Kevin Page on taxation and transparency

Posted on Thursday, February 22, 2018

“It is hard to create trust and a culture of accountability in political institutions without a high degree of transparency,” says Kevin Page.

By McGill Reporter Staff

Kevin Page is the founding President and CEO of the Institute of Fiscal Studies and Democracy at the University of Ottawa. He was appointed Canada’s first Parliamentary Budget Officer on March 25, 2008 where he served a five-year term.  Page will be giving the keynote on the subject Taxation and Transparency tomorrow at the MISC conference.

Are Canada and the world becoming more or less transparent as we look forward to the end of the 2010s and the beginning of the 2020s?

Canada and the world are facing a long list of significant policy challenges. If we are going to address these challenges we need leaders and policy makers to come together in a way that facilitates open discussion and analysis. It is hard to create trust and a culture of accountability in political institutions without a high degree of transparency.

As a Parliamentary Budget Officer for Canada I got to see close up how a government will deliberately limit the flow of information in order to evade debate and accountability. I think the current trend towards less transparency in some political capitals around the world is not sustainable in a knowledge-based society. I am optimistic about the future even though our institutions are struggling at present.

Are there hardwired threats to fiscal accountability in federalism? You instance Stephen Harper’s Truth in Sentencing Act in 2010 as a “silent” change to the criminal code that was designed to increase provincial spending on incarceration. You say that it “illustrated perfectly how the Conservative government disregarded the principle of any meaningful fiscal accountability.” How so? How to prevent such things?

The Conservative government under Prime Minister Harper got stuck between a perception that they are good fiscal managers and that they were going to be mindful and respectful of provincial jurisdiction. When the 2008 world financial crisis hit, it was inevitable to run federal budget deficits. Budgetary revenue growth fell with the decline in economic output. Cuts to some taxes like the GST and corporate income taxes and the need to add temporary fiscal stimulus added to the budgetary deficits.

In this environment, the government was worried about the price sticker shock of moving forward on big initiatives like the ‘tough on crime’ agenda (and needed military procurement). There was a deliberate strategy to bury the costs or to pretend there was no additional budgetary pressure to higher incarceration. The changes to the criminal code impacted provincial justice systems and budgetary balances. There was no transparency. No white paper on policy. No line in the federal budget for higher prison costs. There was no debate on whether the strategy and cost of changing the ‘remand system’ was a good one for society.

The threat of fiscal downloading from the federal to provincial and from provincial to municipal governments is real. Prime Minister Harper did not invent fiscal offloading. Strong intergovernmental relations, institutions, processes and transparency can help reduce the threat.

Taxes used to be the best place for transparency and accountability. Now they seem impenetrable in their complexity to many people. How to make technical complexity subject to democratic accountability?

Taxation is complicated for experts and lay persons. Some of the complexity stems from the growth of tax expenditures over the past few decades. We have seen the ‘ying’ but we are waiting for the ‘yang’.

The time is ripe for a tax reform conversation that deals with 21st century policy issues and the issues of fairness, transparency and simplicity. We need governments and experts to find ways to better explain the workings of tax policy and administration. We need to reverse the decline in public trust in Canada’s political institutions. Helping citizens understand the link between taxes paid and government programs and services provided is a fundamental place to start. As Einstein said “in the middle of difficulty, you will find opportunity.” I applaud the McGill Institute for The Study of Canada for firing up the debate on tax policy in Canada while before the next federal election.

What advice would you provide to the next generation of Canadian leaders?

I like the strategy highlighted by David Brooks, the well-known New York Times editorialist.  Three things. One, in your work, align yourself to an experienced and skilled practitioner. Two, go see the world – see things from different perspectives and cultures. Three, be stubborn on principle – never, never give up on your values.

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