There’s a lot of talk about the Value Added Tax and its various sister excises, like the Retail Sales Tax and the GST, or Goods and Services Tax. A lot of countries have one or more of these. They raise a lot of revenue, but require mounds of record-keeping and can quickly become oppressive.
Economist David Henderson recently noted the strange fortunes of Canada’s GST. When it was imposed, it cost the party that sponsored it — the so-called Progressive Conservative party — nearly everything. Canadians so loathed the tax that they punished the PCs by throwing them out of office — way out: Their representation in Parliament went from 295 seats to two.
Some repudiation, eh?
Henderson wryly notes that the Liberal Party, which picked up majority support, did not abolish the tax as promised. Are you shocked?
Nearly everyone feels the GST, nearly everyone pays it. One reason to support such a visible tax, Henderson says, rather than less-visible taxes is so that voters have a feel for the magnitude of the tax. But precisely because that’s true, they’ll punish the party that imposes it.
Hey politicians — I have a better idea. Get rid of some less-than-visible spending. It would hurt the parties a lot less. And it really would solve the tight budget problem, making the need for a visible tax vanish.
This is Common Sense. I’m Paul Jacob.