I Really Don’t Think So
Back in 1991, the Canadian Conservative government of the time foisted on us the much-hated 7-percent Goods and Service Tax—a European-style VAT—on all purchases except food. When they were considering the tax, it was supposed to be 9 percent, but I think, like many others, that it was a political ploy—that they wanted 7 percent from the offset but started by pushing 9 percent because they knew the tax would meet with a lot of opposition from the public, and they could then seem like they were backing down. Some provinces, like Nova Scotia, already had an 11-percent provincial sales tax, so in the first years the GST kicked in, given one of the taxes was applied on the other, we ended up paying 18.8 percent on all purchases. By the mid- or late-’90s, provinces like Nova Scotia harmonized the sales tax so that now the rate is 15 percent.
Like everyone else, I’m not crazy about paying taxes. But my ambivalence kicks in when I consider the services our governments provide, which aren’t provided in jurisdictions where taxes are lower. Our universal health care system alone, though plagued with problems of its own, is the single, most compelling argument in favour of higher taxes. When I think about how someone in the U.S. who came down with cancer and had no valid health insurance at the time is now facing as much as $100K in health-care costs, I appreciate even more how I, as a Canadian, if I had had the same misfortune, would not be in such an awful situation. Or when I think about all the time my father spent in hospital in the last years of his life, or about when my elder brother’s appendix nearly ruptured almost two years ago, and we’re not having to pay for any of the care given during those events. It’s a role I believe the State must continue playing, even if it means high taxes. It’s a sound societal project.
However, the problem with sales taxes—or any single-rate tax, for that matter—is that it’s inherently unfair for low-wage earners. I have no problem whatsoever with someone who can afford to buy a big motherfucking SUV paying a lot in taxes. But if you’re a working poor, having to pay 15 percent on all purchases hurts a lot more. It can mean having to choose between essentials. The federal government’s GST credit (up to $304/year), while welcome, doesn’t come near to recovering the 7-percent federal portion of the sales taxes.
Consequently, I gasped when I read this story today, in which the Agricultural Institute of Canada is suggesting that the GST be applied to food and that the revenue be given to farmers. Now, don’t get me wrong: It’s clear to me that farmers across Canada are hurting. But adding the GST to food is not the way to go. For one thing, can the government be trusted to earmark every penny raised from the tax for farmers? And for another, is imposing additional financial hardship on Canadians who already have trouble making ends meet such a good idea?
Governments everywhere, it seems, are obsessed with the idea of cutting taxes—a vestige of trickle-down economics, which has been proven not to work. Yet wouldn’t it be more sensible to take existing tax revenues that might seem dispensible on the surface, and redistribute them where they’re needed now? Like helping farmers who are struggling for no reason of their making?