A Taxing Problem

What if we took the most recent Fraser Institute tax attack report, taxmanThe Canadian Consumer Tax Index, and its claim of a 1787% tax increase since 1961 at face value and simply shrugged? Not for the reasons Matt Elliott did yesterday when he challenged the robustness of the report’s methodology but from an angle of nonchalance. Yeah, so? Big deal. I’m with Oliver Wendell Holmes. I like paying taxes. With them I buy civilization.

Or in other words, would I rather be living now in 2013 than back in 1961?

Infant mortality rate in 1961 was 27.1/1000. In 2011? 4.9/1000. Canadians lived 10 years less on average in 1961 than they do now. GDP per capita… well this.


Of course taxes aren’t the sole reason for those positive changes but neither did taxation roll us back to the dark ages. We are hardly taxed to death, as some like to say. In fact, the stats point to just the opposite.

So let’s stop operating from the premise that taxation is inherently bad. Politicians like Councillor Doug Ford should be derided and dismissed outright when they state something as glaringly asinine as “All taxes are evil as far as I’m concerned.” taxesareevilThe subtext of such a sentiment is that the person expressing it is not to be taken at all seriously. It is a mind-numbingly idiotic thing to say that only a certified crank would believe.

The negative economic effects of taxation have long been exaggerated while the benefits have been methodically downplayed. Every time you go to see your doctor and don’t have to open your cheque book is your tax dollars at work. You drive to work today? Your tax dollars paved the road you used. Whatever you kid learned in school comes from a portion of your property taxes.

Without taxes, there is no public sphere or common wealth. Everything’s for sale and anything deemed of worth usually goes to the highest bidder. Taxation is one way we seek to mitigate the damages inflicted by the laissez-faire, everybody-for-themselves workings of our free market system.

And now comes the great debate about paying for a long overdue public transit expansion throughout the GTHA region. How to fund The Big Move. No taxes, no way, no how says our mayor and his ardent supporters. Government’s already got its boots on the neck of the taxpayers and emptied our pockets. That well’s been tapped dry. emptypockets2Read the Fraser Institute report if you don’t believe Mayor Ford.

OK. So, well. How do you propose to build and run the transit network we really needed about a decade ago, oh haters of taxes and respecters of taxpayers? You got $50 billion or so kicking around, easily accessible?

*crickets, crickets*

With no credible plan to pay for any new transit (and with three years to come up with one), the mayor and his allies have switched tacks and now seek to undermine the trustworthiness of the governing Liberals, citing scandal after scandal as proof that they shouldn’t be allowed further access to the taxpayer money tree. ORNGE! EHEALTH!! GAS PLANTS!!! GAS PLANTS, FOLKS!!!!

Now I don’t want to sound as if I could care less about accountability. The mismanagement and dedication to evading responsibility for it is deplorable. I’d be more than happy to turf this government from power and start with a clean slate if I saw I viable alternative, at least on this particular issue of transit.

So far, I don’t. It’s all populist pandering from both left and right with nothing much more on offer than change for change’s sake. distractionThe Liberals are tired and fresh out of ideas. Vote for us, for a different kind of tired and lack of new ideas.

And in terms of transit building, I’ll go even one step further. Add these scandals up, right up, generously to the top. Call it $3 billion of ill-spent money and let’s pretend it was a single year outlay. What was the total spending in yesterday’s provincial budget? $127.6 billion? That represents a little over 2% of the total 2013 expenditure. Statistically, a rounding error.

Before you go all off and start labelling me a Liberal apologist, my point is, all that money, the entire $3 billion would make but a dent in the Big Move. It would pay for just over a year of the proposed 25 year timeline. Where’s the rest going to come from?

We can bitch and moan, mumble and grumble, huff and puff and threaten to blow the shaky credibility house down but we’ve still got a shitload of transit to build. Until someone comes up with a better plan* to pay for it, our taxes are going to have to do the trick. Just like they have always done when it comes to paying for the public good.


impatiently submitted by Cityslikr


* There won’t be a better plan. If there was a better plan, we would’ve heard about it by now.

The 5.6% Dissolution

Pondering Toronto’s 2010 mayoral campaign so far, which is something I do with fair regularity given the subject matter on this particular site, I am often left scratching my head as to the approaches and tactics of various candidates. Why are they doing what they’re doing? Who are they trying to reach with that particular line of reasoning or this mode of attack? Is George Smitherman actually gay or is all his talk of having a husband merely a beard to mask the fact the man doesn’t possess a progressive bone in his body?

My latest bafflement arises via deputy mayor Joe Pantalone. Reading through an interview he did earlier this month with blogTO, I was struck by the answer he gave to their question, Why didn’t you do more about these transportation problems as deputy mayor? Councillor Pantalone’s response? In 2008 [the Fraser Institute] analyzed the Province’s tax situation situation and found that out of all the taxes paid in Ontario –put together in one basket, municipal, provincial, and federal — municipalities only got 5.6 percent…


Now, I had no luck in locating the analysis Pantalone was referencing but will shoulder all the blame for that as I started breaking out into hives spending that kind of time on the Fraser Institute website. Preston Manning says this, Mike Harris says that. (A Simpson shudder and intense itching begins all over upper torso.) But taking Joe at his word, I began to wonder why he wasn’t making more hay with this point.

Why wasn’t he channeling voter frustration and outrage at the fact that the city is being severely short-changed by both senior levels of government and forced to annually negotiate dire fiscal straits due to massive imbalances in both governance and revenue structures? As a councillor for almost 3 decades now and having worked with all sides of the political spectrum, Joe Pantalone had arrived at this late juncture in his career finally and reluctantly convinced that Toronto (and every other municipality in Ontario) was being knee-capped by Queen’s Park and until true, unconditional reform was undertaken, nothing was going to change that. No amount of fiddling with numbers, privatization or selling of public assets could alter that reality.

