No more tax cuts

[Jerry J. Fortin]

Why not dump income taxes for individuals and business altogether and implement a fair tax system. A national sales tax with a lower income exemption, get rid of revenue Canada and save a few billion dollars in the process. Tax us on what is spent, not earned. Let us keep what we earn and let them tax us on what they can.

[Pat Coghlan]

I've seen a number of reports that Revenue Canada has looked at the tax rates a few times and decided that the individual tax rate is the fairest. The last report I saw was this one but there have been others:

http://www.caledoninst.org/Publications/PDF/609ENG.pdf

I have no problem looking at delivering fairness in taxation. I'm convinced though that income splitting isn't the way to do it and joint tax returns often have undesirable consequences .

First, CRA doesn't develop tax policy. That's the job of finance and HDRC. CRA is responsible for the implementation of tax policy.

The info in that report is BS. It gives the impression that if a stay-at-home spouse returns to the workforce, her (or his) income is added to his/her spouse's and taxed at the individual rate. As I've pointed out, with a joint return a couple has joint tax brackets, which are much wider than for singles so, yes, her (pardon the assumption) income is supposed to be added to the family total. The article somehow argues that it's better for the higher-income spouse to pay a high (almost 50% in Canada) tax rate so the lower-income spouse pays (for example) the lowest rate on the lower income.

The last major study by a Canadian government on the issue was the Carter Royal Commission, which recommended taxing family - not individual - income.

In France, they take the family income, divide it by the number of family members, and calculate the tax owed as if each person earned <total>/<# family members>. All families with the same income and number of family members pay the same taxes.

They don't do that in the US, but at least all families with the same income pay the same taxes.

[Pat Coghlan]

So by 'tax brackets' you are proposing that people with children pay a lower amount of tax on ALL their taxable income?

Probably, but I didn't specify exactly. I would define different family classes (singles, couples, couples with children) and create a set of tax brackets that make sense for each class. There would be an exempt amount which would be different for families with children vs singles, and the higher tax rate would kick in at a higher income level for the former as well.

What you have proposed doesn't match with your desire for two tax brackets.

How can you match income tax rates to the money it will be used to buy. Would that mean somebody in rural saskatchewan would pay different rates on the same level of income than someone living in downtown Toronto? That would follow if you tried to tax income using for housing at one rate and 'luxury' items at a different rate.

And people think the current tax system is too complex....

Well, I shouldn't have to do the job of the finance department...unless they'd like to hire me :-)

What I do know is that our system is broken. We use family income as the criteria for clawing back benefits, and a family with two kids and an $80K aggregate income can find itself receiving zero benefits. They are essentially treated like a single person, with almost equal tax liability. I don't know if you have kids, but a family with children and $X/year in income has much less disposable income than a single person with the same income.

[Pat Coghlan]

Doesn't the current system of tax brackets already account for taxing "luxury" income at a higher rate? The child tax credit already provides tax relief for those with children. So the only real change called for is a sort of tax credit for married people with disparate incomes, but I'm not certain why the government would consider that a priority.

There are too many brackets and they are meaningless. You lose the equivalent of the CCTB for one child for each $20K of family income above $40K. A family with a $60K income and one child has all of its CCTB clawed back. Ditto for an $80K family with 2 kids, a $100K family with 3 kids etc.

I predicted many years ago that the same 2-income families that argue for keeping the current system would be screaming about unfairness once they retire and realize they only have (typically) one good pension income. This is exactly what happened in 2007 with pension-splitting.

I suspect that it won't be possible to keep this benefit for pensioners exclusively. I would replace the current pension-splitting provision with a joint tax return which would reduce the HUGE benefit that married pensioners now have over singles with equivalent incomes.

[Pat Coghlan]

Why not dump income taxes for individuals and business altogether and implement a fair tax system. A national sales tax with a lower income exemption, get rid of revenue Canada and save a few billion dollars in the process. Tax us on what is spent, not earned. Let us keep what we earn and let them tax us on what they can.

Will never happen.

There's too much money sloshing around that never makes its way into the pockets of working people. Governments will be taxing income - in all forms - forever.

[jdobbin]

First, CRA doesn't develop tax policy. That's the job of finance and HDRC. CRA is responsible for the implementation of tax policy.

The info in that report is BS. It gives the impression that if a stay-at-home spouse returns to the workforce, her (or his) income is added to his/her spouse's and taxed at the individual rate. As I've pointed out, with a joint return a couple has joint tax brackets, which are much wider than for singles so, yes, her (pardon the assumption) income is supposed to be added to the family total. The article somehow argues that it's better for the higher-income spouse to pay a high (almost 50% in Canada) tax rate so the lower-income spouse pays (for example) the lowest rate on the lower income.

