Connecting taxation to services increases transparency and accountability

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Direct funding schemes have pros and consFinance Minister Robert McLeod didn’t have much to offer on the question of whether the profits from Inuvik liquor sales should go directly to programs that deal with addiction in Inuvik.

The money is funnelled into the GNWT’s general revenue fund, from which the government takes and puts to use in ways of its own choosing.

Jonathon Michel hoped just 10 per cent of the Inuvik profits could go to funding the John Wayne Kiktorak Centre, a community resource that aims to combat some of the damaging effects of alcohol addiction.

McLeod has a good point that elected politicians have a greater ability to decide what programs to run, and how, when the money is not tied to any specific use, but what is lost in the general revenue system is transparency and accountability.

Governments always prefer as much latitude as they can get for spending taxpayers’ money. Without tying Inuvik liquor profits to any one thing, the government can do whatever it wants with it.

A great example in recent Canadian history on this subject is the introduction of the income tax in 1917. It was originally envisioned as a temporary wartime effort to help fund the First World War, which unfortunately was not placed with any time limit to end, but merely with the suggestion that it be reviewed a year or two after the war.

Alexander Maclean, finance critic at the time, rightly guessed that it would long outlast that timeframe. And so still we have it today, no one connects it to war anymore, and its use is up to the whims of the sitting government.

Throwing all the money in a big pile to choose from certainly makes the government’s job more fun and makes the government more powerful in what it can do. That does have benefits, as it means the government can more flexibly adapt to the needs of the day.

But people need to see the effect of their taxes to continue believing in the rightness of their collection.

It’s hard not to grumble about the bite taken out of each paycheque when it’s not clear where that money is going.

Did it go for the road here, or to building a new facility on the other side of the country? What’s it matter if it would all be covered by debt anyway?

The government taketh, and the people get a vague idea of what it giveth.

Though it restricts the government’s power, tying funding to programs or services certainly improves accountability and transparency.

If profits from Inuvik liquor sales were legislated to go toward funding Inuvik programs, everyone would be able to see that connection. It would also give people the feeling they are contributing to the good of their own community when they are buying liquor, knowing where the profits are going.

It could well be that Inuvik gets more benefit out of its liquor sales going into general revenue than it would if the sales were tied to being spent in Inuvik. But who would know? That’s the public relations problem with general revenue funding.

The government is rarely going to legislate a limit to its own power. But in the name of transparency, such an idea could be considered here.