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THE TAXPAYER

Promoting the responsible and efficient use of tax dollars

Nov/Dec °92

Is government borrowing driving us into the poor house?

In Canada, we’re all getting poorer. It’s not an illusion. It’s not made up. It’s absolutely true.

While overall incomes are still rising, after paying all the taxes that are being levied by the various levels of govern- ment, the amount of money Ca- nadians have left to live on is getting smaller. The reason?

Uncontrolled government spending leading to unre- strained government debt. When people take out a mortgage for a house, the price of the house increases substan- tially over the term of the mort- gage as interest piles up. For example, a $65,000 mortgage amortized at 10% over 25 years will actually cost the home-

Taxes keep

getting higher — and higher...

Over the years, governments have not wanted to reduce their spending in order to deal with their deficits, but instead have turned to taxpayers time and again for more money.

per year. As a result, the total tax burden on Canadian house- holds consumes 24% more of the economy than it did just eight years ago.

The impact of the tax in- creases falls most heavily on middle income taxpay-

The average family IS ers, with those who have paying almost $1,900 children and combined in- i ie comes of between $35,000

= taxes this and $100,000 per year hit year thanitdidin the hardest. However, 1984, even low income families

Now, a study by Patrick Grady of Global Economics, reported in the Canadian Busi- ness Economics magazine (Fall 1992), has shown just how much the tax burden has in- creased. The average family is paying almost $1,900 more in taxes this year than it did in 1984, and the government has raised the tax burden on Cana- dian households by $22 billion

are paying more in taxes

today than they did in 1984. Grady warns that the persistence of a high federal deficit and increased pressure on the government to spend more, mean the situation will likely get worse.

Until governments learn to live within their means, Can- ada’s taxpayers will be the ones expected to make up the differ- ence again and again.

Canadian Taxpayers Federation #200 - 1315 Scarth Street Regina, Sask., S4R 2E7

| Think about it: That incl

owner $175,000. The same principle holds true for govern- ment debt.

Increasingly, people are be- ginning to understand that the interest payments on the debt of our various governments are becoming the major factor in determining our standard of living.

At the national level, tax- payers shell out about $42 bil- lion a year paying interest on the debt. This is roughly how much it costs to run the prov- inces of Alberta, Newfound- land, Saskatchewan, Manitoba, Nova Scotia, New Brunswick, PEI and over 80% of British Columbia’s budget.

all the highway departments, prisons, health systems, schools, universities, and bureaucrats in these provinces! No wonder everybody is getting poorer and struggling to pay their bills. The taxes we have to pay in order to satisfy interest is killing us. Add to this the fact that the $42 bil- lion we spend on interest doesn’t even reduce the debt, and we see the difference between how much Canadian taxpayers owe, and how much that debt will eventually cost us.

In order to accurately see what taxpayers are facing, though, the indebtedness of the provincial governments must also be added, plus the fact that

| our federal politicians are still

borrowing over $30 billion more a year.

Since the defeat of the Char- lottetown Accord, our politi- cians have been talking about turning their attention to the economy. If some of them come out with some kind of scheme claiming they found a way to make us all prosperous, hang on to your wallets. The truth is that the best thing they could do for Canadians is to quit borrowing; they should cut spending and re- duce taxes. There’s no other way that Canadians and our chil- dren can have a fighting chance at a prosperous and stable life- style because the debt of govern-

-ment is what’s making us all poor.

ife for the average Canadian.

The Taxpayer

The Canadian T: e Federation A politician fighting for TAXDBVOIS oi. 3 Taxpayers must work together across borders .................. 4 Unmasking the demand for SOIVICGS. he en ett 5 What happened to direct democracy in B.C.?............ 6 B.C. government fiddies while fiscal house burns.............. 6 Taxes hurt economic GrOWE io... coe 8 LOAD i ae sadssieeecs eee 9 Reverse Robin Hood OCONOMICS). 2c. wets, 9 Saskatchewan upgrader down-

grades province's finances ..10 Making allowances for

MEAS i caiGinuc eee 11 An interview with Sir Roger Douglas co sictalaeaeen 12 Ship of state gets shot across INO: DOW &..ccsscssovagearminaenn 13 Albertans still waiting for Freedom of Information......14 Taxpayer action guide........ 15 The transformation of Canada as a democracy................. 18 Letters to the editor............20 Drilling for dollars in the oil DaICh ee sista atom ere 21 Are Canada’s airlines being taxed to death? «0.00.00... 22 Manitoba deficit hits $442 TANMIOR 0s -bacneesescntcachosbasimcbe 23