Sure, his opponents would go down the beaten path of telling Joe we need to get our house in order before going to the province with cap in hand, begging for bailouts. They already have, haven’t they, Rocco Rossi. But played right, those kinds of statements could be effectively turned against those using them, showing them to be know-nothings, out of touch with the facts. Or worse still, enablers of a dysfunctional governance structure where too much power and money go to those with the least amount of accountability.

Because one doesn’t need the 5.6% analysis from the Fraser Institute to know that there is a systemic unfairness at the core of our political system. Where one level of government has complete and utter control over another with little recourse or redress on offer. Evidence abounds that this arrangement, which goes back to the birth of this nation in the middle of the 19th-century, is beneficial purely uni-directionally. Municipalities bear the brunt of provincial and federal neglect and mismanagement. Until we can get ourselves out from under the weight of that, there is little to be done to fix our current predicament. Anyone who tries telling you different is either uninformed or lying. Maybe both.

And Joe Pantalone should tell them so. He should tell us that. He should point out that in every city budget, Toronto is forced to spend more on provincially mandated programs than it receives in money from the province. That’s the deficit spending at the centre of our present money woes. It’s not out of control spending at City Hall that is responsible for higher property taxes, increased user fees, underfunded public transit and infrastructure projects. No matter how loudly and often Pantalone’s mayoral rivals spew forth that nonsense. No. This city’s increased expenditures are going directly into the gaping maw of Queen’s Park. Not only are our provincial taxes going to feed that beast but so is a chunk of the taxes we’re supposed to be paying to the city for the services they continue to deliver to us.

That’s what Joe Pantalone should be saying every time he opens his mouth or one of his opponents open theirs.

But maybe Joe’s been at it for too long. He’s too much of the consummate insider and can no longer see the forest for the trees. For now, he’s content to simply counterpunch, rope-a-dope in the hopes that the right of centre contingent around him exhausts itself, flailing as it is at the populist figments of their collective imaginations. He is not the warrior we’re looking for to wage the real battle ahead that needs to be waged.

resignatedly submitted by Urban Sophisticat

Rocco Rossi Goes Underground

So now Rocco Rossi’s going to build us subways. Two kilometers of track and one stop per year for the next ten years. Once we get that albatross Toronto Hydro from around our necks, the world will be our oyster! Get cheque. Go to the bank. Pay off debt. And the money will start rolling in.

Monetization of public assets. It’s so simple that it’s amazing no one else has ever thought of that before.

Oh, wait. They have. Margaret Thatcher. Ronald Reagan’s President’s Commission on Privatization in 1987. Our very own Mike Harris. Remember the 407? (Hey! There’s a snappy campaign catch phrase. Remember the 407! Reminiscent of the defiant battle cry, Remember the Alamo! It’s open for public use. Maybe you want to use it, Councillor Pantalone. A little bump to help you step up and get involved in the conversation.) How about the recent long term lease deal/debacle in Chicago where they outsourced the revenue for parking meters and lots into private hands?

What I’d like to know before we go all weak in the knees over Mr. Rossi’s plan to trade Toronto Hydro for subways is does it make an economic sense? With more than a few substantive examples of privatization plans gone awry, where are the positive illustrations of asset monetization? One? Any? I’m all ears here.

Even in the Fraser Institute’s call to privatization arms, the to-the-point article entitled Time to privatize, there’s talk of the tremendous benefits of “sweeping privatization” backed by overwhelming research in academic literature. The results have shown that privatized firms increased profitability, efficiency and dividends while reducing debt ratios. OK, but what about any benefits to the public purse? What does the public gain from monetizing assets?

Errr… well, a better run, more profitable company will help increase economic growth overall. More money, more tax revenue. So we’re counting on that old trickle down theory that conservative groups like the Fraser Institute love so much. There’s also the possibility of an increased amount of capital investment which would also stimulate overall economic growth, taking us back to trickle down again.

There seems to be a much more robust argument against privatization coming from people like Dexter Whitfield and the Municipal Services Project. Mr. Whitfield summarizes the crux of his recent book, Global Auction of Public Assets: Public Sector Alternatives to the Infrastructure Market and Public Private Partnerships, in a post at Truthout. His view seems to be that the public is better served by directly investing in infrastructure without relying on the private sector. Real life examples seem to back his argument up.

Examining Mr. Rossi’s plan specifically, things just don’t seem to add up. If I understand correctly, the city of Toronto garners more equity annually from it’s ownership of Toronto Hydro than it spends on servicing the debt. In selling Toronto Hydro, we pay down some of the debt thereby decreasing the amount of interest we pay per year. But after the one time payday, we get no further revenue from Toronto Hydro. So unless Mr. Rossi plans on paying off the debt entirely, we’re still in a negative cash flow situation as opposed to a slightly positive one if we keep revenue coming in from our ownership of Toronto Hydro.

And he plans to build 2 kilometres of subway track and one station per year at roughly $200-300 million a pop? How? Where’s the money going to come from?

Yet this announcement was made to great fanfare yesterday morning. What has Rocco Rossi done to earn himself such a free ride? Serious candidates should have serious plans not simply the hocus-pocus of you want subways? I’ll give you subways. Just don’t look behind the curtain.

Rossi’s announcement is the latest in a trend from our conservative candidates of shameless pandering that was best summed up in the Tweet-o-sphere yesterday by Graphic Matt. Look at me! I’m a right-wing candidate for Mayor of Toronto. Here is my proposal: subways! Here is how I will pay for them: magic!

— head scratchingly submitted by Cityslikr