Why Higher Taxes Are Better Than Spending Cuts
February 27th, 2010 - MadHacktressThe budget is due to be released next week when Parliament opens its new session and Minister of Finance Jim Flaherty has promised that the government will use spending cuts rather than increased taxes to balance the budget.
And this is wrong, wrong, wrong.
I’ll tell you why:
The Canada Revenue Agency doesn’t need to hire any new personnel when taxes are increased. 5% GST or 7% makes no difference to the administrative costs of the CRA. Personal and corporate income tax rate fluctuations? No problem, it’s just a matter of punching a different number on the calculator.
But:
When the government “cuts spending” that means that programs the government runs, offers and services it provides are reduced, eliminated or scaled back. Money is spent by the government (also known as OUR TAX DOLLARS) to prioritize potential programs, services and spending for cutting. It spends money our tax dollars to wind down those programs and services – and in the process people lose their jobs (and get paid severance, EI, etc – by way of OUR TAX DOLLARS).
Also, when government revenues recover and the government wants to increase spending on these programs and services it costs money our tax dollars to decide what programs, services and spending priorities should be tackled in what order. And then it costs money our tax dollars to ramp up the new and improved programs and services. Not to mention hiring the new people who will be doing the job that others were already trained to do (with our tax dollars, times two).
All signs point to the current economic situation as a temporary one. That we’re “on a path to recovery“. The government’s own advertisements make that assertion. Why, then, would they want to throw away excess millions of dollars paying consultants and administration in the process of ramping down these programs only to, presumably, restore the funding and ramp them back up? A temporary increase in taxes to mitigate the deficit makes far more sense in the forward-thinking, long-term view.
Of course it doesn’t sell well if you’re a Conservative.
Then again the common-sense things rarely do.
Please, Mr. Flaherty, don’t throw away millions of our taxpayer dollars to government consultants just so that you can provide fewer services for the same amount of taxes.



