Writing in the Vancouver Sun, columnist Don Cayo reports on a recent Macdonald-Laurier Institute paper by former StatsCan Chief Statistician Munir Sheikh. The paper, “Estimating the True Size of Government: Adjusted for Tax Expenditures”, attempts to calculate the impact of tax expenditures, which are generally ignored at budget time, on the scale of government activity. Sheikh finds that the federal government is 50% larger than traditional estimates show.
Cayo, who calls Sheikh a “hero to many” for taking a stand against the elimination of the long-form census while he was at StatsCan, writes that when he “includes these enormous numbers in his calculations, the size of government doesn’t work out to 44 per cent of GDP, as is generally reported, but 54 per cent.”
Sheikh is a numbers guy, and he doesn’t speculate or argue policy issues. But it is easy to think of reasons why governments are so keen on tax expenditures. They are largely hidden from view, and thus a government can pretend this spending isn’t costing taxpayers anything. It means more priorities can be funded, often leveraging still more private spending. It lets politicians grant favours to potential donors and/or voters. And tax expenditures can be presented as tax reductions, although this is true only for the lucky few while, in fact, a larger share of the tax burden is left for the majority who don’t get the special break.
To read the entire column click here.