. ‘Scorched earth - the Ontario government's hunt for new : TOVONUGS ......sssccccnsseecsensesee

City employees earn

GIDE sida que 25 A future with less, GOVEPNMENT.........cercrseecveres 26 Industry, Science and Technol- ogy handouts if 28 What are you going to say {22g Weep Re eee Re et 32

The Canadian Taxpayers Federa- tion is a federally incorporated, non- profit organization. Our purpose is to promote the responsible and efficient use of tax dollars and to provide the public with information about govern- ment spending and policy. Founded in 1989, the Federation is independent of all political or institutional affiliations and is entirely funded by subscriptions and free will contributions.

Cost:

The Taxpayeris published six times a year by the Canadian Taxpayers Federation. There is a charge of $55 to receive The Taxpayer. Additional donations are also neces- ‘sary to fund the various research and

advocacy activities of the Canadian

Taxpayers Federation.

‘Address:

_ Please address all correspondence to #200 - 1315 Scarth Street, Regina, Sask., S4R 2E7. Phone hice: 352- 7199. |

is copyright. Copyright owner is the Canadian Taxpayers Federation. Per- mission to reprint can be obtained by writing:

British Columbia: #206-920 Hillside Drive, Victoria, BC, V8T 1Z9

Alberta: #304-17304-105 Ave., Ed- _monton, AB, T5S 1G4 Saskatchewan: #200-1315 Scarth St., Regina, SK, S4R 2E7

- Editorial cartoons - used by permis-

sion.

Staff profile

Robin Richardson

Robin Richardson, M.A., C.F.A., is the Director of Re- search for the Canadian Taxpay- ers Federation. Robin works out of the Federation’s office in Vic- toria, B.C.

He has worked as a senior

economist for a major Canadian bank and was director and chief economist for an institutional brokerage firm. He also served as a senior consulting economist for a national engineering firm and as a senior economic advisor for the Canadian Federation of Independent Business.

Robin received an Honours B.A. in Economics from the Uni- versity of Western Ontario, where he was a gold medalist and candidate for the Rhodes Schol- arship. He earned a Masters de- gree in Political Economy at the University of Toronto and did post-graduate doctoral studies in international economics at Har- vard University. He is also a Chartered Financial Analyst and has a masters degree in Educa- tion.

Concerned about rising gov- ernment spending and deficits, Robin was an early advocate of a constitutional amendment re- quiring the federal government

to balance its budget over the course of the business cycle.

He has been active in commu- nity activities including organiz- ing fundraising for overseas famine relief and United Way campaigns.

Todd Diakow

Todd Diakow is a Research Associate working for the Tax- payers Federation out of the Re- gina office.

Todd came from a farming background, and initially re- ceived a two-year certificate in Agricultural mechanics from Kelsey Institute in Saskatoon. With the downturn in the agricul- tural economy, he continued his education at the University of Saskatchewan in Saskatoon.

In 1990, Todd graduated with a Bachelor of Arts degree in Cana- dian history, with Honours. After the completion of his degree, he entered the Masters program in

Nov/Dec ’92

history and is in the process of completing his degree.

Todd’s responsibilities in- clude research on Saskatchewan issues and he is currently in- volved in an analysis of the prov- ince’s health care system. He also makes regular contributions to The Taxpayer.

It's up to you and me

by Ken Dillen

I was having coffee with my old buddy Arnie, an ardent fish- erman, hunter, camper, and all around good guy who takes ex- ception to a lot of things. The one thing that irritates him more than any other, though, is what he describes as the “insatiable appetite of politicians for more tax money.”

So I asked him, “Arnie, be- sides complaining about politi- cians and taxes all the time, what are you going to do about it?" He replied, in a defeated sort of way, "Well, what can anyone do about it?”

"Arnie," I told him, “I used to feel the same way. I watched politicians of all stripes tax us to the limit. Then, when there was nothing left to tax, they com- menced to borrow us into the poor house."

