AMA on Taxes with Yours Truly

I will be doing an Ask Me Anything (AMA) over on reddit (Canadian Politics) today (July 22) at 2pm ET. The topic is tax policy. I am a little nervous about the ask my anything part, because, well, it is not like I know everything. Anyway, feel free to join me and, gulp, ask me anything.


CRA’s tax debt write off

“We shouldn’t be surprised that the Canada Revenue Agency just wrote off billions in tax debt, but the government can and should fix the problem by withholding more tax when income is earned.” Read my latest over at Macleans to find out how.

How not to hold a referendum: Vancouver’s transit tax referendum

As you might now, the results from the Metro Vancouver transit tax referendum are in, and those who voted (<50%) most voted against the transit tax proposal. With the results in, it is prompting much navel gazing about the referendum and whether it was doomed at the start.

My opinion is yes, it was indeed doomed from the start. The referendum really boiled down as to whether people in Metro Vancouver were willing to pay for better service. The problem was they had no counterfactual for that ‘better service’. In fact, the only counterfactual people had was poor service, poor communication, a litany of poorly implemented transit projects, and a group of mayors who don’t seem to be able to work very well together for the betterment of transit overall, and not just in their little fiefdom. The ‘yes’ side seemingly only response to this strongly held belief was a variant of “Trust us. We’ll do it right this time.” Of course, this promise seemed rather empty when in the midst of the referendum Translink hired a new CEO while continuing to pay the other one.

With that information in hand, it was unsurprising the outcome of the vote. In fact, this referendum holds eerie similarity to the HST referendum in BC, which was mostly a vote against the government and their governance than necessarily the tax itself. This suggests that BC needs to learn a lot about how to hold referendums, given that there seems to be a potentially increasing appetite for them in this province.

There is a lot of rich literature about how to structure referendums to ensure that the referendum is about what you think it is about and not something else, as appears to be the case in both the HST and transit tax referendum. Governments in BC would be well served to conduct such a comprehensive literature review. And if they don’t want to do it themselves, we have lots of excellent MPA students here at UVic that would be happy to do it as part of their MPA degree requirements.

One aspect that I would like to point out is that when holding a referendum about money for service issues, like the transit tax referendum, voters are best served by having a real counterfactual about the service their money would buy. That is, put your money where your mouth is. The literature shows quite clearly that voters are more likely to support money for service proposals when they have a direct chance to experience the benefits. This is often done by running pilots. While infrastructure investments clearly cannot be done for these pilots, small targeted service improvements can be done and are worth the time and money.

Of course, if you want my opinion on the transit tax itself, I thought the instrument was a poor choice. Metro Vancouver as a two-fold problem: terrible traffic congestion along with a need for public transit investment. The best tool to address both problems in a congestion charge and you can read more about this idea here and an implementation path here.