The last major study by a Canadian government on the issue was the Carter Royal Commission, which recommended taxing family - not individual - income.

In France, they take the family income, divide it by the number of family members, and calculate the tax owed as if each person earned <total>/<# family members>. All families with the same income and number of family members pay the same taxes.

They don't do that in the US, but at least all families with the same income pay the same taxes.

Never said that the CRA developed policy. I should have said they they provide different numbers for different scenarios and send their results to Finance so that they can make a decision on policy. Flaherty himself would have been the last Finance minister to get the results on income splitting and probably joint tax returns for his last budget. Out of desperation, he gave income splitting to seniors because of his income trust cancellation. It is funny that he gave up one program because he thought it would be a drain on government revenue for another program that will be...a drain on government revenue. Not to mention the area of fairness which is one of the reasons cited for the change in the income trust tax change.

I think you mean the last independent study for the government was the Carter Royal Commission. I'd say there would be have been numerous in house examinations of the tax codes through several governments just to prepare for various budgets. Most have dismissed income splitting as too expensive. Others have dismisses interest mortgage deductibility as well for some of the consequences involved in having such a program. And lastly, many have dismissed joint tax returns because of some of the consequences in that regards.

I am certainly interested in fairer taxes for everyone. I am also interested in preserving the progressive nature of taxes based on what people can pay. The tax code is sufficiently complicated that I would support a Royal Commission on the subject. I'd be interested in some of the practical changes that such a commission could make. Canada's experience with Royal commissions though is that governments often only takes aspects of a commission's recommendations. Sometimes the whole thing sits on a shelf gathering dust for whatever reasons.

[jdobbin]

The government is addicted to increased spending. It won't cut taxes because it can't bring itself to cut some of its spending back.

In the two years along that the Tories have been in power they have increased government spending 25%.

http://www.nationalpost.com/opinion/story.html?id=203779

Both Prime Minister Stephen Harper and Finance Minister Jim Flaherty have gone out of their way in the past two weeks to dampen expectations of further tax cuts in this spring's budget. In year-end interviews, each man chanted the same mantra: Canada's economy might weaken slightly in the coming year driving down government revenues and eliminating the fiscal room needed for more income tax reductions. But if we are to suffer a slight slowing of growth, a tax cut is precisely what is needed to lessen the impact.

It would seem our economy will grow a little more slowly in 2008 than in 2007, but only a little -- closer to 2% perhaps, than 3%. Alberta's energy sector is still booming, as are Saskatchewan's and British Columbia's now, too. However, a high dollar continues to drag down central Canada's manufacturers and the mortgage credit crunch in the U.S. is likely to spill over here, if only indirectly.

A further tax cut could stimulate Canadian consumers to take up the slack, but instead, the Conservatives are talking as if preserving the size of government is their first priority. How very unconservative.

How very inconservative indeed. And with an election approaching, you cn bet one of the reasons there won't be tax deductions is because the Tories will be spending like drunken sailors.

[jdobbin]

Harper will mounting a campaign in regards to the GST cut tomorrow in Mississauga. I wonder if it won't be lost in the news cycle that is more focused on New Year's Eve.

http://ca.news.yahoo.com/s/capress/071230/.../harper_gst_cut

Stephen Harper is ringing in what could be an election year with a replay of a campaign stunt that helped propel him into the prime minister's office two years ago.

Harper is to visit the same electronics store on Monday in Mississauga, Ont., where he first unveiled the Conservative party's pledge to reduce the goods and services tax to five per cent from seven per cent over five years.

Monday's visit is meant to underscore the fact that Harper has delivered on his popular 2006 election campaign promise. He lopped the first percentage point off the hated tax last year and the second percentage point cut goes into effect Jan. 1.

Consumers will save $12 billion over the coming year as a result of the two-step GST reduction, according to the government.

With any luck, the media will report that government spending is up 25% in the last two years and that the GST cut was a poorer choice than an income tax cut.

[Pat Coghlan]

I think you mean the last independent study for the government was the Carter Royal Commission. I'd say there would be have been numerous in house examinations of the tax codes through several governments just to prepare for various budgets. Most have dismissed income splitting as too expensive. Others have dismisses interest mortgage deductibility as well for some of the consequences involved in having such a program. And lastly, many have dismissed joint tax returns because of some of the consequences in that regards.

And yet, out of the blue, Flaherty introduced pension-splitting, just like that.

