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Don't throw taxes under the bus

April 15, 2014

4-minute read

As Ontario inches toward a potential spring election showdown, Premier Kathleen Wynne is making clear that she wants public transit to become the ballot box question.

That’s heartening, because there is majority public support for greater transit investments after too many years of political and traffic gridlock.

But it looks like she's throwing needed new taxes under the bus in the process.

In her most recent announcement, Wynne committed to $29 billion in transit and transportation improvements over the next 10 years.

The money to pay for it will come from a variety of sources – to be announced in the upcoming provincial budget – but Wynne tweeted she’s ruling out "raises to the HST, gas tax or income taxes on low/middle income families."

Wynne’s willingness to put desperately needed public transit improvements front and centre on the electoral table is laudable. But it's disappointing that she caved into opposition demands to take these revenue options entirely off the table.

This is an opportunity to have an adult conversation about the value of our taxes, something that’s been absent in Ontario for some time.

For his part, Progressive Conservative Leader Tim Hudak is using the revenue argument as a political wedge, claiming Toronto can build $2 billion worth of subways without raising any taxes at all – which sounds about as believable as his "I’ll create a million jobs" hyperbole.

We all know there is no free lunch. Paying for Toronto’s subways without raising taxes would necessitate cutting public services. Which ones? Health care? Education? Both?

For Wynne’s part, she appears to be trying to straddle the uncomfortable line between the PCs’ no new taxes stand and the NDP’s no new taxes, tolls or fees on the middle class gauntlet. That's called getting stuck between a rock and a hard place.

Wynne tweeted about two taxes she’ll re-direct to pay for transit, bridges and highways. For instance, rather than take the opportunity to increase the gas tax (it hasn’t been raised in a couple of decades), Wynne says she’ll re-direct some of the existing gas tax to pay for transit.

And rather than take the opportunity to examine the revenue-generating potential of a one percentage point increase in the HST – which would generate an additional $2.7 billion a year that could go toward public services – Wynne says she’ll re-direct some of the existing HST revenue for transit and transportation.

There are better options but politics is clearly getting in the way. The government’s own expert panel recommended raising gas taxes and, to a lesser extent, the HST.

CCPA Research Associate Hugh Mackenzie went even further when he examined revenue options to pay for the Greater Toronto Area and Hamilton public transit expansion. He settled on this mix:

Fuel taxes, which haven’t gone up since 1993 in Ontario and have been introduced as revenue options in Montreal and Vancouver.

Sales or payroll taxes, for practical reasons. Despite the contention over sales taxes, there remains 2% fiscal room on the HST front due to cuts at the federal level. Payroll taxes would be a more progressive option.

Parking charges or develop­ment charges. The region could levy these charges at different rates depending on location to encourage drivers to choose public transit.

Additional revenue to address operating cost needs could be raised by restoring a portion of the cut in corporate tax rates implemented since 2010.

It turned out Mackenzie’s recommended options weren’t too far off from Metrolinx’s solutions: a one percent HST increase, a five cent gas tax increase, a business parking levy and development charges.

The broader political narrative around taxes in Ontario is what’s really stunting the conversation about revenue options that don’t deserve to be thrown under the bus. The narrative hasn’t matured much since Mike Harris stormed into power in 1995 on the promise of tax cuts and smaller government.

Instead of changing the conversation about taxes in the name of better public services, Wynne's “Move Ontario Forward” announcement adopted similar divisive rhetoric that the opposition has been deploying.

That divisive narrative includes pitting regions against regions instead of talking about a common vision for everyone ...

"Funding will be fair," Wynne tweeted. "My commitment to you – London or Sudbury will not pay for projects in Toronto #moveontforward."

 "We will create one fund for the GTHA and one for the rest of the province #moveontforward."

 "Each part of Ontario would receive its proportional share – $15 billion for GTHA and nearly $14 billion for the rest #moveontforward."

That divisive narrative also includes putting a protective wall around the much-vaunted middle class as a political excuse for not having a deeper conversation about the revenues required to maintain Ontario's quality of public services ...

"Our plan will not be funded by increases in the gas tax, HST or income taxes on low or middle income earners #moveontforward."

Maintaining the fiction that Ontario can have nice things without everyone putting a little skin in the game to pay for them doesn't change the conversation about taxes in this province.

The divisive rhetoric around taxes downplays the fact that everyone benefits from a smart public transit investment and that we all have a responsibility to contribute to each others' well-being by paying taxes.

In fact, one person’s response to Wynne’s series of tweets was to tweet: "Taxes are communal by definition."

As I wrote in my contribution to Tax Is Not A Four Letter Word, edited by Alex Himelfarb and Jordan Himelfarb (who have written about "Canada's dangerously distorted tax conversation"), there’s a fascinating question that Environics Research asked Canadians a short while back: what do you do that makes you feel like a good citizen?

#1 answer: I volunteer.

#2 answer: Kindness.

#3 answer: I pay taxes.

Taxes are the gift we give each other, in the form of buses, streetcars, subways, bridges, safe roads and highways. Championing better services – and providing confident leadership to generate revenue to pay for those services – is what’s needed.

Trish Hennessy is director of the CCPA’s Ontario office. Follow her on Twitter: @trishhennessy.

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