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Arguing about justice

 | 
Axel Gosseries
, 
Philippe Vanderborght

Taxation, fees and social justice

François Blais

Résumé

Les États sont appelés a fournir de nombreux services a la population en vue de poursuivre divers objectifs (justice, efficacité, stabilité, etc.). Il y a plusieurs façons de financer l’offre de ces services. Cet article explore les avantages et les limites de la taxation ou de la tarification du point de vue d’une conception de la justice empruntée a Ph. Van Parijs. L’auteur conclut par quelques recommandations qui tiennent compte des pressions fiscales que subissent aujourd'hui les États.

Note de l’auteur

I wish to thank John Baker for comments on an earlier draft of this paper.

Texte intégral

Taxation or fees?

1There are basically two ways that public services can be funded: through general taxation (mainly income and consumption taxes), or through user fees. The latter is based on the principle of pay-per-use. Each strategy has its own advantages:

  1. General taxation allows governments to provide public services while redistributing the cost to the wealthy. Such a transfer helps to equalize the opportunities of the members of a given community. That is why this funding method is attractive from the perspective of social justice, particularly when coupled with the principle of providing services for free. By placing the cost on taxpayers, and therefore mainly on the wealthy, governments can minimize (but not eliminate) barriers to the use of these services.

  2. User fees, on the other hand, have the advantage of charging either part or all of the cost of services to the user. This makes individuals more responsible for their consumption of services, and reduces (but never eliminates) the risk of waste (Maniquet & Sprumont 1999). Holding individuals responsible for their choices is an important component of equality among citizens. For this reason, the principle of user fees can never be brushed aside by those who support equality.

2These two approaches generate the following dilemma. Free public services make them much more accessible, but can also lead to waste and to a lack of real choices for the consumer. User fees encourage responsibility, but they also tend to exclude the poor. This short paper attempts to explain why there is no easy way out of this dilemma. I start with a brief theoretical review of the most fundamental elements of this problem. I conclude by outlining three proposals that might help us make our minds up about user fees.

Social justice and public services

  • 1 I obviously borrow this definition from Van Parijs 1995.

3Let us start with a definition: social justice aims at maximising the real freedom (or opportunities) of the least advantaged, in a sustainable way.1 This Rawlsian definition is in tune with Van Parijs theory of justice and rejects strict egalitarianism in favour of giving strong priority to the interests of the disadvantaged. Leaving aside technical considerations about the meanings of the words maximise and opportunities, this approach remains compatible with a wide range of egalitarian conceptions of justice. It refuses to reduce justice to so-called formal rights such as legal or political liberties, by emphasising the socio-economic conditions necessary for their full expression.

4Once a certain number of basic rights are protected, the real liberty of the most disadvantaged can be maximized in two complementary ways:

  • Through cash transfers that counteract inequalities resulting from, for example, wages, inheritances and the concentration of capital amongst the wealthy;

  • Through in-kind transfers in the form of (free) public services that favour, for example, the development of human capital and individual autonomy (education) or the preservation of this human capital (health).

5Theoretically speaking, we could deny that both types of transfer are necessary. We could defend an egalitarian approach that relied on cash transfers only, albeit much more generous ones than at present. Private companies could then offer services to the population with little interference from the state. This hypothetical equalization of opportunities would allow individuals to pay for the services they want, according to their own needs and preferences (Buchanan & Tullock 1971).

6Although this proposal may seem surprising, it can in theory claim to resolve the dilemma between equality and personal responsibility. In principle, a massive cash transfer to the poor would equalize individual conditions. User fees for public services would then become obsolete because these services would no longer be provided by the state.

7This ’egalitarian’ approach exhibits, however, a major drawback. It ignores the true value of turning some fundamental services – such as health and education – into public and even mandatory services in the real world, where massive cash transfers are out of the question. In the real world, universal, free public services guarantee that the poorest citizens are able to access quality services that they could not afford to buy privately. This inability of the under-privileged to provide for themselves the same high quality services as the wealthy furnishes the best rationale for a wide variety of government-provided services. Paradoxically, this restriction of consumer choice is carried out in the name of the ’real freedom’ of the underprivileged, and – if necessary – by limiting that of the wealthy.

A question of balance in institutional arrangements

8The realization of social justice therefore depends on an optimal combination of cash and in-kind transfers. The problem lies in a lack of consensus on which public services could truly improve the real freedom of the disadvantaged, and in even more disagreement on the scope and form that these services should take. The task of determining the level and type of transfers necessary for maximizing the real freedom of the under-privileged depends on empirical analysis, and not just on broad principles. Our experience of over sixty years of social democracy may allow us to identify a certain number of trends, but these are dependent on administrative, political or economic conjunctures that leave little room for definitive conclusions.

9Let me stress this point: many of the ideological debates between the socalled ’left’ and ’right’ are based on an empirical evaluation of the consequences of socio-economical proposals — which does not make these debates any easier to decide. Would it be better, from the point of view of social justice and of the least advantaged, to prioritize the financing of daycare or of post-secondary education? To what levels? Is universal access to basic medication preferable to surgery for aging joints? Should we increase family allowances, or the number of hours children spend at primary school? It is obvious that once we start talking about increasing the real freedom of those who have the least, our choices among institutional arrangements are, in principle, endless. That is why these questions deserve to be examined with more serenity than passion, and with reliable facts at hand rather than rhetoric.