If ANY study had been done, they would have realized that a down-the-middle pension splitting scheme gives a huge advantage to couples vs singles; essentially tax brackets that are double. Couples shouldn't pay the same taxes as singles, since they have less ability to pay (higher food/shelter expenses etc.), but they don't need tax brackets that are twice as wide.

When a government introduces THAT kind of tax change, what can we hope for in terms of well though out reform?

No, my guess is that somebody like Dion who is desparate to win an election will pledge something like a joint tax return before too long, especially now that pensioners have it.

[jdobbin]

And yet, out of the blue, Flaherty introduced pension-splitting, just like that.

If ANY study had been done, they would have realized that a down-the-middle pension splitting scheme gives a huge advantage to couples vs singles; essentially tax brackets that are double. Couples shouldn't pay the same taxes as singles, since they have less ability to pay (higher food/shelter expenses etc.), but they don't need tax brackets that are twice as wide.

When a government introduces THAT kind of tax change, what can we hope for in terms of well though out reform?

No, my guess is that somebody like Dion who is desparate to win an election will pledge something like a joint tax return before too long, especially now that pensioners have it.

Flaherty was totally wrong on the income splitting for seniors. It was a desperate and costly ploy that is totally unfair.

There are already tax measures for couples with children just as their income guarantees for in old age with OAS. As I said, I'm for fairness but there is no way I would support income splitting although I would do very well in it.

Dion is two points ahead of the Tories even without offering such a measure. I think joint tax returns with no cuts in spending are likely to place us in the same situation the U.S. is in: deficit.

[sharkman]

Flaherty was totally wrong on the income splitting for seniors. It was a desperate and costly ploy that is totally unfair.

There are already tax measures for couples with children just as their income guarantees for in old age with OAS. As I said, I'm for fairness but there is no way I would support income splitting although I would do very well in it.

Dion is two points ahead of the Tories even without offering such a measure. I think joint tax returns with no cuts in spending are likely to place us in the same situation the U.S. is in: deficit.

This is getting silly. How many posts can this guy flood one page of a thread with? Has he noticed no one is listening since his broken record responses are getting so repetitive they must be violating at least SOME of our rules?!

I think just about everyone knows, dobbin, of your deep hatred of anything to do with Harper. It must be killing you to see your Liberals stumbling about with the likes of Dion at the helm. Cheer up, if Dion gets a minority he'll give you your precious GST increases.

[Michael Bluth]

I think just about everyone knows, dobbin, of your deep hatred of anything to do with Harper. It must be killing you to see your Liberals stumbling about with the likes of Dion at the helm. Cheer up, if Dion gets a minority he'll give you your precious GST increases.

That's why he won't win and will be lucky to hold the Conservatives to another minority.

Over and over and over the Liberals will get hammered on a potential GST increase.

[capricorn]

The first thing to greet Canadians on January 1st, 2008 is a GST cut. What a way to ring in the New Year following the end of a year that brought so much bad news from around the world.

My condolences to the family and friends of gunner Jonathan Dion of the 5th Light Artillery Regiment from Valcartier, Quebec. Lest we forget.

[jdobbin]

This is getting silly. How many posts can this guy flood one page of a thread with? Has he noticed no one is listening since his broken record responses are getting so repetitive they must be violating at least SOME of our rules?!

I think just about everyone knows, dobbin, of your deep hatred of anything to do with Harper. It must be killing you to see your Liberals stumbling about with the likes of Dion at the helm. Cheer up, if Dion gets a minority he'll give you your precious GST increases.

If you feel there are violations of the rules, please report them. I certainly haven't heard anything from the moderators on any posting I've made for quite some time.

It would be good to get income tax decreases with a Liberal government. I'd have no problem giving up GST cuts in exchange for that.

Edited December 31, 2007 by jdobbin

[jdobbin]

The first thing to greet Canadians on January 1st, 2008 is a GST cut. What a way to ring in the New Year following the end of a year that brought so much bad news from around the world..

Wonder how much it will be noticed in the first days of the year. No newspapers on January 1 and many news broadcasts are abbreviated. The last GST cut didn't really give the Tories the big boost in the polls they hoped for.

[capricorn]

Wonder how much it will be noticed in the first days of the year.

It will be noticed by all Canadians at every cash register across the country. That beats newspaper coverage anytime.

[charter.rights]

Wonder how much it will be noticed in the first days of the year. No newspapers on January 1 and many news broadcasts are abbreviated. The last GST cut didn't really give the Tories the big boost in the polls they hoped for.