"Just think about the way our system works," I said. "Politi- cian ‘A’ comes to town and says, ‘Elect me, and I’ll build you a hospital.’ A few days later, poli- tician ‘B’ comes to town, calls politician ‘A’ a cheapskate, and says if you elect him, he’ll build a bigger hospital, throw in a school, and pave every road. Then, along comes politician ‘C’ who says he’ll do all of the above, and what’s more, he’ll es- tablish a social-safety net so that

anyone who won’t work, or can’t work, will be kept too."

It was pretty apparent that Arnie had caught the drift of what I was trying to say, and he confirmed my hunch by saying “The big question is who pays?"

"You got it,” I agreed, "it’s guys like you and me and other people in this coffee shop who eventually end up paying the bills for all the politicians’ prom- ines."

"That’s right!" he exclaimed, driving his index finger into the air to emphasize the point, "Now, the question is, what can little guys like us do about it?”

"It would seem to me, Arnie, that this thing’s never gonna get fixed until guys like you begin to take some responsibility for the way things are, instead of just complaining all the time."

"What da’ya mean take some responsibility?" Arnie de- manded. "It’s not my fault the politicians got us into this mess."

"Arnie, how old are you?" I asked.

"Forty-eight," he replied.

"In the thirty or so years you’ve been an adult, what have you done to contribute to the well-being of the province?"

At this point, he really didn’t know what to say. He fidgeted on his chair a bit, looked around a bit more, and repeated what he’d already said, "It’s not my fault the politicians got us into this mess."

"I’m not talking about whether or not the politicians have done a good or bad job, Amie. My question was ‘In the thirty or so years you’ve been an adult, what have you done to

contribute to the political well- being of the province?’"

Old Arnie just sat there.

"I don’t really know what to say to that,” he replied honestly, "I’ve never thought about it in those terms.”

I walked away from the cof-

fee shop that morning wonder- ing if I’d been a bit too hard on Amie. After I thought about it for a while, though, I became even more convinced that unless a significant number of people quit their complaining in favour of calling for responsible change, we in fact aren’t going to see things get much better. Instead, they just might end up getting worse. Ken Dillen is a former member of the Manitoba Legislature and is a member of the Federation's Advi- sory Board.

ae So a | ee ee ee

Attention local ratepayers ,

The Canadian Taxpayers Federation is currently compiling a directory of local

J ratepayer and taxpayer associations throughout Canada.

If you are a member of a local ratepayers group, or know of one in your community,

please fill out the following form and return it to:

The Canadian Taxpayers Federation

#304 - 17304 -105 Ave

Edmonton, Alberta, T5S 1G4

Name of ratepayer association:

President/Chairman: Year established:

a Mailing Address: Telephone:

Number of active members:

a ee ee ne ee

Nov/Dec '92

The Taxpayer

A politician fighting for taxpayers

Tax decreases can happen in Canada

by Dean Smith

While municipal taxpayers across Canada have been faced with an ever increasing burden of taxation, the City of Langley, lo-

——E

cated in the B.C. Fraser Valley, bucked the trend and announced a property tax decrease for 1992. The charge for lower taxes was led by Joe Lopushinsky, the city’s mayor. Lopushinsky says they

opushinsky: A politician concerned about taxpayers

were able to put through the 1% tax decrease by trimming some waste and through natural growth in the tax base.

Lopushinsky was first elected mayor of Langley in 1988, run- ning on a platform of lower taxes. He defeated the incumbent mayor by 72 votes, a result which many considered a fluke.

But many have found Lopushinsky’s philosophy of politics appealing. He says, "I am not a friend of government and don’t profess to be. I’m not re- sponsible to council or the bu- reaucracy that governs it. My allegiance lies with the people of the city of Langley." Of course, these views have caused the mayor to come into conflict with his six aldermen and city bureau- crats.

Two weeks after he was first elected in 1988, the city admin- istrator quit. Citing the need to streamline city hall, Lopushin- sky pushed through with plans to combine the city administrator’s job with that of the city clerk. This saved the city a $70,000 annual salary.

When the city council ap- proved a tax increase of 5.5% in January 1990, Lopushinsky de-

cided to send out a letter telling citizens that he had called for a 1% decrease. When Council threat- ened to sue him if he used taxpay- ers’ money to communicate his own views, Lopushinsky pro- duced and mailed out the letter at his own expense. Nevertheless, the council subsequently billed him $17.33 for his secretary’s time in typing the letter. Undeterred by the council’s

City of Langley was able to reduce taxes

unwillingness to reduce taxes, Lopushinsky ran again in the No- vember 1990 civic election, again on a platform of tax reduction. Despite a challenge by the former mayor, Lopushinsky won by 889 votes.

