Political Will continued...

The publicity around per-diem (subsistence/meal allowance) is not an income tax issue! It is a political issue, guided by political will! Let me take the long road, with a few stops along the way, to explain what I mean.

CRA has many, many levels of authority. The higher up someone advances the more politics are involved in their job descriptions. In order to advance as high as the upper crust “generals” (as I described them in my book) civil servants need to make sure they don’t get blamed for ANYTHING! “Cover your butt” is the first course taken by civil servants when contemplating advancement. This means that any new application of the income tax act must be able to be flexible enough to weather shifts in political parties. Sometimes new administrations direct CRA in different directions.

Here is the latest example of “upper level” income tax legislation designed to be applied through political will rather than clear legislation! The article is called “Lawyers see overkill hidden in federal bill” it is found at http://www.thebottomlinenews.ca/index.php?section=issue

The article can be summarized as follows. Current changes to the Competition Act and the Investment Canada Act hidden in our government’s budget implementation bill is legislation that is aimed at those who “fix prices” through cartel style agreements. It “…changes the conspiracy law to make it illegal to conspire with a competitor, without proof of the impact on competition…”, “…there will be no test… any agreement will be a violation…”. Another significant change comes with the label “abuse of dominance” (anti-bullying policy). As the article states “…caution is the keyword as it will be hard for many companies to know, in advance, when they have abused their dominant position… it is difficult to distinguish between aggressiveness and abusiveness…”

In this legislation there is deliberate vagueness. It produces an INVISIBLE glass ceiling, imposing “law” without clarification or definitions yet with record setting fines and penalties. So we must be realistic in the application of the law, ultimately it will come down to “political will”. Who will complain? Who will listen? Who will send out the dogs (no pun intended). Owners of monopolies, oligopolies etc would view the legislation as forcing a “blank check” to be written to the government… with no clear invoice!

Legislation like this may be designed to intimidate and control without specifics. It is a reflection of how the higher level CRA officials view their jobs and positions. Legislation must have administrative flexibility, no definite right/wrong, no clarity just authority.

The only way to affect long term stability in the application of some income tax issues (such as subsistence/per diem) is political will. Most “exceptions” must be individually defended until they become common knowledge with universal application. Once enough people use the exception it would create a negative public perception if it suddenly was taken away.

The more people know about it, the more people who use it the safer it is for everyone. Political will, in a democracy is always the citizens. Think about the implication of long term application and stability of any tax benefit!

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