes. Income taxes penalize work, which is the creation of goods and services of real value. Targeted consumption taxes (such as taxes on gasoline, for instance) penalize behaviour that we know costs all of us, and the environment. This would be a far more economically favorable model.
That's why the Canadian Taxpayers Federation requests, as well-intentioned as they might be, ultimately don't serve the national interest.
Michael Hlinka provides daily business commentary to CBC Radio One and a column syndicated across the CBC network. He also conducts financial planning courses.
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