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Economy Lab

How to raise the bar on debates about taxation Add to ...

Lindsay Tedds is an Assistant Professor in the School of Public Administration at the University of Victoria



As citizens, we expect the government to provide us with various goods and services, from the mundane (water, sewers, roads, schools, airports) to the controversial (welfare benefits, student loans) to the patriotic (National defence, Snowbirds, RCMP, Canadian Space Agency).

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Clearly, a government must raise revenues through taxation. This necessarily means that discussions regarding expenditures must include discussions on taxation and vice-versa.



Discussions regarding taxation and expenditures are often heated. Debates ensue over the bundle of goods and services provided by governments and the means by which this bundle will be paid. Unfortunately, those involved in the debates don’t often take the time to take a step back and consider the implications of their position or the perspective of others involved in the debate.

As a society we must understand that our individual expectations of what goods and services should be provided vary according to our individual preferences. Thus, each and everyone one of us will face tradeoffs. We will get some things that we want, and other things we don’t want.



We more often complain about the things we don’t want than praise what we do get. You often hear people complaining about waste. Is there wasteful spending? Sure. Pork barrel politics is not about to disappear. And we all know the cases of ministers, bureaucrats, and contractors who have claimed egregious expenses.



But when it comes down to complaining about specific goods and service, there is one thing to keep in mind. By suggesting a good or bad service is wasteful you are judging some else’s preferences. You are in effect denying the ability of another individual to be happy, to have their needs met. What normative framework are you using in deciding for everyone else what “should be?”



Equally, we always need to remember that someone somewhere at some point in time is paying for these publicly provided goods and services. For example, Quebec students need to remember that by not paying an increase in tuition it necessarily means that other people have to pay for their education. And many of those paying never had the privilege of a university education, likely due to the fact that they themselves could not afford it. Similarly, their decision today necessarily means they have traded off paying lower tuition today with paying higher taxes in the future when they enter the work force in what is already the highest taxed province in Canada.



And as we discuss ways to make our system more progressive by taxing the wealthy more heavily, we need to respect the sacrifices many high income earners have made to get where they are. Medical specialists are a good example. Most specialists train for more than 10 years after medical school. They sacrifice their personal lives and those of their families and forgo earnings to do so. They often enter their high paying jobs around the age of forty, when many of us are well settled, and often do so with more than a hundred thousand dollars of student debt.



Discussions about expenditures and taxation could be raised to a higher level by keeping these things in mind.

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