John Lester, a research fellow with the School of Public Policy at the University of Calgary, published a research paper with suggestions on how to improve the transparency and accountability of tax-based spending programs. At the moment, the government is providing approximately $26 billion in tax incentives, split roughly 40-60 between businesses and individuals.
Lester presents 3 proposals to better improve the visibility and scrutiny of tax-based spending programs:
1. Shift responsibility for existing tax-based spending programs from the Department of Finance to the relevant spending department. For example, shift SR&ED from the Department of Finance to Industry Canada, whose portfolio already includes most spending programs that provide support for business R&D.
2. Modify reports to Parliament to provide a clearer picture of both tax-based spending and direct spending (i.e. grants). Include all tax-based spending programs in the government’s overall expenditure plan and spending estimates tabled in Parliament.
3. Include tax-based spending program expenditures in the government’s evaluation policy and in Strategic Reviews, which currently only look at direct spending.
Lester points out that there would be challenges in the implementation of such an integrated system, because the Minister of Finance would be forced to give up some authority.