To the delight of taxpayers, Lopushinsky has shown that mu- nicipalities do not have to resort to tax increases to balance their budget.

The cost of medicare

About a month ago, I had a phone call from a U.S. reporter who was curious about how our Canadian medicare system worked. I told him that in a lot of ways it worked very well, but that despite the accolades being rained on it by some, the overall Cana- dian health system is financially unsustainable.

He was surprised to learn that, unlike his country where individ- ual states are prohibited from bor- rowing, Canadian provinces have the power to borrow unlimited amounts of money at any time. He was also surprised to learn that what’s allowing the Canadian medicare system to keep going is the huge amount of money being borrowed on an annual basis by these provincial governments.

"If our provincial governments couldn’t borrow huge sums of money every year, Canada might not have a medicare system at all," I said. "The real question you should be asking then is not how

MEDICARE IS THE

RVICE AND

SYSTEM THAT ENABLES e ADULTS Pee MEDICAL

it works, but how long can Cana- dian governments keep borrowing in order to help pay for it?"

I then gave him a bit of a break- down as to how much the health care system costs each province versus how much the individual provinces are borrowing. In Man- itoba, the Filmon government will spend $1.8 billion on health care this year, while borrowing roughly $400 million to help pay for it. Saskatchewan will spend $1.6 billion on health this year, borrowing nearly a billion last year, and another $500 million this year. Alberta’s health budget is over $3.5 billion, and the gov- ernment will borrow over two bil- lion dollars.

In British Columbia, the Har- court government is projecting that they’ll spend nearly six bil- lion on health, when at the same time they’re borrowing close to three billion dollars to meet their total spending requirements. In central Canada, just like they did

THATS EASY SON. MEDICARE.

——

last year, Ontario will borrow an- other $10 billion. The Mulroney government in Ottawa will bor- row close to $30 billion again this year, while paying out literally billions in transfer payments to help fund medicare.

After relaying this information to him, I told him of an editorial cartoon that I had clipped out of the paper. The cartoon was done by Cam, who is well known for the editorial cartoon awards he’s won. In it, there’s a picture of a father sitting in his chair in the living room, reading the daily pa- per, and a little boy, maybe seven or eight years old is standing be- side him.

“What's the best thing about Canada?" the little boy asks his father.

"That’s easy son, medicare," the father immediately replies. "Medicare is the system that en- ables us adults free medical serv- ice and the government ensures we never have to pay for it... You will!"

In the final frame of the car- toon the little boy is standing there with a stunned look on his face watching his father who has already gone back to reading his paper.

Editorial cartoons, although often meant to poke fun at things, are often seen as funny, or else strike us as humorous because the one-liners in them are accurate and factual. In this case, it is ab- solutely true that Canada’s health system cannot be economically sustained at current levels for much longer, and it’s also true that the generation of young people

who are coming up now are going to help pay for the health care that is currently being received by the middle age and older generations.

Some might call it a kind of re- verse Robin Hood economics; take from the kids and give to the parents.

Dog-gone tax

A Regina dog owner fought the GST - and won.

Tim Maloney is the owner of a cocker spaniel named Kate. Ear- lier this year, Kate was sent to Minneapolis to be inseminated. On her return, Maloney was charged $17.50 GST - on the stud fee.

The customs officer argued that the insemination increased the dog’s value, and therefore GST was chargeable. Maloney

said that’s ridiculous. "I laughed - I thought they were joking, but no, they were dead serious, and

ee | Tim Maloney with (smiling) Kate

they said that no, we won’ t release your dog to you until you pay the $17.50 GST."

When Maloney asked how they could tell whether the dog was pregnant, he was told the dog seemed to be smiling.

Maloney fought the officer’s decision, and was finally rebated the $17.50 after a ruling came down that this was one service the government didn’t need to tax.

Well, Kate was pregnant, and her two pups were named, "Re- bate" and "Here Comes the Taxman.”

The Taxpayer

Nov/Dec '92

Taxpayers must work together across borders

by Bjorn Tarras-Wahiberg

The steady increase of the total tax burden is becoming the true scourge of the industri- alized world. In 1970, when we still lived in the romantic period before the first oil crisis, the average tax burden in the

Sweden may appear as a rather respectable place!)

