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Osgoode Professor Lisa Philipps: Fiscal favours are eroding Canada's tax system

Osgoode Professor Lisa Philipps: Fiscal favours are eroding Canada's tax system

With Tuesday’s budget, the federal government continued its love affair with tax expenditures, those special breaks that target tax relief to select causes or groups, wrote Lisa Philipps, professor in York’s Osgoode Hall Law School, in the Toronto Star March 23:

Like many Liberal budgets before them, every one of the Conservative budgets since 2006 has announced an array of new subsidies to be delivered through the tax system. Though their individual price tags may seem modest, they add up to a major drain on revenues. This budget alone would reduce federal revenues by almost $300 million per year once the new personal tax credits are fully phased in.

Who will evaluate the impact of these new tax expenditures to see if they are encouraging more Canadians to pursue postsecondary education or volunteer firefighting, or have other salutary effects that help to justify their costs? Most likely no one, ever. Once enacted into law, these special rules will sit in the tax code indefinitely with no need to be examined or reapproved the way a direct spending program would be.

It is easy to add tax expenditures and almost impossible to remove them. This is why many tax policy experts call for “sunsetting” these rules, which gives them a limited lifespan subject to evaluation and reapproval.

It’s time for Canadian politicians and voters alike to grow up about tax expenditures. Little breaks may seem nice if you happen to be part of a favoured group, but ultimately they destroy simplicity and fairness for all of us.

Posted by Elizabeth Monier-Williams, research communications officer, with files courtesy of YFile– York University’s daily e-bulletin.