Canada, of late, hasn't had anything like the roiling economic problems of the US: they're running a deficit, but a comparatively small one the 2011-12 budget calls for just under C$30 billion, which is about one-eighth of total revenues and while all three opposition parties opposed it, resulting in a de facto vote of no confidence, forcing a parliamentary election, the Conservatives gained enough seats in the election to pass the budget on their own.
Which is not to badmouth the Liberal party, the largest opposition party for the moment: Canadian Liberals are relatively sane, especially compared with the guanophenic American left. Allow me to point out an example from 1995, after Canadian debt was repeatedly downgraded by those Evil Rating Agencies:
Not to act now to put our fiscal house in order would be to abandon the purposes for which ... this government stands competence, compassion, reform and hope.
The words of Paul Martin, later to become Prime Minister, but then the Minister of Finance in Jean Chrétien's government. There were indeed tax increases in Martin's budget but for every additional dollar of taxation, Martin called for seven dollars worth of spending cuts. You can be absolutely certain that no one on John Boehner's speed dial, let alone Barack Obama's, has anywhere near that level of intestinal fortitude. By 1998, Canada's budget was in the black again, and stayed there for a decade, until everything worldwide seemed to unravel in the Panic of 2008; the Conservative government, on whose watch it occurred, says it will eliminate the deficit by 2014-15. Meanwhile, south of the border, it's a toss-up whether Washington will even have a budget for 2014-15: at this writing, it's been two years since the last formal budget expired, to be replaced by, well, not a damn thing, actually.
Still, taxes tend to be higher in Canada: while the top federal income-tax rate is a mere 29 percent, individual provinces levy their own rather stiff taxes, though at least you don't have to file a separate provincial return unless you live in Québec. Then there's the infamous GST, a value-added tax levied at both federal and provincial levels. Then again, the GST, which used to be 7 percent, is now down to 5. (Some provinces have merged their own sales taxes with the GST, resulting in something called the Harmonized Sales Tax.)
The Canadian Constitution Act of 1867, by design, centralizes some powers in Ottawa and allots others to provincial governments. In this regard, it's not too much unlike the American Constitution, with the general exception that Canadian politicians are expected to pay more than lip service to the Act. (The anniversary of its passage, in fact, is a national holiday: Canada Day.) And just as in the States, there is some rumbling about whether there's too much centralization. Steve Lafleur of the nonpartisan Frontier Centre for Public Policy here calls for something I've long advocated:
The problem isn't that we have too little government spending, but that revenue collection and spending decisions often happen at the wrong level. Revenue generation and spending should take place as close as possible to the point of delivery. There is no reason why someone in Moose Jaw should pay federal income taxes so that the Federal Government could partner with the province of New Brunswick to build a highway near Moncton. Similarly, there's no reason why someone in Edmonton should send property tax dollars to the province so that it can pay for a transit expansion in Calgary. Not only is filtering money through multiple layers of bureaucracy inefficient, but it leads to bad decision making. Decisions both on the revenue and expenditure side need to be made at the lowest level of government possible.
But wait. It gets better:
In order to ensure that cities can meet their infrastructure requirements, provincial governments should gradually devolve spending responsibilities and revenue generating capacities to the municipalities, and the federal government should end the practice of intervening in infrastructure issues altogether. Some municipalities may choose to raise property taxes, others may increase user fees, and still others may experiment with municipal sales taxes. But regardless of how municipalities decide to raise revenue, they are better placed to determine how much revenue is required, and which projects are really essential. More importantly, devolution gives more direct control over decision making to the people that are actually impacted by the decisions. Devolution means more accountability, and more local input.
If Lafleur showed up in Washington with ideas like this, they'd demand his head on a pike: the Party of Big Government (the one with the elephant) and the Party of Incredibly Farging Big Government (the one with the jackass) can't possibly conceive of such a thing. There are times when I think we should nuke the place from orbit it's the only way to be sure and let the Canadians salvage what's left. Prime Minister Stephen Harper may be a tool, but tools, at least, can be put to useful, occasionally even decorative, work, something no one will ever say of the current US Congress.
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Copyright © 2011 by Charles G. Hill