Friday Afternoon Links

Assorted content to end your week.

- John Paul Tasker reports on the federal government's plans to close some loopholes which allow the use of small corporations in order to avoid income taxes. And Andrew Jackson writes that we should support that first step toward a fairer tax system. But the Star points out that there's far more ground to cover:

The three measures now being floated all aim to limit the ability of high earners to use the small-business tax system to dodge paying their share on income. The most far-reaching of these would constrain the practice of so-called “income sprinkling,” which allows individuals to significantly reduce their tax burden by transferring large portions of their income, through a corporation, to family members. Taken together, the package could save Ottawa hundreds of millions of dollars annually.

This is a start, but it likely won’t get Morneau even a tenth of the way toward his stated aim of saving $3 billion annually through a review of so-called tax expenditures.

The promised review is crucial. Over the last century, Canada’s tax code has grown into an unwieldy mess. The code is now roughly 200 times longer than it was in its original form, a result not mainly of thoughtful economic design, but of the slow accretion of politically micro-targeted tax breaks. The Harper Tories were particularly fond of such boutique tax credits, which allowed them to appeal to certain politically important constituencies while essentially shrinking government.

Tax expenditures now account for upwards of $100 billion of forgone revenue annually, about a quarter of all government spending. Yet, unlike other government outlays, they are not subject to significant parliamentary scrutiny or even government study. No one seems to know exactly how much is lost through these loopholes, or whether they achieve their stated objectives. As Auditor General Michael Ferguson warned in 2015, even the finance department seems to be in the dark.

What we do know, however, suggests that these tax breaks, like the ones Morneau is now seeking to tackle, too often benefit most those who need help least, deepening rather than mitigating economic inequality.

- Meanwhile, Ashley Renders reports on the new (if limited) disclosure required of Canadian resource companies to document what they've paid to governments.

- Speaking of which, Sara Golling rightly slams Christy Clark and her B.C. Libs for using their last day in office - and the cover of a public emergency - to award a major donor permits for mine activities which couldn't win federal approval. And Bob Mackin reports on how Clark's henchpeople have thrown public money at the Site C disaster with no time for even a cursory review.

- David Reevely notes Ontario Hydro's bizarre re-entry into the coal power business years after the provincial Libs shut down plants within the province. 

- Finally, David McKie points out that many Indigenous families are missing out on the federal child benefit - showing the limitations of a program which relies on people to identify their own opportunity to sign up.