Is there really such a thing as a "friendly" tax system? One in which a tax return can be completed by a Canadian without a doctorate in economics?
Welcome to the world of simplified taxation, care of the Canadian Taxpayers Federation.
The non-partisan lobby, in advance of a federal budget expected next month, is proposing a new, improved scheme for collection of taxes.
In its first year in power the Harper government presided over a 7.5-per-cent spending jump. Last year spending increased by 5.3 per cent and it's expected to grow 4.6 per cent this year.
So what of the Canadian Taxpayers Federation proposal? Here's a link to their press release.
The CTF wants to simplify federal taxation and reduce federal income taxes from four rates to two rates. Sadly, the phrase "flat tax" has come to mean "single rate" or "simple tax" or even "no cheating".
Flat rate, two rates or four rates - who cares.
The CTF has a very smart proposal. The CTF proposes that the federal government raise the personal exemption to $15,000 and then remove most of the tax deductions we now have. For example, the CTF wants to eliminate the following deductions:
• Increased capital gains exemption for fishermen and farmers and select small businesses.
• Tax credits for tradesmen’s tools.
• Tax credit for students’ textbooks.
• A children’s fitness tax credit.
• A tax credit for public transit expenses.
• Tax deductions for security donations to charities.
• Tax credit for employment expenses.
• A new apprentice job creation tax deduction.
• An environment “feebate” subsidy for buyers of small compact cars.
• Tax relief for foreign participants at the Vancouver’s 2010 Olympic Games.
• Increased meal expense deductions.
These deductions merely complicate our tax forms and make life difficult for taxpayers. They are forms of vote-buying and social-engineering. (The government tries to induce good behaviour through the tax system.) And note: Many of the tax deductions cited are due to the Harper government.
Under the CTF proposal, what deductions would be allowed in addition to the $15,000 personal exemption?
Proposed credits and deductions from income
Basic personal amount of $15,000
Spouse and equivalent amount of $15,000
Child credit of $2,200 per child
Senior credit of $3,000
Infirm dependant expenses
Eligible dependant expenses
Charitable donations expenses
Education savings plan
Foreign tax paid
No deductions for union fees, moving expenses, northern residency, textbooks, tuition fees. (If I were the CTF, I'd take away the senior credit. Why should older people pay less tax than younger people? Most older people are richer anyway.)
Critically, the CTF argues that the tax system is not the way to correct for injustices in society. If we - as a society - want to help certain people, then we should tax everyone and help those who need help. We should not use the tax system as away to help people. If we do so, this is an invitation to people to fudge their income declarations. Let people try rather to fudge their subsidy claims. The onus is on them, not the tax collector.
In the same sense, the CTF suggestion simplifies the lives of many Canadians and the CRA. Many Canadians would not have to pay any federal income tax at all. If we eliminated payroll taxes such as CPP/EI, then the federal government would need to know nothing about them. Employers could pay them over or under the table because there would be no difference.
If the federal government adopted the CTF's proposal, it would be a revolution in Quebec. Thanks to Bernard Landry, the Quebec income tax form is already more complicated than the federal tax form. The CTF proposal would make the difference more stark - the federal form would be simpler and fewer people would bother. Does this matter?
Some people - including me - have argued that a measure of a civilized society is whether people pay taxes. For some, we should all pay taxes because then we all have a stake in the system. IMHO, paying taxes is not a reminder to everyone that government is a collective enterprise and we are all entitled to government services. IMHO, poor people should not pay tax at all. The measure of a civilized society is whether those who should pay taxes indeed pay their tax. The measure of a society is how the majority treats the minority.
Sorry for my Canada rant.
On CBC Radio, I have heard nothing about this CTF proposal. Instead, CBC Radio news has gone into detail about the Gaza strip and Egyptian and Israeli embargoes. The CBC pays to have a (unilingual anglophone) reporter abroad full time reporting about Palestinian affairs. But the CBC has no one reporting about an intelligent proposal to change Canada's federal tax system.
We pay $1 billion every year for Radio-Canada/CBC. English-Canadians are very poorly served.
Edited by August1991, 25 January 2008 - 09:22 PM.