Mum's the word on those hidden taxes

If you want to identify some of the more important issues in this election campaign, don't pay much attention to what the politicians talk about. Instead, focus on what they don't talk about.

For example, we're hearing too much campaign chatter about direct taxation. The New Democrats intend to bleed the wealth and job creators via higher taxes which will send many packing.

On the other hand, the Conservatives promise dramatic tax cuts but haven't given us the other side of this equation -- namely, how will they be financed? Overly ambitious tax cuts often trigger overly drastic program cuts.

And the Liberals, true to their role as the long-reigning Wizards of Ottawa, say what voters received in tax cuts a few years ago is all they're going to get. For this, we must be on bended knee, and are expected to donate our votes generously in the ballot box. Yes, the Liberals are asking voters to keep the faith -- and no peeking behind the curtain.

But none of the above mention the hidden taxes Canadians pay not just to Ottawa, but to all levels of government. When you factor in the so-called non-tax source of fundings -- fees, licences, fines, royalties, Crown corporation profits -- we're a world leader.

That's the focus of a recent paper by the C.D. Howe Institute, an independent, non-profit policy research group based in Toronto.

Their paper compared total government tax levels among the 25 OECD (Organization for Economic Co-operation and Development) countries and found that when based on traditional taxes, Canada is roughly in the middle. However, when non-tax sources are factored in, only Sweden, Norway and the Slovak Republic are ranked higher.

Using 2001 data for the OECD, the latest available, the C.D. Howe paper reveals hidden taxes in Canada total about nine per cent of our national income, or GDP. In dollar terms they total almost

$10 billion annually which, says the institute's policy analyst Yvan Guillemette, equates to $3,215 per capita. In fact, the size of this hidden-tax take increased 21-fold between 1975 and 2001.

True, Ottawa didn't carry us to these lofty heights of hidden tax collection achievement by itself. It was most ably assisted by provinces such as B.C.

Both these levels of government have honed their off-loading skills to a fine art and it's the municipalities who end up under-nourished at the end of the food chain.

So, given the size of our hidden-tax take, why are we being asked by the NDP to endorse higher taxation? As the report notes, Ireland and Australia have much lower levels of both direct and hidden taxation, yet they have excellent social services.

And while the Conservative promise for major direct tax reduction sounds great, their vague explanation of using growing surpluses to fund these cuts is suspicious. Historically low interest rates are about to rise and this will dramatically increase debt-servicing costs.

As for the Liberals, faith is not enough. They've headed a national government that had too much money and this led to flagrant fiscal abuses such as the gun registry and sponsorship scandals.

Consequently, when the parties show a campaign hand for raising, lowering or holding the line on taxes, watch out for the other hand -- the one you don't see, which holds hidden taxes.

Brian Lewis is the Province's business editor: blewis@png.canwest.