Tax Facts 9

David Robinson is an economics professor and dean of the Faculty of
Social Sciences at Laurentian University.

For the Fraser Institute, “Tax Freedom Day,” (June 26th) deserves
more attention than Groundhog Day, and the annual release of the
Institute’s Tax Facts is as important as the advance of the Doomsday
Clock toward nuclear annihilation.

The central element in Tax Facts 9 is the Institute’s “Consumer
Tax index,” a measure that shows how the burden of taxation has grown.
The index compares total taxes paid by an average Canadian family in
1994 with the tax bill of a similar family in 1961. The conclusion is
that taxes are 11.5 times higher now than then. But if the index tells
us anything, perhaps we should celebrate the fact that it has been
virtually constant since 1990. Next year the doomsday clock may move
back a few seconds.

There are problems with the index. Did the “average” family really
have a cash income of $46,000 and a total income of $66,853 in 1991,
even though Table 2.5 shows 53 percent of tax filers had assessed
incomes below $20,000 for 1991? The most dramatic increase in taxes is a
trivial result of inflation and some of the rest is due to growing real
income. Taking inflation into account, taxes have still more than
doubled, however. Overall, the analysis, based on 45,000 families, is
careful and conventional.

The Tax Facts series presents valuable information in clear language
for lay readers; raises important issues, including the idea that
current deficits can be seen as future taxes; points out that businesses
receive billions in hidden subsidies; and provides a politically correct
slant on its conclusions. (In an elegant example, corporations are
defined as “joint ventures between capitalists and workers.”) The
authors admit that Canadian corporate taxes are very low by world
standards, but ask that we keep in mind that spending on infrastructure
may be insufficient. Although there are some factual inconsistencies
(e.g., they say that Ontario is one of the three governments that spends
the most per capita, but include a table that shows Ontario as spending
the second-lowest amount), Tax Facts 9 is a readable and informative
introduction to the Canadian tax system.