Efficiency and public services

10Some public services have no direct relation to social justice but are meant to promote security, stability, welfare and, above all, efficiency. Modern states often find themselves obliged to supply goods and services that would not be forthcoming through markets. This can be accomplished by rationing, by partial nationalization, or by taking complete control of economically important spheres of activity, such as energy, communications, transport, social insurance or natural resources, to name just a few. What level of state intervention is required for long term efficiency in the provision of these so-called ’public’ or ’essential’ services?

11Most debates about user fees fail to distinguish clearly enough between services designed to promote justice and services (or other interventions) dedicated to producing greater economic or social efficiency. Yet this distinction is crucial for assessing the consequences of introducing or increasing such fees. An additional complication is that a public service may serve more than one mission at a time. Take public education as an example. It certainly aims to give more autonomy and freedom to future citizens, but it is also vital for economic growth. Can one truly evaluate the first objective while ignoring the second? We may have to do so, but the two objectives will continue to interfere with one another. In any case, we must try to desanctify public policies if we want to evaluate their true contribution to the real freedom of those who have the least of it. We must also constantly remind ourselves that just because a service is public does not mean that it is essential, nor must everything that we think of as essential be free or subsidized. Food and water are certainly essential to the well-being of individuals. Yet it is not always necessary to subsidize their consumption.

Three proposals

12These debates about user fees and public services arise at a time of financial crisis and of increased fiscal competition between states. States have to find new strategies and better ways of prioritizing, if they want to continue to offer and pay for their services. One cannot remain insensitive to these pressures, nor to the need to constantly revisit the question of whether services should be free or subject to fees. In this spirit, I would like to make three proposals to bring this debate out of the traditional rut of the ’left’ vs. the ’right’.

13First of all, in the context of increased fiscal competition, combined with persistent and legitimate environmental concerns, a greater use of consumer and environmental taxes is unavoidable. Contrary to what is often perceived by ’the left’, these taxes should not be regarded as anti-social, since their revenues can be used to make compensating transfers to the disadvantaged. Moreover, these taxes have the advantage of addressing two major issues of our times: over-consumption and the resulting rapid deterioration of the environment. Consumer taxes and user fees have the same advantage: they make individuals, rich and poor, more responsible for their consumption and for the effects of their choices on future generations. Of course, these new taxes can only be justified if they are also used to help the disadvantaged. This could be accomplished through both direct monetary transfers and progressive consumption taxes (Graetz 1979). Such a combination would maintain or even improve the purchasing power of the worst off.

14In the same spirit, one should not resist higher user fees for public services whose main objective is not, nor can be, justice, but simply greater efficiency. In such cases, the public already benefits from the fact that these services are controlled by the government. It is undesirable to boost the consumption of these services through lower-than-market prices. This principle holds not just for the cost of electricity, but also, potentially, for other services such as access to roads, to insurance, and even – perhaps especially – to water. Once again, the fact that these services are considered ’basic’ (or ’essential’) does not mean that they must be free or subsidized (explicitly or implicitly, there is little difference) by the state. It is better for the state to ensure that these services are financially accessible to the under-privileged than to subsidize their over-consumption.

15Finally, whenever public services are absolutely necessary to meet the requirements of social justice, we should strive to provide these services as universally and freely as possible. We need to do this, however, in light of society’s capacity to pay, as well as their relative contribution to increasing the real freedom of the disadvantaged. Be it in relation to transfers or to public services, universality has the merit of ensuring that the least advantaged obtain the same quality of services as the wealthy. Providing services for free eliminates economic barriers that can hinder access. When equality of condition is at stake, the noble objectives of preventing waste and promoting individual responsibility should be pursued by tightening administrative controls rather than by introducing financial constraints.

16Public service user fees will always face the same difficulty: that of the persistence and even the worsening of socio-economic inequalities in our societies. That is why those who enthusiastically defend their merits should give greater attention to the struggle for social justice. In particular, they should recognise that fees can be more efficient and more equitable only if the state makes much greater direct transfers to disadvantaged individuals. Between user fees and social justice there is a link that must never be severed.

Bibliographie

References

BUCHANAN, J. M. & TULLOCK, G. (1971), The calculus of consent: logical foudations of constitutional democracy, Ann Arbor: University of Michigan Press.

GRAETZ, M. (1979), 'Implementing a Progressive Consumption Tax', Harvard law review, 92 (8): 1575-1661.

MANIQUET F. & SPRUMONT Y. (1999), 'Efficient strategy-proof allocation functions in linear production economies', Economic Theory, 14: 583-596.

VAN PARIJS, Ph. (1995), Real freedom for all: what (if anything) can justify capitalism?, Oxford: Oxford University Press.

Notes

1 I obviously borrow this definition from Van Parijs 1995.

Auteur

François Blais is a political philosopher at the Political Science Dept. of Laval University (Québec city). He is the author of Ending Poverty. A Basic Income for All Canadians (Lorimer, 2002), and of several articles on related issues. He remains a strong advocate of basic income, and has delivered many conferences in order to promote this idea. Since 2006, he is the Dean of the Faculty of Social Sciences at Laval University, where he continues to teach the history of political thought.

© Presses universitaires de Louvain, 2011

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