University of Bath PHD An assessment of the role and degree of influence exerted by the Canadian Federation of Independent Business on the formulation of Canadian federal income tax policy Gorman, F. Barry Award date: 1991 Awarding institution: University of Bath Link to publication Alternative formats If you require this document in an alternative format, please contact: [email protected] General rights Copyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights. • Users may download and print one copy of any publication from the public portal for the purpose of private study or research. • You may not further distribute the material or use it for any profit-making activity or commercial gain • You may freely distribute the URL identifying the publication in the public portal ? Take down policy If you believe that this document breaches copyright please contact us providing details, and we will remove access to the work immediately and investigate your claim. Download date: 08. Oct. 2021 AN ASSESSMENT OF THE ROLE AND DEGREE OF INFLUENCE EXERTED BY THE CANADIAN FEDERATION OF INDEPENDENT BUSINESS ON THE FORMULATION OF CANADIAN FEDERAL INCOME TAX POLICY Submitted by: F. Barry Gorman For the Degree of PhD of the University of Bath 1991 COPYRIGHT 'Attention is drawn to the fact that copyright of this thesis rests with its author. This copy of the thesis has been supplied on condition that anyone who consults it is understood to recognise that its copyright rests with its author and that no quotation from the thesis and no information derived from it may be published without the prior written consent of the author'. 'This thesis may be made available for consultation within the University Library and may be photocopied or lent to other libraries for the purposes of consultation'. UMI Number: U601766 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. Dissertation Publishing UMI U601766 Published by ProQuest LLC 2013. Copyright in the Dissertation held by the Author. Microform Edition © ProQuest LLC. All rights reserved. This work is protected against unauthorized copying under Title 17, United States Code. ProQuest LLC 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 48106-1346 ACKNOWLEDGEMENTS This thesis could not have been completed without the assistance and encouragement of many colleagues and friends. I wish to thank my supervisors, Mr. Cedric Sandford and especially Mr. Roger Bowles, for accepting the project as a worthwhile endeavour and for their guidance and positive criticism over the years. Many colleagues at Saint Mary's University offered helpful comments and the encouragement to persevere to the end. I am especially indebted to John Chamard, Dick Chesley, Hari Das, Frank Dougherty, Jack Gale, Sam Jopling and Peter Secord for their efforts. A debt of gratitude is extended to Pauline MacLean, who assisted with the typing and the final conversion of the text to a printable format. Finally, I would like to thank Linda, Danny, Karen, Tim and Matthew, who have had to put up with me during the writing of this thesis and who have suffered as only the family of a PhD student can suffer. To all of you, my heartfelt thanks. SUMMARY This thesis examines the income tax related lobbying actions of the Canadian Federation of Independent Business (CFIB) and is intended to determine the rationale for these activities. CFIB was formed in 1971 as a tax revolt movement to protest proposed government legislation. Throughout the succeeding two decades, tax matters have been of paramount concern to the association and its members. As a representative association, CFIB publicly claims to represent its members to government and to work to further their economic interests. Via a content analysis of CFIB publications, this thesis chronologically reviews the pre-budget submissions of CFIB, its other tax related lobbying actions, and its post-budget reaction, specifically its boasts of having achieved tax "victories” for its members. The analysis examines the success of CFIB in influencing tax policy, noting the number and characteristics of CFIB tax proposals which have or have not appeared in budgets, and reviews a number of CFIB lobbying campaigns. Throughout the thesis, CFIB's attempts to attract media publicity and its use of attention- grabbing strident rhetoric is noted, as well as its critical need to increase its cash flow. The analysis reveals that, contrary to its claims to represent its members and to be a significant player in the tax policy process, CFIB is not particularly successful at attaining tax concessions for its members