This post is slightly dated as it is about the Budget, which obviously did not pass given that we are in election season, however I think it is still something worth writing about.
Preston Manning wrote an interesting article in the Globe and Mail a few weeks ago, with the interesting title "The hiss factor and the art of taxation". In the article he suggests that those focusing on only the economics, miss the fact that the politics are important.
It follows a few articles from economists complaining about the huge number of politically motivated tax credits, and the lack of substantive economic policy changes in the Budget.
The issue goes beyond the ever expanding list of tax credits, (see a take on the ever growing list of credits here ), and points to the challenge of bringing the public with you on complicated issues.
I actually think that there are two possible paths, one is the cynical one, of which the explanation for the GST cut by the Conservatives is a good example. This was a situation in which politics, was the only concern when the government cut the GST by two percentage points. Many now point to this move as creating a structural deficit and undermining the governments long term revenues, despite the impact of the "Great Recession".
The second approach would be to explain clearly the choices faces Canadians. It's a difficult path, in part because the general public doesn't always recognize the trade-offs involved in some of these decisions. One can only hope that new ways of presenting the information could help. The Finance department's site "Where does your tax dollar go" should be rolled out and highlighted to more people, so that people can understand basic facts about where government money goes.
In the end the only real answer is to do both, find something that makes sense economically, and politically. It's hard in practice, as often they pull in opposite directions, and in many cases splitting the difference isn't possible.