Parallel to this we are expe- riencing a dramatic increase in economic activity between all countries, including the setting up of economic unions such as the ones between the countries

of the European Economic Commu-

With a better understanding of the _ nity.

pros and cons of the tax systems in neighbouring countries, we may be able to influence our politicians to adopt good practices while removing

We must ensure that economic un- ion doesn’t result in "free trade" in taxa- tion [as there will be

absurd elements from our country’s pressure on govern-

tax system.

industrialized countries (the OECD members) was 30 per cent of Gross Domestic Product (GDP), which is the dollar value of the country’s total pro- duction of goods and services. In 1980, the average tax burden had risen to 35 per cent, and two years ago it broke the 40 per cent line. (Ten more years of this, and my own country

ments to harmonize their tax systems. There will be a ten- dency for countries to add new taxes rather than seeing other countries remove taxes.] Mem- bers of the International Asso- ciation of Taxpayers must work together in stronger coopera- tion to stop this ominous devel- opment.

Let me point out the advan-

tages of taxpayers and their as- sociations working together to

Taxpayer groups around the world

// i |e (/ [Se |€

WY a OR

Wt i ae

The International Associa- tion of Taxpayers was estab- lished in 1988, and today is composed of 20 member asso- ciations from 16 countries on five continents. Taxpayer as- sociations are found in Aus- tralia, Austria, Belgium, Brazil, Canada, Finland, France, Germany, Great Brit- ain, Hungary, Japan, Luxem- bourg, Norway, Portugal, and Sweden. There are four asso- ciations in the U.S. and new groups are being formed in Spain and Italy.

Australia’s taxpayer asso-

ciation is the oldest, being founded in 1919. Second oldest is the Swedish associa- tion, which was established two years later, in 1921. The Swedish association helped to start associations in Fin- land in 1947 and in Germany after the fall of Hitler in 1949. The German associa- tion is the largest, with 330 thousand members, while the Swedish association, with its 180 thousand members, is one of the largest in propor- tion to the country’s 8.6 mil- lion citizens.

curb government spending and taxes:

-Improved knowledge of

other countries’ tax sys- tems. With a better under- standing of the pros and cons of the tax systems in neighbouring countries, we may be able to influence our politicians to adopt good practices while re- moving absurd elements of our country’s tax system;

-Establishment of new

members. Our latest new- comer is the Society of Hungar- ian Taxpayers, which was established in July of this year. With a strong international or- ganization, we may be able to establish new taxpayers asso- ciations in other countries at an even faster pace so that, in the end, we have an efficient, worldwide network of member associations.

With better cooperation be- tween the various associations, we may be able to assist our

members even when they cross borders. Of course, stronger

cooperation demands more work and patience from the

member associations, but in the long run, I am sure the benefits will be worth the extra work.

Bjorn Tarras-Wahiberg is the President of the Swedish Taxpayers Associa tion and of the International Association of Taxpayers

The frightening case of Sweden

Beware of Invisible Taxes

by Bjorn Tarras-Wahlberg During the period prior to 1970, Sweden had the most rapid economic growth in the world after Japan. Our taxes were moderate at that time. After 1970, however, an enormous increase of the total tax burden took place. This hap- pened in a rather sly way be- cause the taxes that were sharply raised - the payroll taxes and the sales tax - are not clearly visible to the citizen. Some of the taxes are not even called taxes. The

In 1970, Sweden was experiencing the However, between 1970 and 1990 the total tax burden increased from 40% of GDP to 56% and today Sweden has fallen to the lower half among the 24 OECD countries.

payroll taxes, for instance, are called "employer fees", even though they are taxes in every sense of the word. The citizens have even been duped into be- lieving that it is the employers, or the "production", that pay the payroll taxes, even though most sensible people understand that the level of these taxes has a direct impact on wage levels. The result of this political hocus-pocus has been a rise in the total tax burden from 40% of the Gross Domestic Product in

pid economic growth of

1970 to a stifling 56% in 1990. This has opened the way to an equally enormous increase in public expenditures - a third of the Swedish working force is now employed in the public sec- tor.