and that many of its public iii statements exaggerate its role in the policy formulation process. The thesis concludes that the true rationale for all CFIB lobbying activities can be found in its hidden agenda - that is, its need to penetrate the existent member market to acquire the requisite membership numbers, and the cash flow they generate, to ensure the long-term survival of the organization. In other words, CFIB's lobbying strategies and tactics are viewed as marketing tools to further the self-interest of the organization, not as genuine efforts to further the economic interests of its members. LIST OF FIGURES Figure Page 1-1 Reciprocal Information Flows Between CFIB and the Department 4 1-2 Reciprocal Benefits of Engaging in Mutual Exchanges 5 2-1 Organizational Life Cycles 33 2-2 Organizational Growth Stages and Attendant Problems 33 2-3 The Four Interrelated Games 42 3-1 Annual Membership Growth 87 6-1 Annual Revenue Growth in Constant Dollars 325 6-2 Annual Growth Rate 326 6-3 Annual Number of Tax Proposals Included in a Budget 329 6-4 CFIB's Share of the Potential Member Market 3 32 v TABLE OP CONTENTS Page Acknowledgements ii Summary iii List of Figures v CHAPTER ONE - INTRODUCTION, PURPOSE and ORGANIZATION 1. Research Topic and Objectives of the Study 2 2. Focus of the Study 3 3. Central Thesis 6 4. Central Research Questions 9 5. Hypothesis 10 6. Limitations of the Study 10 7. The Analysis 11 8. Significance of the Research 13 9. Organization and Order of Presentation 14 10. Endnotes 15 CHAPTER TWO - SPECIAL INTEREST GROUPS A. INTRODUCTION 18 B. SPECIAL INTEREST GROUPS 18 1. Overview 18 2. Motives and Objectives of InterestGroups 19 3. Issue-oriented Versus Institutional Interest 20 Groups C. FORMATION, DEVELOPMENT, AND GROWTH OF SPECIAL INTEREST GROUPS 21 1. Canadian Government Action Theories 21 2. Traditional Formation Theories 22 3. Olson's By-Product Theory 24 4. Breton's Coercion Theory 27 5. The Life Cycle of Organizations 31 D. THE FUNCTIONS AND ACTIVITIES OF REPRESENTATIVE ASSOCIATIONS 35 1. The Provision of Member Services 35 2. Representing the Members to Government 37 3. Policy Participation 40 4. Exchange Transactions With Politicians and Bureaucrats 40 E. THE RESOURCES AVAILABLE TO PRESSUREGROUPS 45 F. TARGETS OF LOBBY GROUPS 47 G. THE STRATEGIES AND ADVOCACY TACTICS UTILIZED BY LOBBY GROUPS 48 1. The Overall Tone of the Tactics 48 2. Strategies and Tactics 48 (a) The Presentation of Briefs to Policy Makers 48 (b) Propaganda Claims 49 (c) Seek Public Support 50 (d) Issue Opinion Polls 51 (e) Purport to Represent a Significant and Influential Membership 52 (f) Attract Media Attention 52 vi (g) Other Tactics 53 H. INTER-ASSOCIATION COMPETITION 53 I. GOVERNMENT RECOGNITION OF SPECIAL INTEREST GROUPS 55 J. THE CRITICAL NEED FOR A LARGE MEMBERSHIP 58 K. SUMMARY OF THE COSTS AND BENEFITS OF THE MUTUAL EXCHANGES 59 L. SUMMARY 62 1. Introduction 62 2. A Model of Special InterestGroups 62 M. ENDNOTES 65 CHAPTER THREE - THE CANADIAN FEDERATION OF INDEPENDENT BUSINESS INTRODUCTION 70 PART I - FORMATION/ GROWTH AND LOBBYING STRATEGIES 71 1. Formation 71 2. Federation Objectives 74 3. Organization Growth 75 4. The 1979 Organization Crisis 76 5. Member Services 79 6. CFIB Appointments to Government Advisory Agencies 80 7. Involvement With International Associations 81 8. Membership Growth 82 9. The Sales Spiel 90 10. Federation Activities 93 11. The Federation's Approach to Issues 93 12. Issues and Dominant Themes 94 13. Lobbying Strategy 94 14. How The Federation Attempts to Influence Government 97 (a) Overview 97 (b) Federation Research 98 (c) Education 99 (d) The Media Publicity the Federation is Able to Generate 100 (e) The Credibility of the Organization 100 (f) The Provision of Viable Policy Proposals 101 (g) The Mandate Programme 101 15. The Mandate Poll 102 16. Federation Accomplishments 105 17. Summary of Findings 107 PART II - TWO TAX-RELATED LOBBYING CAMPAIGNS 110 A. THE FEDERATION GOES TO WAR 110 1. The 1981 Pre-Budget Brief 110 2. The Budget 111 3. CFIB Reaction 111 4. The Campaign 113 5. The June 28, 1982 Budget-AGovernment In Retreat 115 6. CFIB Summarizes Its Victory 117 7. The Outcome 119 B. CFIB'S CAMPAIGN TO STOP THE VALUE ADDED TAX 120 1. Introduction 120 2. The Early Years 120 3. The Wholesale Sales Tax Option 122 vii 4. Reaction to the Conservative Pledge to Reform the Sales Tax 122 5. The White Paper Sales Tax Reform 124 6. The Outcome 125 C. SUMMARY OP PART II 125 ENDNOTES 127 CHAPTER FOUR - THE TAX POLICY PROCESS INTRODUCTION 139 PART I - A COMPREHENSIVE MODEL OF THE TAX POLICY PROCESS 140 A.