Monday, November 12, 2007

From the mailbag

So my father apparently thinks that comment threads are for the little people, and decided to email me his disagreements with my blog post here. So at the risk of boring everyone on the Internet to dry hacking tears, let me restate things.

The issue is not, "wouldn't it be great if Harper spent some money on cities." Sure it would. There's a bunch of things I think it would be great if the government spent some money on. But that's why I vote NDP -- to spend other people's money! Woot! But that's very different from saying that the Feds have a positive obligation to spend money in the cities.

But when Harper says cities are a provincial responsibility, he's not stating his opinion, and he's certainly not saying "drop dead" as the Star wrote. He's stating empirical, legal fact. This thing called the Constitution Act of 1867 makes that clear.

Meanwhile, the argument that the feds should spend money on cities boils down to a few well-known facts: most Canadian live in cities, cities deliver services closest to people, cities are important, etc etc etc. But none of these facts, I would argue, has any relevance to the issue of whether the Feds should pay for cities instead of the provinces.

This is not about "should cities get money". Of course I think they should. The question is, who should pay? Well, McGuinty could have raised the PST by two notches in the last 2 years and not, on balance, hurt a single Ontarian taxpayer. That he would have been pilloried for doing so by the Toronto Sun and the National Post changes what, exactly? Or forget the GST -- the feds have been cutting income taxes and corporate taxes for years now. The provinces can tax those same pools of revenue -- if they're the foundations of the federation the way they so often claim to be, why not step up to the fucking plate for once?

The provinces generally, and Ontario most especially, don't suffer from a lack of fiscal capacity. They suffer from having endorsed the false premise that we can have government without ever paying a tax increase. Even Dalton McGuinty, who actually did raise taxes (sanely, and with my full support) seems to have only learned the lesson that if you raise taxes, you better grovel for your life and beg not to be kicked by talk radio hosts.

My father says I'm letting the perfect be the enemy of the good -- it's all fine to talk about constitutional responsibilities, but cities need money, and the feds have it. Harper's being callous and disregarding an urgent situation. (Paraphasing my father, I think.)

Well, maybe. But let's be clear: this is Stephen Harper we're talking about, so it's possible that the perfect is being the enemy of the bad. Stephen Harper stepping in to municipal affairs isn't exactly a risk-free scenario, if you get my meaning. And then there's the issue of whether provincial premiers (not all of whom are as blandly moderate as McGuinty, remember) would allow Ottawa to write checks direct to municipal governments.

I don't envy provincial governments. They suffered from downloading in their own ways, when the Feds cut transfer payments. But they responded with downloading their costs on to the cities. The two answers to this problem are for provinces to give cities room to breathe, fiscally speaking, and for provincial political leaders to stop supporting Federal leaders who insist on tax cuts -- meaning yes, McGuinty needs to come out swinging against Stephane Dion as well as Stephen Harper. If this is about anything other than rank political cowardice, consistency demands it.

There might, in the future, be some grand fiscal bargain that could be struck between the feds, the provinces, and the cities, where we all walk away happy. I doubt it. At the moment, you've got two levels of government who theoretically could give money to the cities, but only one level of government whose job description literally requires it.

It's not like I enjoy agreeing with Stephen Harper on this one. Or at all. Ever. But sometimes the sky actually is blue, the grass really is green, and sometimes, just sometimes, Stephen Harper states an incontrovertible fact. Why, as a resident of the city of Toronto, I'm supposed to be angry at him for that, eludes me.


Woman at Mile 0 said...

I disagreed with your post as well. Good on your Dad for calling you on it.

john said...

I'm curious: 1) were your disagreements the same, and 2) what keeps people from commenting when they disagree?

Gar Lipow said...

Not a Canadian. So, I'm not going to comment on what is the responsibility of whom under the Canadian constitution.

But I will make a general economic point. It is a mistake for too much of the tax base to be local or even state/provincial under modern corporate capitalism. Because it is too easy for big national and multi-national corporations to lure municipalities and states/provinces into bidding wars to cut taxes, and promote a race to the bottom. Heck it is hard to prevent that kind of competition among nations at the international scale. But cities and provinces have close to zero resistance. Large corporations just have too much leverage. So in terms of policy, taxation from a broader base is preferable.

john said...

A reasonable point. But certain taxes are, I think, more safely local. Small sales taxes aren't worth the effort to avoid them except for large purchases.