THE EDITORIAL PAGE Tax reform: rhetoric or reality?

Tax reform and reduction has become the order-of-the-day both in th is country and the U.S.A. But is it rhetoric or reality?

As most of us know only too well, the over-all tax take being levied against the average Canadian today is about as severe as exists any place in the world. And it’s riddled with inequalities. Even Finance Minister Michael Wilson himself calls it a “quagmire of complexities”– which it is indeed.

The central objective of the long-promised reform package to be presented in his upcoming budget will be to reduce both personal and corporate tax rates and increase the number of taxpayers by cutting the number of tax breaks now in existence, he told the Canadian Tax Foundation in Toronto recently. Rates in this country have remained inordinately high because of special deductions, he said, vowing that “those days will soon be gone.” Profitable corporations will no longer be able to escape paying taxes, he assured his audience.

This all sounds fair enough. But we suggest that the average Canadian should not hold his breath awaiting the day he will be carrying more after-tax dollars in his pocket, for sales taxes of all descriptions are likely to rise sharply as there was nary a word about slashing expenditures to cope with the feds’ crippling deficits. Politicians just don’t operate that way. And to be realistic, could any party that really started slashing government spending and handouts hope to be re-elected? We have simply grown too accustomed to living high off the hog, largely through this government largess.

And it’s much the same story in the United States, where President Reagan’s impossible dream of a balanced budget within five years is as dead as the dodo bird. We refer, of course, to that pretentious charade known as the Gramm-Rudman bill which he signed into law last year. Its goal was a balanced budget in five years, with interim targets that call for a $144-billion shortfall in the current fiscal year, reducing to zero in the 5-year period. If it becomes clear by August of each year that taxing and spending decisions will not bring about the prescribed deficit, across-the- board spending cuts would then be orderd by the comptroller- general to reach the mandated optimistic goal.

Inasmuch as this year’s U.S. deficit is likely to top the $170- billion mark and no indication of any mandatory across-the-board spending reduc tions, we must assume that Uncle Sam has kissed Gramm-Rudman goodbye. After all, he has a war to wage in Nicaragua — and these wars can prove very costly.

By the way, that U.S. debt has doubled in just five years to more than $2 trillion. The interest charges on this are simply staggering and represent the fastest growing demands on its treasury, exceeding even Mr Reagan’s massive defence expenditures.