The effect of these gigantic tax increases on Swedish indus- trial competitiveness has been obvious enough. From a top po- sition in the "growth league" in 1970, we have now fallen to the lower half among the 24 OECD member countries.

in the world next to Japan.

Nov/Dec ’92

The Tax

Unmasking the “demand” for services

by Lewis K. Uhler

Politicians frequently claim that a "demand" exists for more and bigger programs and spending. But this "demand" is not demand as we ordinarily understand it - in the context of supply and demand. Why? Be- cause most government serv- ices cost the recipient very little, if anything. There is no price to regulate demand - hence "demand" is virtually un- limited.

If one of your local auto dealers decided to "market" cars free, the "demand" would be virtually limitless. If you visited your favourite shoe store and found that $50 shoes were on sale for 50 cents a pair, your "demand" for shoes would probably be limited only by your closet space.

In 1972, to help develop Proposition 1 (the constitu- tional tax and spending limit for California) for then-Gover- nor Ronald Reagan, we com- missioned a study to learn how much citizens knew about taxes and government spending. One section was devoted to the costs of various government services. Under the direction of Wm. Craig Stubblebine, Pro- fessor of Economics at Clare- mont McKenna College, our experts calculated the cost to

each citizen of various state and local services - roads, edu- cation, police, prisons, garbage collection, etc. - based upon in- come levels. With this infor- mation in hand, we found that those surveyed underestimated the cost to them of government

L BUDGET \

| ee ae : Ps ;

services by 50 to 70 percent, irrespective of income level. In other words, if the real cost to that person for a particular service was $100, he estimated the cost to be in a range of $30 to $50. Respondents had no

idea of the real costs because of |

a __________________.______

Lewis Uhler - President of the 500,000 member U.S. National Tax Limitation Committee

a lack of pricing information. There is no reason to believe we would get different answers today or that guesses about fed- erally supplied services would be any more accurate.

"Free Money”, Unlimited Demand

And remember, the respon- dents to our survey were tax- payers who were actually paying something for the serv- ices. When you have a person who is paying no taxes and is receiv- ing a welfare grant,

deep, provided it was at full fed- eral expense. After beneficiar- ies were required to pay half the cost, the locals supported a one- way channel at a shallower depth, costing $50 million.

When you put a pricetag on what has been a "free lunch", it’s amazing how quickly the dieting instinct surfaces.

The very fact that price is largely unavailable to ration government services is one of the most compelling reasons

"When you put a price tag

food stamps, medicare, etc., there is absolutely no limitation on that person’s demand for

on what has been a ‘free lunch’, it’s amazing how quickly the dieting instinct surfaces.”

more. In the case of "welfare" to businesses

and the non-poor, some

of the recipients do pay

taxes, but because there is no linkage between taxes paid by that individual/organization and the federal grant, the gov- ernment’s funding is consid- ered "free" money. Hence, there is little or no suppression of demand in this instance, either...

(One example) was in Balti- more, where local interests sup- ported a $300 million double-width channel 55 feet

Economic development or economic

by Craig Docksteader

There are few people who would question whether a di- versified, developed economy is important. However, there is increasing concern Over gov- ernment economic develop- ment programs which may in fact be hurting rather than help- ing the economy.

Government economic de- velopment policies appear to be based on the following cycle: 1) remove money from the pri- vate sector; 2) spend the money to stimulate the private sector; 3) tax any profits that come out of that spending; and 4) remove money from the private sector to pay for any losses that result.

Governments do have a

unique role to play in attracting investment and industry. Only governments can ensure there is a healthy tax climate in place which will attract new busi- nesses and ensure optimum production in existing busi- nesses and industries.

However, the existing prac- tice of taxing in order to pro- vide grants, loans and other subsidies erodes the potential of ever achieving such a cli- mate. In many ways it is like the proverbial "catch 22" where, in the process of at- tempting to stimulate economic development, the government contributes to economic de- cline, resulting in calls for more government involvement which produces more taxes and more economic decline. With- out question, the sooner gov- ernments get off this slippery slope, the better.

