Op-Eds

Our federal fiscal masters are deeply inconsistent. They freely spend billions in revenue windfalls on one hand, but are obsessive about every nickel of tax they might fail to collect, no matter the cost to Canadians. The 2019 budget features yet another revenue bonanza of scattered handouts, many clearly contrived in haste. That is bad. What is worse is how the government simultaneously tightens the screws, making tax compliance harder over amounts of money that are often derisory, and citing the integrity of the tax system in resisting reforms that could do Canadians much good. Start with the big spending. The 2019 budget started from a fiscal baseline that, over the six-year projection period, was better than anticipated in last...
We already know that Canada’s population aging will drag down government revenue and blow up social and health spending, but its long-term impact on fiscal sustainability and intergenerational fairness greatly depend on future government policies. While this demographic change substantially shifts the tax burden away from baby boomers and their children − the baby busters or Generation X – to the boomers’ grandchildren, achieving long-term fiscal sustainability can be possible. In my recent study for the C.D. Howe Institute, I estimate average lifetime tax burdens for the current generations by birth cohort, and for an unborn future generation. Lifetime tax burdens are simply the total amount of taxes minus cash benefits and...
This week’s review of the Ontario government’s pre-election financial report from the provincial Auditor-General reconfirmed what The Globe and Mail reported last weekend: The government is using an accounting trick to shrink its reported deficit and debt. It is hiding the cost of borrowing to subsidize electricity prices over the next few years by inventing an “asset” – revenue from the higher prices Ontario’s electricity consumers will pay later on – to keep the borrowing from showing in the government’s bottom line. Auditor-General Bonnie Lysyk’s review concludes that the pre-election report is not a reasonable presentation of Ontario’s finances. Her concerns deserve wide attention – not just in Ontario, but throughout...
The federal government's proposed changes to the tax treatment of "passive" investment income in small business were among the most criticized elements of the consultation paper released last July. Wednesday's announcement from Finance Minister Bill Morneau addresses one of their most serious flaws: the threat to the retirement prospects of many small-business owners. The revised proposals strike a better balance between the government's "fairness" objective and the need for business owners to use their corporations to save for both future business and personal purposes. To recap, the July proposals would have ended the refundability of taxes on passive investment income in Canadian private corporations when the owners took the money in...
Many families with young children struggle to afford good-quality childcare. The current tax deduction for child-care expenses helps to alleviate the cost for some, but many families, particularly at the lower end of the income scale, end up with practically no tax break from the current system. We can do better. In a recent C.D. Howe Institute study, we propose to upend the tax treatment of child-care expenses, and replace the tax deduction with a system of generous refundable tax credits. It would provide up to 75-per-cent child-care cost subsidy at the bottom of the income scale – à la Quebec – for a child in private, unsubsidized, care. This revised system would increase work participation, fairness, quality of care and may end...