An occupational hazard in column-writing is to be negative about everything, especially everything governments do. In fact, the world is a pretty good place and arguably getting better. Even governments occasionally get things right. When they do it’s best to say so and in that small way maybe encourage good behaviour.
Last week’s Quebec budget, which had several faults that I recently wrote about in FP Comment, also had good points I haven’t written about yet. One good thing it did was provide $250 million in compensation for the loss in the value of taxi permits.
Because of severe legal restrictions in permit numbers, taxi companies have for decades been ripping off customers with prices much higher (and service rather lower) than they needed to be, as the spectacular success of lower-priced Uber and other ride-sharing apps has proven. It’s only because of monopoly-like pricing that taxi permits have had such crazy values — as high as $300,000 at times in Montreal. And the monopoly was only made possible in this naturally easy-entry business by the government making unapproved entry a crime.
So I grant only a complex morality sees it as fair to take 250-million tax dollars from long-ripped-off ordinary citizens and give them to the former rip-off artists, who aren’t even reformed rip-off artists but are still lobbying hard to keep competitors out. First we pay when they foist their monopoly on us and then we pay when a new technology comes along to finally free us from it.
The idea of paying people off when you take away their legislated privileges is one that should have greater currency
But in spite of its complex morality, the idea of paying people off when you take away their legislated privileges is one that should have greater currency. The privileged themselves won’t appreciate it. They’ll prefer to keep their privileges, as the taxi industry wants to. But it will help persuade the big-hearted, well-meaning majority of the ripped-off public that everyone is being treated fairly. Some Canadians are so nice they worry that if taxi drivers aren’t allowed to charge extortive prices any more, that would be a bad thing socially, given that most of the taxi drivers they meet — who aren’t even necessarily the permit owners — can’t possibly be earning much money. Next stop: Poultry and dairy farmers.
Speaking of low incomes, another good thing the Quebec budget does is raise the “basic personal amount” exempted from personal income tax by $346 and then index it from 2018 on. The idea behind the basic personal amount is that there’s some income nobody should be taxed on. We all have basic needs. Everybody has to buy toothpaste, warm themselves in winter and get their recommended calories per day, whatever that number is this week. On that basic amount of income nobody should be taxed. It’s a principle just about everybody should be able to agree to.
Even the Quebec government understands it, saying in its budget: “The purpose of the basic personal amount is to leave untaxed the income needed for essential needs and obligatory contributions.” A footnote explains, “obligatory contributions” are “essentially, contributions to the Quebec Pension Plan, Quebec Parental Insurance Plan and Employment Assistance.” I really am trying not to be negative but I doubt all Quebecers would agree that in addition to food, clothing and shelter the most important items that should enter into people’s first $14,890 of spending — which is what the basic personal amount is moving to — should be their “contributions,” i.e., taxes, to these other government programs. (Politicians also give donations to their political parties a 75-per-cent tax break. If you put that to a vote, I doubt most people would agree “charity begins at politics.”)
A third thing I like about the Quebec budget is that the term “middle class” appears only once. This is in contrast to the federal government’s veritable monomania about the middle class. The single reference is to how the increase in the basic personal amount will allow “many taxpayers with lower income and in the middle class” to benefit from the $55 tax credit (too little of a good thing) that results from raising the personal amount. Of course, people with high income will also benefit, too. The document doesn’t actually say that outright, but a budget chart shows that $21.5 million, seven per cent of the revenue reduction involved, will go to the 296,584 Quebec taxpayers who are in the top bracket.
For its part, the word “poverty” appears in the budget 35 times. That’s appropriate. The social problem in Canada is not inequality or the middle class. It’s poverty. That’s what governments should be working to reduce.
Unfortunately (sorry, I can’t eliminate the negativity completely) the budget points to the imminent publication of a report on universal basic income. This will raise a host of new problems but, despite that, it looks as if it’s coming anyway.
By: William Watson
Source: Financial Post