Recent developments in the Alberta oil patch illustrate this point. In mid-October, the Al- berta government restructured oil royalty rates to give the oil

industry millions of dollars of |

tax savings a year. When this change was announced, Alberta Energy Minister Rick Orman

made three very significant statements: 1) changing the royalty structure will generate activity and growth in the oil industry in Alberta; 2) lowering taxes will create jobs in the oil field; and 3) the consequent

Alberta government lowered royalties in re oll patch saying this move

growth in the industry would both help stimulate the econ- omy and partially offset the revenue that would be lost be- cause of the tax reduction. Perhaps without even realiz- ing the full ramifications of his

: =. y he ws Hh

a Uw:

will create jobs. One can only wonder how many jobs have been lost over the years because of this tax.

that less, not more, should be done by government - espe- cially by the federal govern- ment. The more resources that are pumped into a system that has no pricing mechanism by which to ration those resources, the greater the waste, ineffi- ciency, and popular discontent that are experienced. Pricing, and price competition, are the only things that produce reli- able levels of demand - and the supply to meet it.

decline?

statement, the minister has ac- knowledged that the previous practice of imposing high taxes on the industry had a negative impact on the oil industry, and consequently on the economy of Alberta. This in turn con- tributed to unemployment and economic decline, both of which typically produce higher government spending and lower government revenues. The irony of this can only be fully appreciated when one re- alizes that since 1980, while heavily taxing the oil industry, the Alberta government was handing out loans and grants to business to the tune of over $2.6 billion in an attempt to promote economic develop- ment and diversification. Instead of taking money out of productive sectors of the economy and selectively fun- nelling it into potentially less productive areas - a policy that has not proved to be beneficial

to taxpayers or to the economy,

the government should leave that money where it belongs - in the hands of those who have already proved they can create

| the jobs and industry we all

want.

The Taxpayer

- British Columbia -

Nov/Dec ’92

What happened to direct democracy in B.C.?

by Robin Richardson

This past June, Premier Mike Harcourt told the B.C. Legislature, "J am committed to referendum and recall. The principle is one that our cau- cus supported when the matter was before the legislature; we support it now."

Despite this commitment, the B.C. government has failed

to address the results of the two referendum questions asked in the October 1991 provincial election in which British Co- lumbians voted overwhelm- ingly in favour of the right of voters to initiate referendum questions (83% Yes) and to re- call their MLAs (81% Yes).

The government’s Legisla- tive Select Committee has

| am committed to referendum and recall. So why the delay?

been asked to review these two questions and has asked the public for written submissions on these two issues. The Cana- dian Taxpayers Federation will be making a presentation to the committee.

Voter initiated referendums may be the only way taxpayers can compel governments to balance their budgets and re- duce their debts. Through this process, voters are able to com- pel the government to hold a referendum on a measure sim- ply by attracting the required number of signatures.

When a majority votes in fa- vour of a measure, the govern- ment is compelled to take whatever steps are necessary to implement the results of the vote, such as by introducing legislation, even if it doesn’t agree with the results of the vote.

At present, only the cabinet may order a referendum, and the result is only binding on the government that initiated the referendum.

Voter initiated referendums would change this, giving the public an opportunity to estab- lish more direct control over how they are governed.

The Taxpayers Protection Act

by Robin Richardson

(ey)

On March 22, 1991, the gov- ernment of British Columbia passed the Taxpayers Protec- tion Act (TPA). This act pro- tected taxpayers from tax increases to March 31, 1994, and contained a provision to prevent the introduction of new taxes during this tax-freeze pe- riod. =

The Taxpayers Protection Act not only limited tax in- creases but also committed the government to balancing its budget over each five-year pe- riod. Its provisions would have required the government to bal- ance its budget by reducing its spending and not by increasing

taxes. Further, the government would not be allowed to in- crease its spending beyond the growth rate of the British Co- lumbia economy.

On March 26, 1992, only one year and four days after it was passed, B.C. Finance Minister Glen Clark announced the gov- ernment would repeal the legis- lation. :

Clark stated that the govern- ment had "accepted the inde- pendent financial review’s recommendation that the so- called Taxpayer Protection Act, with its discredited balanced budget plan, be repealed." In fact, however, the consultants who were hired to conduct the financial review recommended nothing of the kind.

The consulting company of Peat, Marwick, Thorne & Kel- logg, together with the account- ing firm Peat, Marwick, Thorne, did recommend that the government should either expand the legislation to in- clude the Consolidated Reve- nue Fund and _ crown

corporations or replace the leg- islation with a highly visible government policy document, possibly included as part of the provincial budget. Neither of these recommendations were followed.

What did the consultants say

Did you know?

Direct-democracy in Switzerland