On January 1, 2008 the GST is reduced by one percent.....and prices on products go up five percent.... No one will even notice it.

Now if we could only get the government to introduce price parity with the US - especially on vehicles...then I might be tempted to talk nice about them....

[Michael Bluth]

Now if we could only get the government to introduce price parity with the US - especially on vehicles...then I might be tempted to talk nice about them....

It's not the role of the Government to control prices.

All the car makers are offering incentives for the high value of the Canadian dollar.

[jdobbin]

It will be noticed by all Canadians at every cash register across the country. That beats newspaper coverage anytime.

I'm sure you're right. It will probably draw the same long lasting rise in the polls as the last GST cut did.

[jdobbin]

On January 1, 2008 the GST is reduced by one percent.....and prices on products go up five percent.... No one will even notice it.

I know that the price doesn't change in my business. We don't pass on the 1% to consumers. We didn't last time either. Everyone in my industry is using the cut to raise their prices 1% just as they did last time.

Many cities last time pocketed the difference on GST the last time there was a cut as well. Their fees didn't change. Calgary and Toronto were mentioned as cities who didn't lower their fees. Winnipeg was one of the few larger ones that did.

[GreenWhiteandPink]

There are too many brackets and they are meaningless. You lose the equivalent of the CCTB for one child for each $20K of family income above $40K. A family with a $60K income and one child has all of its CCTB clawed back. Ditto for an $80K family with 2 kids, a $100K family with 3 kids etc.

I predicted many years ago that the same 2-income families that argue for keeping the current system would be screaming about unfairness once they retire and realize they only have (typically) one good pension income. This is exactly what happened in 2007 with pension-splitting.

I suspect that it won't be possible to keep this benefit for pensioners exclusively. I would replace the current pension-splitting provision with a joint tax return which would reduce the HUGE benefit that married pensioners now have over singles with equivalent incomes.

Our family income is over $80,000, we have 2 kids are receive $95 a month ($1140 a year).

Edited December 31, 2007 by GreenWhiteandPink

[capricorn]

I know that the price doesn't change in my business. We don't pass on the 1% to consumers. We didn't last time either. Everyone in my industry is using the cut to raise their prices 1% just as they did last time.

Can't win em all. Your business does not involve the average consumer. Corner stores and department stores provide enough visibility for the average consumer. Good try anyway.

[jdobbin]

Can't win em all. Your business does not involve the average consumer. Corner stores and department stores provide enough visibility for the average consumer. Good try anyway.

Since you don't know what my business is, I don't know you could possibly know what my average consumer is.

As for retailers in general, quite a few did take the opportunity to raise their prices which many had kept a lid on for some time.

[capricorn]

Since you don't know what my business is, I don't know you could possibly know what my average consumer is.

In a previous post you alluded that your business could hide a price increase and your clients would be none the wiser for it. I concluded it is not a service that the average consumer shops around for. I don't have the time or inclination to research all your previous posts to confirm this. What? You sell vacuum cleaners from your home or what?

As for retailers in general, quite a few did take the opportunity to raise their prices which many had kept a lid on for some time.

Is this a guess? Where is your evidence of this? Please provide credible proof. Otherwise it goes into, you guessed it, file 13.

[jdobbin]

In a previous post you alluded that your business could hide a price increase and your clients would be none the wiser for it. I concluded it is not a service that the average consumer shops around for. I don't have the time or inclination to research all your previous posts to confirm this. What? You sell vacuum cleaners from your home or what?

Is this a guess? Where is your evidence of this? Please provide credible proof. Otherwise it goes into, you guessed it, file 13.

I don't hide my fees. They've stayed the same just as everyone in my industry has. I've admitted that I'm a writer. In that business GST is usually part of my fee. I have another career that generally pays between $60 and $90 an hour and the GST comes out that fee. It isn't added on the top. No one in my industry changed their fees last time. They won't be changing them this time.

The last time the GST went down, taxicab fares stayed the same coast to coast. They took the 1% themselves. Newspaper companies didn't change their rates either. They increased their prices.

http://www.citynews.ca/news/news_1654.aspx

Smaller items may not be cheaper, either. Newspapers won't reduce their prices. Neither will cab drivers. And the price of parking spots in the city will stay the same. Buy a Coke from a vending machine and you won't be drinking in any savings.

Gas should theoretically go down by a penny a litre but with price fluctuations and the long weekend, you likely won't notice.

Your morning coffee at some franchises won't sink as operators simply boost their java prices to keep the cut for themselves.

The problem: merchants aren't required to pass along the GST reduction to consumers if they don't want to. And many won't.