Article contentMany provinces have adopted similar reporting practices.Article contentPrince Edward Island has not.Article contentArticle contentAccountability questionsArticle contentP.E.I.’s annual estimates identify changes to tax measures from time to time, but there is no comprehensive annual report identifying all provincial tax expenditures, estimating their cost to taxpayers, explaining why they exist, or evaluating whether they continue to provide value-for-money. Islanders therefore have no complete picture of how much public money is being spent through the tax system each year.Article contentThis gap became apparent earlier this year with the introduction of the Island essential benefit. The government announced that approximately $26 million would be provided to Islanders through the tax system. Yet that expenditure did not appear as a traditional spending program within the annual estimates reviewed by the legislative assembly. Because it operates through the tax system, it falls outside the normal budget presentation that most people associate with government spending.Article contentArticle contentThat raises an important question: if tax expenditures are another form of public spending, shouldn’t they receive the same transparency and accountability as every other government program?Article contentThere is another accountability issue worth considering.Article contentArticle contentIndependent examinationArticle contentThe Office of the Auditor General has conducted numerous performance audits examining whether government programs are managed effectively, efficiently and economically. Those audits have improved public administration across many departments. However, there appears to have been no comparable performance audit examining the province’s tax expenditures or the government’s framework for reporting and evaluating them.Article contentThat does not necessarily mean anything is wrong. It simply means one significant area of public finance has received relatively little independent examination.Article contentGood public financial management requires governments to evaluate all forms of spending; not only the expenditures that appear on the spending side of the budget, but also those delivered through the tax system.Article contentArticle contentEvery dollar forgone through a tax credit or exemption is a dollar unavailable for health care, education, infrastructure, or debt reduction. Tax expenditures may well represent excellent public policy, but taxpayers deserve to know how much they cost, who benefits, what objectives they are intended to achieve, and whether they are delivering results.Article contentTransparency is not about criticizing government. It is about strengthening public confidence.Article contentArticle contentPolicy objectivesArticle contentIslanders deserve to see the full picture of how their tax dollars are being used, whether those dollars are spent directly or delivered through the tax system.Article contentPerhaps it is time for Prince Edward Island to join other provincial governments that publish comprehensive annual tax expenditure reports and to periodically ask the auditor general to examine whether those tax expenditures continue to achieve the public policy objectives for which they were created.Article contentGood government depends not only on making wise spending decisions but also on ensuring that every form of public spending receives the same level of public accountability.Article contentArticle contentArticle contentMartin Ruben lives in Victoria and has a background in public sector and not-for-profit corporate governance.Article content
COMMENTARY: The hidden side of government spending
