The Benefits of Public Spending
Jul 01, 2009
A recently released study by the Canadian Centre for Policy Alternatives (CCPA) demonstrates that Canadians receive tremendous benefits for their tax dollars.
In Canada’s Quiet Bargain: The Benefits of Public Spending, authors Hugh Mackenzie and Richard Shillington use Statistics Canada data to weigh the benefits of public services provided by federal, provincial and municipal governments against the benefits of recent tax cuts.
The study concludes that Canadians depend to a significant extent on public services such as education, health care, child care, public pensions, employment insurance and family benefits for their living standard. The authors argue that the results of their investigation shows that the movement for tax cuts in Canada “has been the equivalent of a bait-and-switch sales campaign. The populist rhetoric about the tax burden on the ordinary family has given way to actual tax policy changes that have overwhelmingly benefited only a very small proportion of the population – Canada’s richest taxpayers.”
A previous comprehensive study of tax incidence in Canada showed that, taken together, tax changes at all levels of government in Canada since the early 1990s have delivered virtually no benefit to most Canadians. And they have transformed a mildly progressive tax system into a regressive one.
Canada’s Quiet Bargain actually puts numbers to the benefits Canadians receive: an average benefit of $17,000 from the public services which our taxes fund. This is about the same amount a Canadian working full-time making the minimum wage would earn.
To put it simply, for the vast majority of Canada’s population, public services are “the best deal they are ever going to get.” More than two-thirds of Canadians’ benefit from public services adds up to more than half of their household’s total earned income. For Canadians in median income households, their benefit from public services amounts to $41,000, which is equivalent to about 63 percent of their total income. Overall, the average per capita benefit from public services in Canada in 2006 came to $16,952. Approximately 56 percent of that benefit comes from health care, education and personal transfer payments.
Regardless of the income group looked at, the data in the study show how powerful a role public spending plays in ensuring that the majority of Canadians enjoy a better quality of life.
The study also shows that the vast majority of Canadians would have been better off if the fiscal capacity lost through tax cuts had instead been invested in improving public services. It also addresses the impact of various tax cuts at each level of government.
This study undoubtedly raises very serious questions about continuing Canada’s tax cut agenda and provides ample evidence that the taxes Canadian citizens pay contribute very substantially to the standard of living that we all enjoy by providing us with some of the best public services in the world.
Comments
Comments are now closed