Tax time is coming up, and so is a surprise for a number of Canadians who have received Stephen Harper’s generous $100 per month per child allowance to cover daycare expenses. What a number of families are going to discover that the $100 grant wasn’t a whole grant after all. It’s not tax free. And depending on your level of income, it may be that rather than giving families $100 per month per child, what the Conservative government has really done is given just $65 per month per child. But the problems don’t stop there.
Nowhere on the cheques is it noted that the amount being paid is taxable. And if this statement is noted on the application forms, I haven’t seen it (to be fair, I haven’t looked too hard, since sometimes these forms make me go cross-eyed). Which suggests that a family who has received a year’s worth of daycare supplements, taking in $1200, may be on the hook for about $420 in taxes come April 30th. That surprise is never pleasant.
And I have to wonder: since the Conservatives knew that this money was coming off the cheques in April, why didn’t they just take the money off as the cheques were being issued, just like we do with paycheques? And a cynical conspiracy theory comes to mind almost immediately.
Unlike the Liberal proposal which, albeit flawed, still focused on opening up new daycare spaces, the Conservatives were criticized for underserving the problem. They got points for ensuring that some assistance went to all families everywhere, regardless of when the kids needed taking care of, or who took care of them (like grandparents), but $100 per month, some argued, was a drop in the bucket. It was still a nice round number, though — a lot more impressive than $65 would be. So the Conservatives stuck to that $100 number, even though they might have had to hide the truth a littlein order to sustain the impression that they were doing $100/month worth of good in the face of tax clawbacks.
This isn’t to say that the $100 per month per child under the age of six isn’t appreciated. The money is being spent to deal with the day-to-day expenses that are typically incurred by a young family, and I certainly appreciate the Conservatives’ willingness to trust that I will spend the money wisely. But what I find odd about the Conservatives’ approach with daycare spending is how they sidestepped a number of measures that could have accomplished the same or better benefit, at less cost to themselves, and at less cost to Canadians.
I’m not suggesting that the Conservatives enact the Liberals’ daycare plan, but at least the Liberals had identified a specific problem and was promising (albeit with little credibility) to marshall as many resources as possible to deal with it. And that problem was lengthy waiting lists at daycare centres and the Liberal solution was promising to make funds available to get more daycares built.
On the other hand, the Conservatives raised a bunch of related but ultimately separate issues, and tried to address the needs of all parents through a cash transfer. And here is where the Conservative idea gets half baked: the Liberals propose a significant infrastructure in order to build more daycare spaces. This is defensible because there is little such infrastructure in place. The Conservatives respond by bringing in a new spending program, on top of infrastructure that is already in place.
To make a long story short, the Conservatives passed over a number of opportunities to address the problem as they saw it in a more efficient manner. Parents of all kids in Canada eighteen and under already receive money from the government as part of the National Child Tax Benefit (which is, unlike the daycare supplement, non-taxable). It should have been simplicity itself to tack on an additional $100 per month to those cheques (or $65 without a tax clawback if the Conservatives wanted to keep this revenue). Why wasn’t this done?
Not only have the Conservatives given parents throughout Canada a nasty little surprise come April 30th, they’ve complicated our lives (or the lives of our accountants) when it comes to figuring out how many taxes we pay. They’ve also complicated their own lives, and added to the cost of their own bureaucracy. Why not simply marshal the resources already in place for the National Child Tax Benefit, which already calculates benefits by parental income, and already has the databases in place? At the very least, why waste all the extra paper cutting two sets of cheques instead of one?
Again, the conspiracy theory suggests that the Conservatives, fearing that Canadians would warm to the Liberals daycare plan (for reasons which escape me, since the Liberals had no credibility on this issue after 13 years of broken promises), wanted to produce an alternate that was seen to be benefiting parents — emphasis on seen — even if ultimately it wasn’t benefiting parents as much as the Liberals phantom plan could have, and even if it wasn’t benefiting taxpayers as much as if the Conservatives had used the infrastructure that was already in place.
This is a meme that has affected previous governments of different stripes, but which the Conservatives seem to have gotten hung up on moreso than most. All governments, sadly, seem to want to be seen to be doing things, so they introduce policies and programs that loudly announce themselves. Piggybacking on old infrastructure doesn’t produce as loud of a bang for the buck. And a part of me suspects that the Conservatives have little interest in actually governing — many conservative individuals these days simply don’t believe in government, and this means that the Conservatives have little incentive to make government work. Which is ironic, since they talk long and hard about the inefficiencies of governing, and yet ignore easy opportunities to implement some efficiencies. As another example, consider the Conservatives’ cut to the Goods and Services Tax.
As a political move, it was a brilliant tactic that may well have sealed their election victory. Set aside the irony that the Conservative party introduced the hated 7% value added tax in the first place, the fact that they actually managed to cut it down to 6% after the Liberals promised and failed to remove it entirely, is worth its weight in votes. But as real tax relief for average Canadians, the GST cut — amounting to about a penny off an extra large coffee at Tim Hortons (double cream, no sugar) — fails to impress. And it is another example of the Conservatives increasing the very inefficiency in government that they have so long and loudly complained about.
Consider the cost of maintaining the infrastructure required to calculate and enforce the Goods and Services Tax. Consider that every cash register in Canada, and just about every business, has to keep an eye on it and fill out a number of forms to send to Ottawa each year or even each month. Even individuals have to get into the act; if I as a writer manage to earn more than $30000 from my freelance career, I’m required to start charging GST to my clients (who are, admittedly, prepared for this, and pay it out and write it off as an expense on their tax returns). The bureaucracy is sufficient that the Mulroney government was able to locate the GST processing centre in Summerside, Prince Edward Island, as an economic salve to that community, easing the pain resulting from the closure of a military base there.
And this is on top of the bureaucracy required to calculate income taxes, tariffs, smoking excise taxes, gas taxes; the list gets pretty long. All of these things come with a cost, and suddenly the revenue the GST brings in has been slashed by about $5 billion, without reducing by one penny the cost of collecting it.
Of all of the services and programs the government must spend money on, the item taxpayers probably appreciate the least is the amount of money required to administer taxation. So it is surprising to me that the Conservatives, who like to campaign on reducing government spending everywhere, have taken virtually no steps to reduce spending here. It would have been far greater value to Canadian taxpayers if the Conservatives had found a tax that brought in roughly $5 billion in total, and eliminated it entirely, administrative costs and all.
But then, the Conservatives wouldn’t have gotten the political wind in their sales from cutting a tax that practically all Canadians are aware of and most of them hate *. Again, political appearance trumps the real, effective change that we could enact to improve the government we have. And that cynical little voice tells me that this could also be a part of Harper’s plan to prove his belief in the inefficiencies of government by increasing them.
The Conservatives aren’t the only ones that are missing opportunities to collect tax revenues more efficiently. It’s past time for the Ontario government to harmonize its sales tax with the GST, reducing collecting costs and complexity. But the initiatives that the Conservatives most like to laud have been haphazardly implemented, ignoring opportunities to serve Canadians better. This is worth holding our government’s feet to the fire. Regardless of the Conservatives’ opinions on the merits of government, they’ve still been elected on the promise to govern well, and that’s the promise we need to hold them to.
- Although, as an aside, this still doesn’t explain why, after reducing the GST from 7% to 6%, and reducing tax loads by $5 billion, why the Conservatives couldn’t simply raise income taxes sufficiently to cover the amount of money the 6% GST brings in, and then eliminate the GST entirely.