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Winnipeg Free Press - PRINT EDITION

Taxes rise three times CPI rate

Posted: 05/8/2013 1:00 AM | Comments: 0

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CALGARY -- For those who filed their taxes at the last moment and cut an extra cheque to government, right now is unlikely to be their favourite time of year. For what it's worth, it might be of some comfort to know taxes have provoked much the same reaction throughout history.

To find the origins of tax, one has to travel back to the ancient world and to a fertile plain between the Tigris and Euphrates rivers, now modern Iraq. History's first recorded tax was brought to mankind in Sumer, 6,000 years ago. It is there, inscribed on clay stones excavated at Lagash that we learn of the first taxes, instituted to fight a ferocious war.

But as is often the case in history, when the battle ceased, the tax stayed -- a cause of no small discontent on the part of the locals. Local Sumerians apparently complained taxes filled up the land from one end to the other.

Charles Adams detailed such history in his 1982 book, For Good and Evil: The Impact of Taxes on the Course of Civilization. As his title implies, taxes have been both useful and a scourge.

In Canada, taxes pay for items any sensible person would regard as desirable. One could point to the most basic functions you'd hope taxes would undergird. A few examples: governments that (in theory) protect your property and person from interference; courts to enforce such desirable laws; for cops and others to protect kids.

On the flip side, it wouldn't take long for anyone to identify useless government spending. Think corporate welfare, or taxpayer-financing for professional sports and their stadiums, or above-market compensation in the public sector. Think of absurdly high salaries for some native chiefs, or the Harper government's endless stream of taxpayer-financed commercials that tout Ottawa's "economic action plan," at a cost of $78 million in 2012 alone.

In Canada, the first known instance of taxation was an export duty on beaver pelts (50 per cent) and moose pelts (10 per cent) in 1650 in what was then New France.

While the tax on beaver furs was reduced to 25 per cent within three years, by 1662 every import was subject to a 10 per cent tax for six years, necessary to help pay off colonial debt.

Ever since, the number of taxes has multiplied.

Two colleagues recently found that, since 1961, tax increases have outpaced the growth in the cost of clothing (up by 607 per cent), food (higher by 578 per cent) and shelter costs (up by 1,290 per cent).

In fact, Statistics Canada's Consumer Price Index, which measures the prices Canadians pay for a wide variety of goods and services, rose by 675 per cent from 1961 to 2012.

But taxes? They're up by 1,787 per cent!

n other words, tax hikes since 1961 have outpaced inflation and the necessities of life, thus squeezing family budgets.

And taxes are heading up again, most recently in British Columbia, Manitoba, Ontario, Quebec and New Brunswick.

But, you may respond, "Taxes are what we pay for a civilized society." That's what American Supreme Court Justice Oliver Wendell Holmes Jr. said back in 1927.

Back then, however, government spending as a percentage of the economy was much lower than today.

A better perspective on taxes comes from Richard Cartwright, a 19th-century gentleman who made clear how he thought politicians had a duty to exercise restraint in matters of taxation and spending.

"All taxation is a loss per se," he said. "It is the sacred duty of the government to take only from the people what is necessary to the proper discharge of the public service; and that taxation in any other mode, is simply in one shape or another, legalized robbery."

It may come as a surprise to some that Cartwright was not some supposed ideologue but the Dominion Minister of Finance in the Liberal government of the day and the words were spoken during his 1878 budget speech.

Cartwright had the spirit of it right. Moderation in government and taxes, as in all areas of life, is a virtue.

 

Mark Milke is a senior fellow with the Fraser Institute.

Republished from the Winnipeg Free Press print edition May 8, 2013 A9

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