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User Fees Outweighed Tax Cuts

S

spmarshall

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I'm certainly not surprised by this report, as tax cuts both provincally and federally mostly went to the top earners. Meanwhile, transit fares have skyrocketed, municipalities raised fees to deal with reduced funding and the poor and working class have suffered the greatest.

The report, written for the university faculty association (which, like student groups, opposed massive tuition fee increases, and the underfunding of universities), so the focus is on tuition.

From the Star:

Apr. 18, 2004. 03:47*PM

User fees outweighed Tory tax cuts: study

Raise taxes, faculty group advises

FROM CANADIAN PRESS
The benefits to Ontario families of the tax cuts imposed by the Conservative government between 1995 and 2003 were outweighed by higher user fees during the same period, a new study suggests.

The study, to be released Monday by the Ontario Confederation of University Faculty Associations, is a clear warning to the current Liberal government as it struggles to balance the books without raising taxes.

"Our feeling would be that the best approach for raising revenue is through the progressive income tax system," OCUFA president Dr. Michael Doucet said in an interview.

"People know what they're paying for various kinds of services, whether it's through income taxes or user fees."

The study found a typical single-parent family with two children and annual income of $38,000 in 2003 was paying $1,490.43 less in income taxes than in 1995, when the Conservatives were first elected.

But the average Ontario household was paying $1,831.14 more in user fees and property taxes in 2003, the study found.

A family of four with one full-time university student and an annual income of $54,000 - roughly the Ontario average - was paying $4,059.46 in additional user fees in 2003, including $2,465 more for tuition, than in 1995. But that same family was only saving $1,439.80 in lower taxes, the study found.

Compensating for lower taxes through higher user fees is detrimental because it doesn't distinguish between families with different income levels, the study warns.

"A key objection to shifting the burden of public services from income taxes to user fees is that the fees are far less likely to be calibrated to the family's ability to pay, however determined."

Finance Minister Greg Sorbara has steadfastly refused to speculate about what sort of revenue-generating measures will be in the budget, expected next month.

But he has ruled out raising personal income taxes and allowed that the government is considering other "non-tax-based revenue mechanisms" to generate revenue.

And Premier Dalton McGuinty has acknowledged that tolls and user fees are going to play a role in offsetting the cost of upgrading the province's highways and water systems.

NDP Howard Hampton said it's clear where the government is going.

"Going the way of user fees, co-payment fees, administrative fees, tuition fees - those are all regressive taxes," he said.

"You can try to fool people by saying they're not a tax, but they are, and they hit lower-income and modest-income people the hardest."

The use of hidden user fees was one of the previous Tory government's "greatest sins," Hampton said, "and it's being replicated by the Liberals."

The study also says Ontario would be "amply repaid" if the province raised income taxes in order to increase transfer payments to universities by $500 million in the upcoming provincial budget.

Ontario's gross domestic product would eventually climb by $1.07 billion, returning about $128 million to provincial government coffers.

"In a knowledge-based economy, and I think most would admit that's where we are at the moment, we need a population that is as well-educated as possible," Doucet said.

"We lag behind our competitors in terms of participation."

Ontario's operating grants per student to its universities are the lowest in Canada, and have declined by 25 per cent per student over the last 10 years, according to the Council of Ontario Universities.

The province just last week announced $48.1 million for colleges and universities to compensate for the first year of its vaunted two-year freeze on tuition fees.

But Doucet said he fears that may be as much as post-secondary education gets this time around.

"I suspect that may be the extent of it," he said. "I'm not sure about a cut, but my gut feeling is that there will not be any major increase in transfer payments in this budget."
 
Mah, what do you expect? There's too much corruption. If they cut down on it and spent their money more efficiently, they could get by with a lot less $$$.

Look at European transit, their spending is much more efficient and students ride almost for free.
 
Err, Europeans are anything but immune to corruption. And I must point out their higher rates of taxation as well.

GB
 
Hah. Corruption makes up such a tiny amount of the government's budget that it's almost laughable. I'm not saying that it's not wrong, or should not be punished, but don't think we'll be getting Network 2011 built by cutting down on corruption. I remember reading (the figures are probably slightly off) that the new photo health cards were introduced at a cost of $100 million in order to eliminate $30 million in fraud.

It's simple. We either maintain spending as it is now with small increases in keeping with economic growth, we go into long-term deficit, or we raise taxes.

Europe's tax system, contrary to popular belief, isn't as progressive as it could be. It depends a great deal on payroll taxes which undoubtedly cost jobs, and they have much lower corporate taxation than Canada.
 
Not only corruption but it's also about spending efficiency. I in the Cold War where the Soviets could launch 1 kg into orbit for less than 10 % of what it cost the Americans. Now it's easier to do these things in a totalatarian system but just look at the money the Americans wasted on useless and expensive consultants that they barely needed.

An example about corruption is that the Canadian government said it needed to spend $200 million 5 years ago to shelter 5000 Kosovo refugees for 6 months even though Air Canada and its partners offered them free tickets to Canada and back. Now that's over $6500/person. So where did the money that was left go?
 

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