Murphy’s Logic: User fees more fair than taxes

Steve Murphy discusses how user fees can sometimes be more fair than taxes.

“There is no such thing as a good tax.”

This quote is often attributed to Winston Churchill, but he didn’t actually say it.

He did say, “for a nation to tax itself into prosperity is like a man standing in a bucket and trying to lift himself by the handle”.

No doubt, our tax dollars fund many good and important things, but the point is, few among us enjoy paying taxes, especially for things we don’t approve of or don’t use.

This is why tolls are sometimes an appropriate and attractive alternative.

New Brunswick’s plan to impose tolls near the Nova Scotia border has rankled more than a few people, notably Nova Scotians who see it as some sort of provincial admission fee.

But the rationale is that drivers who don’t pay taxes to New Brunswick should pay to use the province’s roads. Out-of- province drivers have been paying to use Nova Scotia’s Cobequid Pass for years and that road wouldn’t have been built without tolls, which were initially paid to the private sector developer.

Truth is, in certain circumstances, user fees are fundamentally more fair than taxes. The principle is simple: people who use a service should pay more than those who don’t. Those who are required to use a given service frequently can also be given discounts or exemptions, as Nova Scotia has recently done with the Cobequid Pass.

Regrettably, Nova Scotia has also eliminated tolls on the Halifax Harbour bridges and in hospital parking lots, fulfilling political promises made during the last election campaign, even as the province’s debt explodes. That’s certainly not a good tax for the people who never or seldom use those services who will also now share in the cost of maintaining them.

Modern Canada has long favoured universality in the delivery of government services, without fees and tolls. But as governments struggle with their finances, it’s a good time to consider whether more user fees – including road tolls – should be integrated into the revenue stream as an alternative to broadly higher taxes.