Policy Context: The Coming Fiscal Debate

Article by The Honourable Hugh Segal

Debates between politicians at the federal, provincial and municipal levels about who can best lower taxes are neither new nor surprising. Ever since the California debate in the 1980's over proposition 13, it has been an ongoing part of our political reality. If one stands back from the partisan bluster on both sides some realities about the dynamic of the debate and its role in real public policy outcomes are apparent.

1. Often, tax cuts for one segment of the population are facilitated by increases in user fees or special levies on other parts of the population or business community.
   
   
2. Tax cuts are often made possible by exogenous economic and demand cycle forces that generate higher revenues from lower tax rates. Rarely is a jurisdiction so cut off from cyclical growth forces that tax cut are only made possible by internal forces.