The CAA's study
Dec. 2nd, 2013 12:19 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
jsburbidgeThere was a press release by the CAA a while back which their deputation is repeating at the budget hearings in Toronto today. It says that motorists pay for the road system, i.e. are not subsidized.
The problem is that even if all their numbers are correct, it shows only that they don't understand the nature of the revenue system.
They count things like the gas taxes and any vehicle-specific taxes towards their totals. However, these are not user fees; they are taxes which go into general funds.
There are also special excise taxes on alcohol and tobacco, and there are probably other taxes buried elsewhere. There are certainly taxes buried in imported consumer goods on which customs duties are charged. (Excise taxes used to be the largest source of government funds, at one point before the introduction of the income tax during the First World War.) But we don't consider the hefty taxes which are part of the price of a six-pack of beer as money which goes to support, say, the addiction research and health care systems. Governments tax things which people are willing to pay more money for (or else adding taxes would reduce sales and reduce the take from the tax levies), and cigarettes, drink, and gasoline are high up on the list of products where raising prices tends to have a relatively small effect on demand.
Similarly, property taxes do not go into a special fund dedicated towards utility infrastructure costs.
Some of the Ontario provincial gas tax (14.7 cents / litre) is, in fact, not directed towards general funds. It is, however, explicitly set aside for transit purposes, not for supporting the road system. However, this is still a diversion out of general funds, and not a user fee.
Only if the various taxes, collectively, were to be properly characterised as a user fee would the claim made by the CAA make any sense.
One way that this plays out, very practically, points up the difference. The excise taxes go to the federal government (which raises them under its general revenue power under s. 91(3) of the Constitution Act, 1867). The Federal government, however, has no authority over highways and streets, although it can choose to fund provincial initiatives, if it chooses, via its general spending power. The provincial government applies the tax (which is considered a direct tax, even though it is buried in the price) under its direct taxation powers under s. 92(2). The government does pay for provincial highways directly, but other roads are maintained and built by the municipalities. (And there are fewer provincial highways than there used to be, as a result of the Harris government's downloading in the 1990s.) The net effect is that most money is spent on roads by the level of government which does not collect gasoline taxes, and a substantial amount of tax is raised by a level of government which does not maintain roads at all.
It is perfectly normal and legitimate that it plays out this way. Most services provided by government cost money which cannot, practically, be raised by means of immediately offsetting fees. Transfer payments are the obvious example, but consider also (for example) monies for public libraries, hospitals, police, and public schools.
The CAA claim is only suited for some sort of Libertarian polity where all levies are dedicated user fees. The system of government we have never has been organized that way, and never will be, for both practical and political reasons. It is a pure piece of propaganda, and should be treated as such.
The problem is that even if all their numbers are correct, it shows only that they don't understand the nature of the revenue system.
They count things like the gas taxes and any vehicle-specific taxes towards their totals. However, these are not user fees; they are taxes which go into general funds.
There are also special excise taxes on alcohol and tobacco, and there are probably other taxes buried elsewhere. There are certainly taxes buried in imported consumer goods on which customs duties are charged. (Excise taxes used to be the largest source of government funds, at one point before the introduction of the income tax during the First World War.) But we don't consider the hefty taxes which are part of the price of a six-pack of beer as money which goes to support, say, the addiction research and health care systems. Governments tax things which people are willing to pay more money for (or else adding taxes would reduce sales and reduce the take from the tax levies), and cigarettes, drink, and gasoline are high up on the list of products where raising prices tends to have a relatively small effect on demand.
Similarly, property taxes do not go into a special fund dedicated towards utility infrastructure costs.
Some of the Ontario provincial gas tax (14.7 cents / litre) is, in fact, not directed towards general funds. It is, however, explicitly set aside for transit purposes, not for supporting the road system. However, this is still a diversion out of general funds, and not a user fee.
Only if the various taxes, collectively, were to be properly characterised as a user fee would the claim made by the CAA make any sense.
One way that this plays out, very practically, points up the difference. The excise taxes go to the federal government (which raises them under its general revenue power under s. 91(3) of the Constitution Act, 1867). The Federal government, however, has no authority over highways and streets, although it can choose to fund provincial initiatives, if it chooses, via its general spending power. The provincial government applies the tax (which is considered a direct tax, even though it is buried in the price) under its direct taxation powers under s. 92(2). The government does pay for provincial highways directly, but other roads are maintained and built by the municipalities. (And there are fewer provincial highways than there used to be, as a result of the Harris government's downloading in the 1990s.) The net effect is that most money is spent on roads by the level of government which does not collect gasoline taxes, and a substantial amount of tax is raised by a level of government which does not maintain roads at all.
It is perfectly normal and legitimate that it plays out this way. Most services provided by government cost money which cannot, practically, be raised by means of immediately offsetting fees. Transfer payments are the obvious example, but consider also (for example) monies for public libraries, hospitals, police, and public schools.
The CAA claim is only suited for some sort of Libertarian polity where all levies are dedicated user fees. The system of government we have never has been organized that way, and never will be, for both practical and political reasons. It is a pure piece of propaganda, and should be treated as such.
