Our beloved Goods and Services Tax has stirred up renewed cries for the establishment of a "fair tax system."

I've never been enamoured with the existing system, but I used to assume (perhaps naively) that it came to be the way it is because it was somebody's idea of fairness at the time it was enacted.  Lately I've been having serious doubts.

Most people view taxation as an evil, but a necessary one.  The justifications for it tend to fall into two major categories.  The first rationale is that government provides us with certain goods and services: national defence, the judicial system, roads, schools, hospitals and the like.

We may argue about which of these things are appropriately provided by government and which by private enterprise, but most people generally seem to feel that if something is being supplied to them by government, then it's fair that they should have to pay for it, just as they pay for mundane commodities and services like shoes or haircuts.

The problem is, I have never yet heard anyone propose a tax system that even comes close to implementing this theory.  One of the main stumbling blocks is always the notion of dependents' deductions.  Even proponents of various flat rate tax systems are forever cluttering up their proposals with exemptions or deductions for children.

This means that a childless taxpayer at any given income level always pays more tax than someone who has children.  This doesn't jibe at all with the theory that we tolerate taxes because it's fair to pay for what we receive.  The average family with children obviously receives a lot more education, health care, transportation, etc. than the average taxpayer without children.

How absurd it would seem if shoe stores or barbers started charging for their wares and services on the basis of how many dependents their customers had, rather than the quantity of product they consumed.  Could anyone possibly consider that fair?

If the "service" rationale for taxation is to hold water, shouldn't a fair tax system charge taxpayers with children more rather than less than those without?

The second rationale for taxation is almost the exact opposite of the first.

Under this rationale, we pay taxes to implement a system of "social justice" in which wealth is redistributed from the rich to the poor, from the healthy to the sick, from the fortunate to the unfortunate, so that we can all afford to buy equal numbers of shoes and haircuts.

Of course, there are also private charities that perform this function.  The tax system recognizes this in a half-hearted way by allowing deductions for charitable donations.

But why are the deductions so trifling?  If the justification for taxation is to help the unfortunate, why don't we get a dollar-for-dollar reduction in our tax bill when we make voluntary donations for that purpose?

There is good reason to believe that the poor and sick could be helped more effectively by channelling their money through private charities.  Replacing paid, unionized civil servants with volunteers or non-union employees would save money.  Replacing people who are largely indifferent to the cause with those who are fiercely devoted to it would improve service.

Because there is a plethora of charities, they would be compelled by competitive pressures to perform effectively in order to attract donors' money.

A dollar-for-dollar charitable tax credit would have another advantage over the current system.  It would provide direct, immediate feedback as to what causes were considered worthy by taxpayers.  If taxpayers felt it was more important to help blind people and child amputees, instead of starving artists and corporate welfare bums, they would be able to vote with their wallets.

Strangely, those who cry the loudest for "social justice" never seem to want to grant tax credits of this kind.  Judging from several columns and editorials I've read in the newspapers lately, the trend is to sneer at food banks and similar charities and to suggest that all such endeavours be commandeered by the government.

This leads me to conclude that neither of these two major justifications of the tax system is what really holds sway today.  I think what we really have is what I call the "Yes, Minister" scheme of taxation, after the popular British television satire.  There's an army of bureaucrats, politicians and special interest groups out there whose livelihood depends upon making the tax system into the biggest boondoggle possible.

They have a vested interest in the inefficient use of tax revenues: those misallocated resources pay their salaries, pensions and grants.   They have a vested interest in the perpetuation of poverty: if it didn't exist, they'd be out of a job.

They also have a vested interest in promoting interminable debate over what constitutes fairness in taxation.  They know the question will never be resolved, but while we're all busy earnestly discussing it, they'll just go quietly about the routine of profiting from it.