During the recent premiers meeting in Charlottetown, the threat of some provinces opting out of the present federal-provincial tax collection agreement (Quebec excluded) facilitated by the Canada Customs and Revenue Agency, was once again raised, this time by Ontario and meekly echoed by Alberta.

This threat is becoming as ineffectual as the fable of boy who cried wolf. Every few years when federal-provincial tensions become really exacerbated, one province or another will muse about withdrawing from federal provincial initiatives, tax collection being the most obvious.

The provincial argument is as follows: Ottawa is jerking us around on health care transfers, we need to assert our sovereignty and gosh darn, we just don't have any flexibility when it comes to our provincial fiscal policy. Let's show those (fill in expletive here) in Ottawa and set up our own tax collection system. Yeah that'll solve all of our problems, we'll show them, rah, rah, craft a press release, let's shake things up.

Yes. Quebec does have its own Ministry of Revenue and separate tax collection system. But let's be clear, for the most part it is a bureaucratic manifestation of political expression. Does it save taxpayers money No. Does Quebec still complain like the other provinces about the state and size of health care transfers Yes.

Quebeckers file two sets of tax forms annually, one to Ottawa and the other to Quebec City. And even if all the work is simplified with tax software, it is hardly fun to wait for your refund from the feds to then simply endorse the cheque over to the province to pay a balance owing.

The Canada Customs and Revenue Agency (CCRA) by virtue of its staff contingent - 40,000 employees - is the largest government department/agency. It is folly to think that setting up a provincial tax collection bureaucracy would be a simple, revenue-neutral exercise of transferring federal employees to the provincial payroll - it just won't happen that way. We're talking tens if not hundreds of millions in start up costs, depending on the province in question.

As well, CCRA already has economies of scale built into its operations. The last thing we need to do is put more tax collectors on the public payroll at any level.

As for the flexibility in fiscal policy argument, it just doesn't wash. All provinces have already decoupled from the old method determining provincial tax as a percent of federal tax payable to determining provincial tax as a percentage of income. And the mixture of tax rates (single or multiple), provincial basic and spousal exemptions and a host of other unique tools of provincial fiscal policy have all been accommodated by CCRA and the federal-provincial tax collection agreement.

The tax reform movement is built around three basic principles: Our taxes should be lower, flatter and simpler. Some strides have been made in lowering taxes. Flatter taxes are a reality in Alberta when it comes to provincial income tax payable and other provinces may yet copy this approach. Simpler tax rates, tax policy, tax structure and most important of all, simple tax filing is still a dream.

Setting up separate tax collection bureaucracies in one or more provinces would be a costly nightmare for taxpayers. Dear premiers, thanks but no thanks.

Tax Fact:
According to a 1997 estimated supplied to the OECD by Canada's Department of Finance, and extra dollar in sales taxes causes a loss of economic output of just 17 cents. A dollar in payroll taxes cuts output by 27 cents, and a dollar in personal income taxes, by 56 cents. As for corporate income taxes, an extra dollar cuts economic output by $1.55. (Source: Northern Edge by Tom D'Aquino and David Stewart Patterson)